Digital-First Retention Playbook: Winning Gen Z Loyalty at Credit Unions

Generation Z consumers—born between 1997 and 2012—are an increasingly sought-after credit union (CU) demographic. Members belonging to this age group are at the highest risk of switching to competing financial institutions (FIs), making their retention an urgent priority for CUs.

Gen Z consumers perceive themselves as facing unique challenges and feel less in control of their financial lives than older age groups. As the first digital-native generation, they are searching for tech-enabled, self-driven tools that help them simplify financial management and meet their goals. To win and retain their loyalty, credit unions need to meet them where they are, on their own terms and in their own language. Personalization, authenticity and convenience are the essential ingredients for engagement.

Gen Z Expectations Are High

AI Adoption Is Going Mainstream

Trust and Authenticity Drive Engagement

Meeting Gen Zers Where They Are

[branded_divider]

Gen Z Expectations Are High

Gen Z consumers are digital-first, but they are also flexible and adept at navigating between digital and physical channels. They expect high degrees of personalization and relevant insights from financial institutions.

Gen Z is at risk of flight from their CUs.

Like previous generations, Gen Z consumers tend to adopt financial relationships handed down from their families, including credit union membership, at least initially. However, they don’t always stick around. According to the PYMNTS Intelligence Credit Union Innovation Readiness index, Gen Z members are more than twice as likely to consider leaving their credit unions (36%) as consumers across all age groups (14%).

72%

of Gen Z consumers report feeling uniquely challenged by today’s economy.

Another recent survey offers insights into this risk. In Velera’s CU Growth Outlook 2025, young respondents cited both their FIs and older family members as their most trusted sources of financial advice, at 36% each. Nevertheless, many in Gen Z also trust digital influencers found on social media (28%) such as TikTok, YouTube and Instagram, who they often find more in tune with their values and lifestyles. Gen Z consumers are also more willing to try something new than their elders. They are more open to exploring unfamiliar and complex financial products, feeling comfortable evaluating multiple options and working with a mix of providers to meet their needs.

A lack of financial control drives Gen Z’s banking imperatives.

A closer look reveals deeper reasons. According to the Velera report, Gen Z consumers feel less in control of their financial lives than previous generations. Nearly three-quarters (72%) say they face hurdles that other age groups do not. As a result, this generation is looking for tech-empowered, self-driven tools that simplify financial management and help them meet their goals. Their digital-first expectations and readiness to adopt new technologies point to a need for credit unions to focus on innovation and high-impact digital products and features to maintain strong ties with young consumers.

Part and parcel with their digital preferences, Gen Z consumers also expect a high degree of personalization in their financial services that matches their lifestyles, values and goals. They expect FIs to anticipate their needs and deliver value in the moments that matter, whether that’s budgeting help, savings nudges or financial education. That expectation has been heightened by their rapid adoption of generative artificial intelligence (gen AI) tools like ChatGPT and Gemini.

[branded_divider]

AI Adoption Is Going Mainstream

Rapid adoption of AI tools is reshaping consumer behavior and expectations, and financial services are no exception. Gen Z members turn to AI chatbots to help plan for the unexpected.

AI adoption is driving consumer behavior—especially for Gen Z.

62%

of Gen Z consumers are open to using AI for ‘what if’ financial planning.

It is no secret that rapid adoption of AI-powered assistants and personalization tools is reshaping consumer behavior and expectations. That’s no less true when it comes to choosing financial partners—and particularly so among Gen Z members. Gen AI models like ChatGPT, Gemini and Claude—which respond to questions in real time, learn user preferences and offer relevant insights—are resetting the bar for what makes for “good service” for consumers. As a result, Gen Z members increasingly expect their financial partners to anticipate their needs and preferences and provide real-time, personalized recommendations.

As one participant in the CU Growth Outlook study put it, “If I wanted to understand how to invest in a CD, or what the Fed is about to do … ChatGPT does a good job of laying out the pros and cons. It will tell you, ‘Here’s a good breakdown.’ That’s how it helps me compare.”

For Gen Z, gen AI is a co-planner for the unexpected.

As noted, Gen Zers feel more uncertain about their current and future financial situation than older generations. Given their willingness to embrace AI, it is not surprising, then, that they would turn to ChatGPT and its ilk to game out “what-if” scenarios. According to the CU Growth Outlook study, more than six in 10 Gen Z members (62%) are interested in using AI to try to anticipate what could happen if either macroeconomic or their own circumstances were to change. Perhaps more surprisingly, 53% of millennials are also interested in using AI in personal financial planning.

