The news: Michigan State University Federal Credit Union (MSUFCU) launched an in-house buy now, pay later (BNPL) feature to serve its members’ financial needs, per a press release.

Why this matters: As a credit union serving a large student population, the institution is adjusting to demographic trends: By 2028, Gen Zers will account for 35.2% of all BNPL transactions, per our forecast, passing millennials. 

Competing with big banks: Adding BNPL to its roster of financial services will also help MSUFCU contend with larger financial institutions. 

American Express, Chase, and Citi all offer card-linked installments, which are preferred by consumers. This signals both the hunger and trust consumers have for bank-backed BNPL programs. 

Our take: Credit unions can compete with big banks and fintechs alike by leaning into what younger consumers want. 

Catering to these student members helps credit unions stave off their age dilemma: In 2023, 69% of credit union customers were Gen X or older, per a McKinsey & Company study. 

Conversely, banks are performing better with younger consumers: 41% of their banking population is millennial and Gen Z and 58% are Gen X or older.

As graying members spend down savings and shrink credit unions’ deposits and interest income, players like MSUFCU can strengthen their banking relationships with young members through aligned alternative finance methods like BNPL.

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