More credit unions are trying to court younger members by offering innovative products, such as contactless debit cards and mobile banking services, according to industry insiders.

Credit unions have had trouble finding new customers, especially younger ones; the Boston market research company Aite Group LLC said in an August report that attracting new members is a "critical challenge" for 55% of credit unions.

Though credit unions "do say they want to attract younger members, they are not expecting the changes to come very quickly," said Christine Barry, the report's author and an Aite research director.

Credit unions recognize the recruitment challenges they face, so they are altering their marketing strategies.

In January, PSCU Financial Services Inc., one of the industry's largest service organizations, began a campaign to help its credit union members promote contactless debit cards to their members, including Gen Y consumers. Gen Y consists of people born roughly between 1976 and 2000; executives say the average credit union member is 47.

PSCU's contactless campaign came a week after it said it would resell mobile banking services to its 1,100 member credit unions.

In August, Co-op Financial Services, which serves nearly 3,000 credit unions, signed partnership agreements to offer mobile banking to credit unions.

"Going forward, we need to find ways to become more relevant," said Kim Hester, Co-op Financial's executive vice president of network services. "We can't continue to operate and be their parents' credit union because we won't be relevant and we won't reach" younger customers.

Co-op Financial also is experimenting with contactless debit cards. Two of its credit union clients tested the cards with employees this year, Hester said. It already has the infrastructure to process these transactions.

"We're beginning to hear a lot of talk about [contactless payments] from credit unions," she said, "and that's why we're ready if our members want to add that product."

More credit unions may soon convert to contactless debit cards now that big-box merchants like Home Depot Inc. and Best Buy Co. Inc. are accepting them at the point of sale, said Ron Silvia, PSCU's director of debit and ATM product services.

Contactless cards "are one of those products, like PIN-debit, that was slow because of the investment but, once the return on investment is proven, the merchants seem to be moving swiftly into it," he said.

Gen Y consumers may find contactless payments appealing because they "want quick payment," Silvia said. "When they want to check out, they want to do it fast, and you don't want to lose them at the checkout lane."

But these efforts to improve credit unions' technology may not matter if credit union awareness is not increased, said Hester, who supports running a national campaign aimed at helping credit unions increase membership.

Some credit unions already have begun increasing their marketing through such social networking services as Facebook and Twitter, according to Aite's report. About 32% of credit unions surveyed said they were considering using social networking Web sites, and 18% said using such services is a high priority.

Aite based that finding on a July survey of 93 U.S. credit unions, in conjunction with the Credit Union Executives Society, a trade group for credit union executives.

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