As AI technology evolves, it will make it easier to compare financial institutions and products, putting additional pressure on providers to anticipate consumers’ changing needs and preferences. AI is not just a tool but also a gateway for FIs to engage with a generation that values speed, transparency and relevance. Whether Gen Z boards that gate, however, depends on trust.

[branded_divider]

Trust and Authenticity Drive Engagement

Gen Z consumers look to a wide variety of sources for financial advice and are comfortable curating their own mix of products and services. They’re quick to change partners, but credit unions have an edge.

Digital-first does not mean digital-only.

For all their digital-first orientation, Gen Z consumers are comfortable navigating between digital and physical channels. According to the Velera survey, members of this age group have different preferences for different activities. While roughly two-thirds prefer online engagement for paying bills and card control activities, nearly half (46%) favor in-person engagement when seeking financial advice, more than any other age group. Either way, however, they expect a consistent and integrated experience across all platforms.

46%

of Gen Z consumers favor in-person engagement when seeking financial advice.

That all-channel fluency presents both a challenge and an opportunity for credit unions. To meet Gen Z consumers’ expectations, CUs need to invest in infrastructure to enable seamless transitions between touch points and platforms. However, this generation’s needs also play to credit unions’ traditional strengths in delivering member-centric service.

CUs rank highly with Gen Z on knowing and understanding them.

While financial wanderlust is common among Gen Z members, it is less so among credit union members in general, who are more loyal to their FIs than non-members. According to PYMNTS’ Credit Union Innovation Readiness index, nearly three-quarters (74%) of credit union members say they are “not at all likely to switch institutions” within a year, compared to just 58% of non-credit union members who say the same of their FIs.

Credit unions’ traditional differentiators—member service, lower fees and community focus—are not necessarily in tune with Gen Z, as this generation gives them lower marks on these attributes than non-Gen Z respondents. However, where CUs rise above the pack among Gen Z is in knowing or understanding them (22%) and, perhaps surprisingly, in being technologically advanced (23%), both rated higher than by non-Gen Zers. Emphasizing those latter two traits in their marketing, as well as highlighting the benefits of those qualities that are resonating less well, could help credit unions recruit and retain Gen Z members.

Gen Z equates digital relevance with authenticity.

Gen Z members tend to view many of their digital interactions in the channels they frequent as more authentic and relevant to themselves than more traditional banking touch points. They seek messaging and branding that convey their values and reflect their identities, rather than generic communications. It is crucial, then, that credit unions meet those consumers where they are—across podcasts, social media and mobile platforms—and deliver value in the form of convenience and personalization. Seamless engagement across platforms and touch points is also essential.

Investing in the technological infrastructure to better compete with digital-only and virtual banks that emphasize fast lending decisions and convenience could also pay off for credit unions.

[branded_divider]

Meeting Gen Zers Where They Are

Members of Gen Z are a mobile, digital-first lot. Gaining and retaining their loyalty requires meeting them wherever they are, whenever they’re there. For financial institutions including credit unions, that means providing real-time, personalized engagements across multiple touch points via a seamless mix of platforms, tools, products and services.

PYMNTS Intelligence offers the following actionable roadmap for credit unions looking to attract and retain this digital-first yet complex generation:

Offer everything, everywhere, all at once. Gen Z consumers inhabit multiple platforms and channels. Credit unions need to meet them where they are.

Make it personal. Gen Z members are accustomed to real-time responses and personalized experiences. They expect the same from financial services.

Be authentic. Gen Z members place more trust in information sources they perceive as authentic than in traditional, product-based marketing. Financial institutions should learn to speak their language.

It’s time for an upgrade. Digital tools and platforms evolve quickly, and Gen Z is quick to adopt them. Investing in the infrastructure to keep pace is essential.

Gen Z is different, and perceives itself as different, from earlier generations. Traditional modes of engagement have less traction with them. By meeting them where they are and on their own terms, financial institutions can still foster loyalty.

Gen Z is poised to become the largest and wealthiest generation in history, and their expectations will fundamentally redefine financial services. It’s a pivotal opportunity for credit unions to build on their core strengths—trust, service and community—while evolving to meet Gen Z where they are. This means embracing digital fluency, reimagining personalization, and delivering authentic engagement and immediacy in ways that resonate with this generation’s values and behaviors.”

Tom Pierce
Chief Marketing & Communications Officer, Velera