What it takes to reach Gen Z borrowers and why the dealership may be the most important branch you’ve never built.
Attracting and engaging younger members is a strategic priority for nearly every credit union today. Panelists in a recent Origence webinar set out to debunk the myth of the risky young borrower by examining the latest research and helping to demystify the shifting patterns and preferences of Gen Z borrowers. Presenters shared findings from the latest research conducted by Origence and Filene Research Institute, explored new opportunities to reach younger borrowers with thin credit files, and emphasized the role technology plays in delivering the speed and convenience this generation expects. The discussion also covered the challenges and opportunities of converting a dealership transaction into a fully engaged credit union member.
Automation as a first impression
Erika Hill, vice-president of marketing at Origence, outlines a scenario familiar to many young borrowers. After being automatically declined by three lenders, a borrower receives an AI-powered, policy-controlled approval in minutes. That moment matters. For many Gen Z and millennial consumers, a car purchase is their first experience with a loan application, and it is also often the first step in a lifelong financial relationship.
Technology proves critical to meeting these borrowers at the point of need. Automation has become a catalyst for engagement and retention, transforming what might have been a rejection into the beginning of a member relationship.
The urgency of the young member gap
With average member age at most credit unions hovering between the late 40s and mid-50s, the industry faces a generational challenge. Jessica Gamache, head of research at the Filene Research Institute, says studies have found that 99% of credit unions identify attracting and retaining younger members as a strategic priority. That challenge is most felt at organizations under $1 billion in assets, though all are affected.
Today, millennials and Gen Z account for fewer than one-third of all credit union members. Credit unions are urged not to wait for that to change on its own. For Gen Z consumers, ages 13 to 28, buying a car may be their first experience with a loan application. They are not evaluating lenders. They just need a car. A passive approach risks losing them at the starting line.
The dealership is the new branch
Brit Barker, senior vice president of sales at Origence, says the car dealership has become the new front door to the credit union branch. While online vehicle purchases are gaining ground, most auto sales still take place in person. With 53% of auto loans originated at the dealership, strong partnerships with retailers make a meaningful difference. Studies indicate 77% of dealers say local relationships influence where financing goes.
At the same time, visiting a car dealership and applying for a loan both carry friction. Gamache notes that point-of-sale financing and buy-now, pay-later are everyday experiences for younger consumers who think about credit differently than their parents. Speed and convenience are not differentiators for this generation; they are baseline expectations. Digital engagement tools create an opportunity to meet members where they already are, rather than waiting for them to walk through the door.
Thin files, big opportunity
Many Gen Z consumers arrive at the dealership without a traditional credit history. Barker notes that 1 in 5 consumers lacks a conventional banking relationship, and 45 million Americans are credit invisible and unable to be scored through traditional methods. Conventional underwriting approaches are missing these borrowers.
Automated tools fill that gap by evaluating non-traditional credit attributes such as on-time rent payments, job stability, and spending patterns. AI-driven underwriting is delivering not just more approvals, but faster ones and at the moment when speed is critical. Barker cites a baseline pull-through rate of 21% on 7 million applications processed through CUDL in 2025. That rate more than doubled, to nearly 47%, when an automated approval or counteroffer was returned on the spot.
Underwriting powered by automated intelligence is proving to be invaluable to balance risk and opportunity. The numbers indicate that thin-file applicants aren’t waiting for you to manually underwrite their car loan; they’re moving on.
Back-office speed matters just as much
Instant approval loses its power if the back office cannot keep pace. Barker cautions against manual, “stare and compare” processing traditions and urges credit unions to adopt automated document processing to fund loans with the speed and efficiency required to compete. Credit unions with indirect lending strategies are already demonstrating results, growing loan portfolios while the rest of the industry contracts.
Three steps credit unions must take now
Gamache outlines three priorities for credit unions seeking to close the generational gap:
- Develop a young member growth strategy. Attracting Gen Z requires intentional planning, not passive hope.
- Mine your existing membership. Analysis shows credit unions have unrealized potential for expanded relationships within their current footprint.
- Balance automation with the human touch. Know when speed and efficiency drive results and when a personal moment of connection makes the difference. “Balancing those things really matters,” Gamache says.
Don’t overlook the Gen X connection
There is a near-term opportunity hiding in plain sight. Gen X credit union members exert strong influence over their Gen Z children, and Gamache says this represents an underappreciated pathway to younger consumers. Young people also maintain strong community ties. While the mission-driven nature of credit unions is not a must-have for this generation, it can serve as a meaningful tiebreaker when they are choosing a provider.
Looking ahead: Gen Alpha is already here
While the industry focus today is on Gen Z, Gamache urges credit unions not to lose sight of Gen Alpha, the first generation raised entirely on Wi-Fi and mobile devices. They will not arrive at a branch to open their first account. The question worth asking now is: where will you meet them?
Start with data, let AI be an asset
Barker’s advice to credit unions is straightforward: start with data and use those insights to understand member behavior. Focus on the full experience from point-of-sale, underwriting, and funding and lean on industry partners where they add value. “Let AI be an asset,” he says. “It keeps us relevant.”
Panelists agree that meeting young borrowers where they are, paired with speed and convenience, is the path forward for credit unions looking to move their membership demographics in the right direction.
