By W.B. King
Whether addressing financial literacy, digital-first initiatives or attempting to close the generational banking divide, a recent GDS Link report found that innovation and inclusivity are essential to member retention and growth.
“Credit union software faces a transformative period characterized by rapid technological advancements and shifting demographic expectations. The crux of this transformation lies in the ability of credit union software to adapt to digital-first, Gen Z banking preferences and to expand their membership inclusively through technological innovation,” the Exploring the Future of Finance: Credit Union Software Trends in 2024 report noted. “This strategic evolution is not just about survival but thriving in an increasingly competitive, digital, and a strong emphasis on value creation.”
The Dallas-based GDS, with offices in Spain, Philippines and the U.K., offers a credit risk management solution geared toward providing tailored software solutions as well as analytical and consulting services.
Taking a Look at Gen Z Banking
Born from the mid-1990s to the early 2010s, Gen Z is a powerful player in the financial sector, the report noted, adding that this demographic represents a pivotal shift toward digital convenience, ethical banking, and the demand for financial institutions driven by purpose.
“Unique to previous generations, Gen Z’s upbringing in a digital environment has honed their expectation for online and mobile banking solutions that deliver both innovation and security,” the report stated. “They seek more than mere financial services; Gen Z wants banking institutions that mirror their values, with a strong focus on sustainability, inclusivity, and community engagement.”
Additional Gen Z report findings include:
Twenty-six percent of credit union members are from Gen Z, yet 90% of existing members wouldn’t recommend their credit union to their children.
With the national median age at 38.5 years old, the average age of credit union members stands at 53 years old, indicating a significant disconnect with younger generations.
Moreover, 60% of members’ children opt for alternative banking solutions, underscoring the critical need for credit unions to evolve and innovate.
“These statistics underline a pressing issue: Credit union software must transcend traditional digital banking services to capture Gen Z’s financial attention,” the report continued. “They are called to craft a holistic digital experience enriched with personalized financial advice, engaging educational content, and robust community engagement initiatives, all underscored by state-of-the-art technology.
To combat these trends, the report suggests exploring artificial intelligence (AI) solutions, especially as they relate to underwriting. “This technology is especially beneficial in reaching underrepresented communities, offering a 40% average lift in loan approvals across protected classes. Such advancements democratize access to financial services and underscore credit unions’ role in fostering financial inclusion and health.”
Related report findings include:
Seventy-three percent of Americans list finances as their number one stressor, underscoring the pressing need for supportive, accessible software for financial services.
AI technology enhances loan approvals by 40% on average across protected classes, showcasing the transformative potential of AI and automation in promoting financial equity and inclusion for underwriting processes.
“The strategic path forward for credit union software in 2024 and beyond is intricately tied to their ability to embrace digital transformation, engage meaningfully with Gen Z, and expand membership through technological innovation,” the report concluded.