Community banks and credit unions continue to struggle to attract and engage Gen Z accountholders. According to a recent Raddon Research Insights (RRI) study, seven in 10 Millennial and Gen Z consumers say they use one of the six largest banks as their primary financial institution. Unlike the big banks, community banks and credit unions have been slower to innovate. The industry is experiencing innovative disruption every day from larger institutions and fintechs. Institutions that are afraid to try new strategies will continue to lose relevancy with younger consumers and limit their future growth potential.

How Well Do You Know Gen Z?

The first step in any successful marketing strategy is understanding your target audience. Did you know ...

• Gen Z is the generation born after January 1, 2000. They are 18–22 years old
• Gen Z is estimated to be a population of about 68 million, representing 25% of the U.S. population and $140 billion in spending power
• Gen Z is the first digitally native generation, having little or no connection to the world before smartphones.
• Members of Gen Z are more racially and ethnically diverse than any previous generation
• Nearly 75% of Gen Z spend their free time online.
• Only 45% of Gen Z watch cable TV
• Snapchat, TikTok and Instagram are the three most popular social networks among Gen Z
• Over 40% of Gen Z spend more than three hours a day on TikTok.
• Social media channels like TikTok and Instagram are a primary source of personal finance information for over a third of Gen Z consumers
• When it comes to financial services products, Gen Z consumers are most interested in debit cards, credit cards, rewards programs and stock market investments
• About a third of Gen Z consumers also want financial education and advice

US Gen Z Social Media Users, by Platform 2020-2025 (in millions)

Source: eMarketer, April 2021 

Why Financial Institutions Should Try TikTok Now

Since a substantial portion of teens and young adults spend so much time on TikTok, financial institutions should use the channel in their marketing strategy – and meet young consumers where they are in an authentic way. Gen Z consumers are also heavily influenced by social media content. Nearly 70% of Gen Z consumers have used product information or advice they found on a social network site.  Now is the time to leverage this unsaturated channel and take advantage of lower costs, higher reach, and greater engagement versus what is available through other, more saturated social media platforms.

TikTok’s algorithm is based on the quality of content, not the number of followers – so you can have zero followers but still achieve millions of views if your content is engaging. As TikTok grows in popularity and more organizations realize its marketing potential, cost per impression will increase.

Institutions that are not afraid to innovate and include TikTok into their marketing strategy will prove more credible and relevant with younger consumers.

Case Study: Royal Credit Union

Recently, Raddon interviewed Andrea Finn, marketing manager from Royal Credit Union ($4.2B), based out of Eau Claire, WI. Royal Credit Union was an early adopter of TikTok, using it as a piece of its overall social media marketing strategy, and has already experienced positive results. Its TikTok channel and strategy earned Royal Credit Union a 2022 CUNA Diamond Award.

What led to your decision to use TikTok?

"We started thinking about using TikTok as a potential marketing channel back in 2020 but decided to wait to launch in 2021 after getting buy-in from our executive team to try it. Our marketing intern was able to research TikTok, which showed that it had over 1 billion monthly users, with 35% of them in that 19–29 age range. A major goal of ours was to attract and grow younger members, and we felt that this was a strategy we should take and launched our channel in October 2021."

What is your goal with using TikTok?

"TikTok fits within our overall social media strategy, which is focused on three main pillars – growing (awareness and membership), serving and educating. The primary goal we set up with our TikTok campaigns is focused on website conversions, as we have dedicated landing pages for these ads."

How are you tracking success of your TikTok campaigns?

• Number of videos – consistently post fresh content, usually post one to two videos per week
• Video views and page followers – looking to build on engagement month over month
• Likes, comments and shares
• Demographic insights

What is your average monthly budget for TikTok ads?

"Our current monthly budget is $500 for our TikTok campaign. Budgets can be set at the campaign level (minimum daily budget of at least $50) or the ad group level (minimum daily budget of at least $20)."

What kind of success have you achieved with your TikTok campaigns?

