As Generation Z enters young adulthood, financial institutions are looking for ways to acquire new customers.
With this new generation navigating its prime banking years, it’s important for banks to personalize their services and address the unique factors that influence the choices of Gen Zers.
Below, we’ll explore how fintechs and financial institutions can capture the Gen Z market and navigate generational preferences to achieve growth.
The Gen Z Opportunity Grows Every Year
As Gen Z ages, capturing this segment is increasingly crucial. According to research conducted by BAI, loyalty decreases with each U.S. generation.
While Baby Boomers use one banking provider for their deposits 65% of the time, only 33% of Gen Zers say they use one financial provider.
Gen Zers also are the most likely to change institutions.
This presents an opportunity for financial institutions to earn their business and become the primary financial services organizations for all generations, particularly Gen Z.
What Gen Z Wants vs. Older Generations
Gen Zers and Baby Boomers have opposing frustrations. Gen Z’s top complaint is that they expect more personalized recommendations from banks.
Meanwhile, all three of the older generations complain that technology at their financial institution “changes too much.” How are banks and credit unions supposed to offer more personalized experiences without changing technology too much?
The responses to another question BAI posed in its survey — “How would you improve digital banking?” — offers some insight into how to navigate this quandary.
All four generations want 24/7 service that includes someone to help when needed. Increasing access to employees who can make technology changes less onerous is an opportune way to navigate generational preferences.
It can help banks maintain satisfaction among older generations while also iterating to more personalization and a better experience.
The People Part of Personalization
Gen Z is insecure about their financial literacy, which creates uneasiness in decisions related to savings, investing, and loans. The desire for personalization comes from that financial inexperience, which can be measured in dollar signs.
Bankrate reports that this generational group pays an average of $19 a month in checking account fees — for routine service charges, ATM fees, and overdraft fees, among other charges — while their elders average less.
To address this issue, banks and credit unions should focus on the people part of personalization. This means offering in-person and virtual financial literacy education programs to help Gen Zers understand the financial products and services available to them.
By providing personalized advice and guidance, financial institutions can help Gen Zers make informed decisions and save money.
With Gen Zers set to make up a quarter of the workforce by 2025 and have $33 trillion in purchasing power by 2030, capturing this segment is increasingly crucial for financial institutions.
To achieve growth, banks and credit unions must personalize their services to meet the unique needs of Gen Z.
This includes offering 24/7 service that includes someone to help when needed, providing financial literacy education programs, and addressing the unique factors that influence the choices of Gen Zers.