So it’s clear Royal Credit Union gets it. Profiled in PYMNTS in early 2018, the Wisconsin-based credit union sets up a banquet table in the cafeterias at each of 17 elementary school locations and, with the assistance of fourth and fifth graders, offers financial services to fellow children and staff.
These “school-site” credit unions provide an opportunity for younger students to gain a practical education towards building a savings routine for themselves and giving them a baseline for what it means to invest in their financial future. The credit union has additional area locations at five middle schools and permanent, physical spaces at six high schools with longer operating hours. “It can be a penny,” says Jennifer McHugh, director of public affairs and financial education at Royal. “The whole goal of the program is just to get them in the habit of saving.”
As if that weren’t enough for Royal Credit Union, the institution also developed a “smart start” checking account that provides 18-25 year-olds overdraft forgiveness twice a year, complete with staff members speaking with them personally to explain why the overdraft occurred and next steps to prevent it from happening in the future.
That 18-25 age range is a strong segue into where this is going: how do we take those kids in communities like Wisconsin, and around the country, and transition them into forming positive financial habits during their college years? So far, it’s been a challenge: the U.S. Department of Education found 11.5 percent of college graduates from 2014 have loans in default. A new report from the Financial Literacy and Education Commission found a mere 28 percent of college students could correctly answer the “Big Three” concepts of inflation, interest, and risk diversification, while having little to no practical knowledge of their own college loans.
Those statistics aren’t even necessarily a surprise; considering student loan costs have reached $1.5 trillion nationwide, they really shouldn’t be. The transition from high school to college is a head-rattle for millions of young Americans every single year. Symbolizing the move from childhood to adult and assuming semi-adult-like responsibilities while being handed a credit card, a piece of plastic for which you still don’t fully understand yet, is a head trip. That lack of financial literacy from an early age has helped get this country into a pretty tough spot, and the time for fundamental, grass-roots solutions in financial education is due.
Why can’t the path to financial wellness for today’s college students start with their local credit union? Credit unions are, by their nature, chartered to serve member needs. They can provide students an atmosphere of financial education and mentorship for students and young adults, flexible plans, while also giving credit unions an opportunity to recruit young members, nurturing their financial lives while developing a trusting and loyal long-term relationship.
It’s with that mindset we run through a couple ways credit unions are the perfect resource with which to increase their appeal to college students:
“Give Me a Reason!”
Many credit union executives may be scratching their heads wondering how, with such a crowded and competitive marketplace, they can possibly grab the attention of kids on college campuses. Many institutions tend to lead with their offerings or features such as rates, fees, and terms. While those highlights are important, what if you turned the entire line of thinking around? What if instead of firing out finance terms, products, and figures they may not understand to begin with, credit unions start the discussion with letting students know what’s in it for them. For some executives, those might seem like the same thing. They’re not.
In fact, an alarming number of Gen Zers are scared of even owning a credit card, failing to understand the concept of interest, or intimidated by the “consequences” of what it means to have one if they can’t pay it off. Talk with them about how each feature, each product, will help them in the broader but still detailed areas of their lives where it will have the most impact! Turn the discussion around to how, say, credit can help them invest in important aspects of life down the line, and the fact they can’t obtain them without good credit.
Todd Romer, founder of Young Money Media, says, “It’s well documented that nearly 50 percent of Millennials are willing to switch financial institutions if given a good reason.”
If credit unions are going to market themselves to Gen Z or late Millennials, they have to know credit unions exist. Bolun Li, an economics student at Duke University and founder of Zogo Finance, cited a university survey finding 76 percent of Gen Z didn’t know what a credit union actually was. If the dominant up-and-coming generation in this country isn’t aware of credit unions, that says quite a lot about how far awareness has to go. And that is in light of the fact that according to NerdWallet, credit unions have nearly twice as many ATMs within a mile of a college campus. Clearly something isn’t working.
In this age of “app and tap” fintech, the need for 24/7 access has become a basic requirement in 2019 and forward. The ability to conduct cashless transactions and banking on the go through digital apps have changed the dynamics for coming generations of consumers. Remember the ATM proximity “advantage” above? Consulting firm RBR found the number of ATMs in service worldwide fell 1 percent last year to 3.2 million, the first such drop since ATMs were invented by Chemical Bank in 1969. If you really believe 1 percent is an insignificant figure in the overall, well, I have a truckload of rotary phones and voicemail message machines to sell you.
Today’s modern consumer has grown to expect the ease of access mobile banking provides, and it’s time credit unions in or near college campuses begin to invest larger budgets towards their mobile apps. Campus ATMs may still have a minimal place in the campus experience, but when your child can pull out their phone, click on their credit union’s app, and transfer needed cash the market recognizes which way the breeze is blowing.
So when a student from that high school in Wisconsin is in college and needs a little extra cash for that quarter or semester’s lunch financing, they know they can pull out their phone, apply for a quick and accessible small dollar loan, and within 60 seconds have money waiting for them when they need it.Wait, your credit union doesn’t feature QCash Financial’s automated small dollar lending platform? In that case, we invite you to request a demo on our website at https://qcashfinancial.com/demo/!