Gen Z and Millennials Favor National and Online Banks, Survey Shows — What Does That Mean for the Future of Credit Unions?

A hispanic woman of the Millennial Generation is taking a picture of a restaurant receipt after eating lunch at a local sushi restaurant.
RichVintage / Getty Images

With roots dating back to the mid-1800s, credit unions have become a pillar of America’s financial landscape, but their popularity could be waning. According to a new survey by GOBankingRates, Gen Z and millennials are less likely to bank with credit unions than they are with national and/or online banks. 

The survey found that 26% of people ages 18 to 24 use credit unions, while 36% of people in this age group opt for national banks such as Chase, Bank of America, U.S. Bank and Wells Fargo. People between the ages of 25 and 34 are even less likely to use a credit union, with only 14% being members of one. They, too, prefer to do business with a national bank (28%) but are even more likely to use an online bank, with 31% saying they bank with these institutions. People ages 35 to 44 also drastically favor online banks (36%), while only 19% of this cohort banks with a credit union. 

Meanwhile, older generations show far more loyalty to credit unions; 35% of people ages 45 to 54 use credit unions, as do 54% of people between the ages of 55 and 64. Of those surveyed who are 65 and older, 60% are members of a credit union. So what does all these mean for credit unions now?

Credit Unions Need To Do a Better Job Appealing To Younger People

One key reason that credit unions are lagging behind national and online banks lies in their own shortcoming: a failure to make themselves known as an option. 

“In general, young people have less exposure to and understanding of credit unions than previous generations,” said Matthew DiGangi, a MassMutual executive in the strategic distribution division and a Bank Insurance and Securities Association leadership advisory board member. 

A Better Way to Bank

Consumers should not be expected to stumble upon credit unions or to innately understand their offerings and perks (or inherit recognition from their parents); rather, credit unions should be expected to reach out and connect with young people who may be in the dark about their values. 

“What is truly the issue for credit unions trying to serve the younger generations is educating them on what a credit union is and how their relationship works as an owner,” said Brian Abner, economist and senior market strategist at Market Research Group LLC. 

Gen Z Does Appear More Interested In Credit Unions Than Millennials 

Though GOBankingRates’ survey shows that older millennials are favoring online and national banks over credit unions, the research also shows an uptick in popularity with Gen Z. This suggests that credit unions could be course-correcting and doing more to appeal to young consumers.  

“Credit unions are making strides to better educate millennials and Gen Z by adding products and services to add relevance with their young members,” Abner said. 

Credit Unions Need To Seize the Digital Day 

Still, credit unions need to grow their digital presence and capabilities in order to generate interest among a generation that is unwaveringly devoted to online and mobile convenience.  

“[This] is an opportunity for credit [unions] to reposition themselves embracing digital,” said Matthew Williamson, VP of global financial services at Mobiquity. “It could, in fact, trigger growth opportunities for them, servicing existing clients more efficiently while attracting a new generation who won’t need to find another provider if they move states and that credit union is no longer available to them. Technology has also leveled the playing field — cloud services, platforms and open APIs provide cost-effective access to building engaging customer experiences.”

A Better Way to Bank

In-Person Banking Is Shrinking, but Not Disappearing  

That so many young consumers prefer online banking over credit unions implies that the days of brick-and-mortar banking are coming to an end — which would be terrible news for credit unions who live by the “people helping people” philosophy. In-person banking will shrink — it already has — but to leap to the conclusion that in-person banking will die out, leaving the credit unions that so crucially rely on it in the lurch, is hasty and shortsighted. 

“In-person banking is still a key component of building a relationship with a customer and the more consultative discussions, such as college planning, retirement planning, insurance needs, investment advice, etc.,” DiGangi said.

Ultimately, what credit unions need to do is strike a balance between in-person services — which are still highly important for those making major financial decisions — and digital fluency. And they need to focus their digital advancements on attracting new customers as well as on highlighting their strong points, such as the fact they are not for profit, unlike banks. That fact in itself could go a long way in winning over more Gen Zers, who tend to be wary of if not strongly opposed to blatantly capitalist motives.  

There’s a Place for Everyone 

“The big picture is there is a place for both banks and credit unions when serving communities,” Abner said. 

Moreover, we must consider the bizarre and tragic times we are living in. With the pandemic raging on as furiously as ever, the world of banking — and what consumers want out of financial institutions — is in flux.   

“From a financial sector perspective, the last 24 months have created a shift in how services are provided to consumers,” Abner said. “Technology, relevant financial products and services, and point of sale will be different.” 

Going forward, consumers will likely want a taste of both: the personal, unbiased service of a credit union, along with the flashy convenience touted by a national or online bank. 

A Better Way to Bank

“The future will see a hybrid type of exchange between institution and customer as more mundane interaction will use varied high-tech systems while more sophisticated transactions, such as loans and wealth services, will be more customized one-on-one interaction,” Abner said. “The result should be more confidence and ease of transaction for consumers and their choice in a financial partner, whether a bank or credit union. Each holds merit.” 

More From GOBankingRates

Methodology: GOBankingRates surveyed 1,335 Americans aged 18 and older from across the country on between December 1 and 3, 2021, asking twelve different questions: (1) What category does your current financial institution fall under?; (2) Have you considered changing Banks within the past year?; (3) If you have considered changing banks in the past year, were any of the following factors? (select all that apply):; (4) Which feature, perk, or other offering is most important to you when opening an account with a new institution?; (5) Are you currently satisfied with all your banking products and services offered by your Bank/Credit Union?; (6) Would you ever have different types of accounts across multiple banks? (i.e. Checking at Chase, but Savings at TD Bank); (7) What is your most preferred method of banking?; (8) Which of the following is the biggest factor of you staying with your current bank?; (9) Which of the following bank accounts do you currently use/have open? (Select all that apply); (10) How much is the minimum balance you keep in your Checking Account?; (11) How much do you currently have in your Savings Account?; and (12) If you are in a relationship or married do you share bank account(s) with your partner? All respondents had to pass a screener question of: Are you currently a member of a Bank (online included) or Credit Union?, with an answer of “Yes”. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

A Better Way to Bank


Discover the Best Banks of 2024: Unveiling Our Top Picks!

We've compiled a list of the top banks for this year!



Here Are the Pros and Cons of Using Multiple Banks

Shot of a woman using a laptop while going through paperwork at home.

Many banks are one-stop-shop financial institutions...


See Today's Best
Banking Offers