Credit Union Executives Are Conducting Due Diligence on Embedded Wealth-Tech Solutions. The Agony of Bleeding Deposits are Forcing Action

By : Ben Malena, April 22,2025

Founder & CMO AlgoPear

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‍The Quiet Shift in Member Behavior
Credit unions have long differentiated themselves through community connection, personalized service, and mission-driven values. But in today’s digital economy, these strengths are no longer enough on their own — especially when it comes to engaging the next generation of members.

Across the country, credit union executives are noticing a troubling trend: deposits, engagement, and mindshare are slowly but steadily shifting to modern fintech apps like Robinhood, Coinbase, Cash App, and SoFi. These platforms aren’t just more accessible — they’re offering the kinds of mobile-first, real-time financial tools that digital-native members now expect by default.

In response, strategic credit union leaders are conducting serious due diligence on embedded wealth-tech solutions to retain their competitive edge, protect deposits, and build long-term loyalty with Gen Z and Millennial members.

Gen Z is Driving the Next Financial Revolution

Born between 1997 and 2012, Gen Z is set to become the largest and most financially influential generation in the next decade. They are also the most digitally connected — and the least likely to walk into a branch.

Let’s look at the data:

• Only 15% of Gen Z currently name a credit union as their primary financial institution
  (Cornerstone Advisors, 2023)
• 73% expect their bank or credit union to help them build wealth, not just store it
  (Deloitte Digital Banking Report, 2024)
• 44% of Gen Z investors already use platforms like Robinhood, Cash App, or Coinbase
  (Pew Research Center, 2023)
• 65% of Gen Z say they would leave a financial institution that lacks intuitive digital tools
  (Accenture, 2024)

Gen Z’s expectations are not only higher — they are fundamentally different. They want financial empowerment at their fingertips, real-time performance tracking, automated investing, and education that’s accessible in-app. Traditional banking tools simply aren’t enough to capture their attention — or their loyalty.

The Risk is Real: Deposits Are Drifting Away

Credit union leaders across the country are witnessing the slow leak of deposits toward platforms that offer embedded wealth tools, digital wallets, and micro-investing features. This isn't anecdotal — it's systemic.

Here’s what’s happening:

• Robinhood now has over 23 million funded accounts — the majority from users under 35.
• Cash App processes billions in direct deposits annually, offering investing, Bitcoin, and banking all in one mobile experience.
• Coinbase is onboarding Gen Z investors into crypto with ease, transparency, and gamified UX.
• SoFi has positioned itself as the “financial partner for Millennials,” integrating student loans, mortgages, investing, and high-yield savings — all in a single app.

“We saw a notable drop in youth engagement and deposit activity during COVID. Post-COVID, we’re realizing it didn’t bounce back — it simply went elsewhere,” shared a Chief Digital Officer at a $2B asset credit union in the Southeast.

These fintechs don’t offer better service. They offer better technology — and they’re using it to siphon away not just dollars, but future members.

Wealth-Tech: No Longer a Luxury, But a Necessity

Until recently, wealth-tech was seen by many credit unions as an optional add-on — something for high-net-worth members or older demographics interested in retirement planning.

That mindset is now outdated.

Today, embedded wealth-tech has emerged as a core digital strategy, especially for Gen Z and Millennials, who often view investing and saving as part of the same experience. These tools are helping credit unions:

• Attract younger members early in their financial journey
• Deepen engagement through personalized automation
• Drive deposits and wallet share via sticky digital experiences
• Position themselves as modern financial partners — not relics of the past

This is why due diligence is happening in boardrooms across the industry. Executives are re-evaluating their digital stacks and asking: Can we deliver what the next generation wants? Or are we just hoping they stick around?

The Business Case for Embedded Wealth-Tech

The ROI of investing in embedded fintech capabilities is no longer speculative — it's demonstrable.

Proven results from early adopters:

• A large West Coast credit union launched an embedded investing tool and saw a 35% increase in mobile logins within the 18–29 demographic
• A Southeastern CU with $1.4B in assets added goal-based savings and investment automation and experienced a 24% improvement in Gen Z engagement
• CUs deploying wealth-tech solutions have seen 20–30% higher digital retention rates and a lift in deposit growth among younger members

And it’s not just about engagement — it’s about revenue. Wealth-tech opens new non-interest income opportunities through:

• Asset management fees
• Robo-advisory services
• Premium tiers or value-added digital experiences
• Stronger cross-sell into loan products through data-driven insights

The Due Diligence Imperative: What Credit Union Leaders Must Consider

For credit union leaders conducting serious evaluations of wealth-tech solutions, here are the key areas to assess:

1. Core Integration Compatibility
   • Does the solution integrate via API without requiring a core conversion?
   • Can it be layered seamlessly into your mobile and online banking environment?
2. Regulatory & Security Compliance
   • Is the vendor FINRA/SEC-compliant?
   • Are cybersecurity and member data protocols aligned with your standards?
3. UX and Member Experience
   • Is the interface intuitive, mobile-first, and engaging?
   • Does it feel like a modern fintech — or a clunky plugin?
4. Customization and Branding
   • Can the platform be white-labeled or co-branded?
   • Does it align with your credit union’s member-first identity?
5. Analytics and Insights
   • Does the platform offer actionable insights on member behavior and engagement?
   • Can your marketing and service teams use the data to personalize outreach?
6. Scalability and Roadmap
   • Will the solution grow with your institution over time?
   • Does the vendor have a roadmap that aligns with evolving member needs?

This level of scrutiny isn’t optional anymore — it’s expected. The future will reward those who lead, not lag behind.

Final Thoughts: Earning Gen Z’s Loyalty Starts Now

Gen Z is not waiting around for credit unions to catch up. They’re already building financial habits — and allegiances — with platforms that speak their digital language.

For credit unions that want to survive and thrive in the next 5–10 years, investing in embedded wealth-tech isn’t a project — it’s a strategic pivot. Those that take action today will be the ones who keep (and grow) deposits, build stronger member relationships, and secure their relevance for decades to come.

Want to see how your credit union can attract and retain Gen Z members with a modern wealth-tech solution?
Learn how AlgoPear partners with credit unions to embed personalized investing, automation, and mobile-first experiences — all without replacing your core.
👉 [Schedule a Strategic Demo]

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