Background: I interviewed the CEO of a credit union attached to a large research university located in a city. The credit union serves university staff, students, alumni, faculty, and family members.
Credit Union Customers: I asked the CEO, who wished to remain anonymous, about what her customers who are 50+ years old are like. She says the majority of the credit union's customers are over 50, and that they are middle/working class, usually making somewhere between 35 and 65 thousand dollars per year. There are many customers in that age demographic who are wealthier, but she tends to have less face-time with them, as they likely have accounts at traditional banks as well.
Financial Services Used by 50+ Customers of the Credit Union: She says her 50+ customers are typically interested in traveling, and often go to the credit union for its international money exchange program. Her 50+ customers also often buy properties or co-sign properties for their children. Many 50+ customers also access payday and emergency loans, particularly when there is some sort of issue with receiving a Social Security payment on time.
Most of the lower-income customers do not have 401(k)s, 403(b)s (the non-profit equivalent of a 401(k)), Roth IRAs, or other retirement accounts. Usually the lower-income customers plan to live off Social Security when they retire. Some customers in this demographic may have a pension plan provided to them by their employer.
Typical Questions Asked by 50+ Customers: The CEO says that her customers do not usually come to her with questions about retirement planning. They usually ask the credit union for help managing their expenses--e.g. juggling paying off mortgages, car loans, student loans, and credit cards at the same time while only earning a modest salary. She advises customers in these situations to analyze, prioritize and consolidate.
Debt consolidation is one of the most popular services used by credit union customers. They typically do not come in knowing that debt consolidation is a financial service they can access at the credit union, but after learning about it, customers often pursue it.
Credit Unions vs. Traditional Banks: My conversation with the CEO illuminated many of the differences between credit unions and regular banks. I asked her more about the "community" aspect of credit unions, and she made the important point that credit unions are for the benefit of its customers--and there are no shareholders, unlike at a bank. Also, she noted that credit unions are held accountable by their customers. When I asked her to elaborate, she explained that credit unions are limited by the savings accounts of their customers--these savings accounts makeup the only pool of money that credit unions draw from when providing loans to its other customers. She explained that this means that credit unions are often more "thoughtful" when providing loans to customers--i.e. lending requirements can be stricter than at regular banks, and that her credit union never wants to lend an amount that would be extremely difficult for someone to pay back.
Credit Union Weak Spots: She identified insurance as a weak spot she sees across the industry. Many of her 50+ customers are not well-versed in all the various types of insurance they qualify for (especially 50+ customers with significant assets), and that could be useful. She singled out long term care insurance as one type of insurance that she wished credit unions had more to do with. She says credit unions could do more in the way of offering and educating customers about insurance.
Digital Expansion: The CEO emphasized that although credit unions are behind traditional banks in terms of digital products offered to customers, they are working hard to catch up. Most credit unions have services that can be completed online (such as loan applications), and many have their own mobile banking apps.
Unexpected Insight: I found that in almost every anecdote the CEO gave, she described some form of emotional counseling given to customers by the credit union. Customers who come to bank in-person are almost always 50+, and their questions tend to have to do with financial hardships. I learned that 50+ customers open up to credit union employees about a whole host of precarious financial situations on a daily basis. This means that a sensitive, non-judgmental, and helpful attitude is crucial for credit union employees. Also, I didn't think that someone all the way at the top of a financial services organization would have so much one-on-one contact with customers, but this CEO meets with customers of all stripes everyday.