"We achieved over 3,300 video views per month within the first three months of using TikTok, which is much more engagement than we were getting from our YouTube campaigns. Our YouTube campaigns only achieved an average of 1,300 video views per month in 2021. Since launching TikTok in October of 2021 we have reached over 1.3 million views. The cost per impression for TikTok is much more effective than other social media campaigns and traditional media (TV, radio, etc.)."

Royal Credit Union Social Media Engagement Metrics as of April, 2022

What advice would you give other credit unions considering TikTok?

• Keep it simple – your videos don’t have to be extravagant or require fancy production. This results in more authentic content that will resonate with younger consumers
• Do your research – look at what other institutions are doing; monitor what content is performing well and what is not.
• It is a time commitment – planning, producing and managing the content does require resources
• Just try it – setting a lower budget commitment and repurposing other social media content from your Instagram or YouTube videos makes it easier to test this channel

Tips for TikTok Content Strategy for Financial Institutions

Nearly 30% of Gen Z consumers said entertaining videos are their preferred method for learning about personal finance topics; and almost a quarter look to social media and influencers for finance information.

One of the reasons TikTok is so popular, especially with Gen Z, is its snack-sized video content. Videos on TikTok are short, usually around 15 seconds – just long enough to hold viewers’ attention. And they can rapidly consume multiple videos in one setting.

While TikTok is mostly known for its lip-synching and dance challenges, Gen Z also consults it for advice on more complex issues, such as health care and personal finance. Popular financial content includes budgeting, mortgage advice and crypto/investing information.

Consumers trust the information they find on TikTok, too. Nearly 7 out of 10 Gen Z consumers say they’re at least “somewhat confident” in financial advice obtained from social media platforms; 21% are “very” or “extremely confident.”

Before launching a TikTok channel, develop a content strategy that will resonate with your target audience. To engage with Gen Z on TikTok, financial institutions should consistently deliver a mix of educational and entertaining content. No stuffy corporate brand messaging here – it’s about solving their problems through entertaining, informational videos. Institutions can get creative and position themselves as financial experts that Gen Z can both learn from and relate to.

Institutions looking for support with TikTok can also collaborate with TikTok influencers. Social media influencers can provide channel expertise, credibility, influence and access to a large network of followers to help institutions increase awareness and get started. (For more information on the benefits of influencer marketing for financial institutions, check out the Raddon Report on microinfluencers). TikTok is full of influencers and content creators who use the platform to educate their followers on a variety of niche topics – including financial advice. For example, TikTok influencer Taylor Price offers Gen Z financial advice to over 1.1 million followers.

Awareness Is Just Half the Battle

Credit unions and community banks looking to increase awareness among Gen Z should explore adding TikTok to their marketing strategy. Then, the real work is figuring out how.

It takes listening, research and re-imagination, according to Tanya Van Court, CEO of Goalsetter, a family and teen banking app and Fiserv partner. She said, “You have to understand what your audience wants and how to deliver it in a refreshing way.”

Start by understanding what Gen Z consumers want from a financial institution, what they value and how they prefer to bank. Make sure you have the right products, services and technologies to deliver the member experience Gen Z desires. Once you engage younger consumers on TikTok and build a relationship with them, they can become advocates for your brand.   

Most importantly, Van Court said, you have to be where people are, in ways that connect with them. For millions of younger Americans, that’s on TikTok.

Consistent Innovation and Embracing New Ways to Engage Gen Z Are the Keys to Success

Only 23% of Gen Z claim a community bank or credit union as their primary financial institution, compared to 70% that claim a major bank. Larger institutions and fintechs have not only disrupted how consumers bank but also how to engage with younger consumers. Community banks and credit unions that are focused on growing Gen Z accountholders need to seriously consider including TikTok into their social media marketing strategy. TikTok is a great opportunity to reach a large captive Gen Z audience, position your institution as an innovative financial expert, and get a bigger bang for your advertising spend.