As bank marketers, we’ve been here before. Each new generation presents its own set of challenges to address, preferences to learn, and perceptions to overcome. That said, Generation Z just might be the most difficult yet. Their level of disconnection from banks and banking (among other generally accepted staples of modern society), has puzzled bank marketers for some time now. But all is not lost, and in fact, engaged in the right way, Generation Z has the potential to grow with and influence the trajectory of banking for decades to come.
Generation Z has stepped into society in the role of inquisitor, often asking “why” when pressed with questions about what is done and how it became generally accepted as ‘the way’. It should come as no surprise that they’ve approached banking in this same manner. “Why do I need a bank?” hints at myriad other questions, many of which we as have been trying to answer for some time now. The good news is that many of these efforts are paying off.
In this article, we’ll dig deeper into Generation Z’s feeling of disconnection from banks and offer up a series of ideas on how to better engage this unique audience. First off, let’s find out who they are.
Who Is Generation Z?
Generation Z, defined as those born between the mid-to-late 1990s as starting birth years and the early 2010s as ending birth years, is largely considered the first digital-native generation, having grown up with the internet, smartphones, and social media at their fingertips. Although those tools are often lamented for how they “steal time” with activities of leisure and distraction, they have also ignited a period of exploration and deep questioning.
Generation Z has had the ability to interact with computers and smartphones in their advanced forms. They’ve come to expect technology in its “2.0” and beyond stages, fully capable, powerful, and often free. They have not been as accepting or forgiving of technology that is merely “good enough,” instead demanding seamless user experiences on day one. In some cases, this is where banks have failed to engage them.
Why Generation Z Distrusts Banks
Let’s explore Generation Z’s experiences and expectations while also identifying opportunities for trust-building and customer growth.
Faltering Expectations
As digital natives, members of Generation Z tend to think about technology first. In many cases, this can put the traditional banking business model at an almost immediate disadvantage. People and place have long been the strengths of traditional banks. We have spent decades honing the branch experience, training up staff to deliver incredible service, and choosing real estate that positions the branch as the proverbial heart of neighborhoods and commerce. Many banks have leveraged this perception with the inclusion of pillars in their logos. That feeling of support and strength is challenging to translate to the digital experience where Generation Z feels most comfortable.
Early online banking felt like crude digital translations of the branch experience. Over time developers have realized that users want different tools online than they do in person. They want seamless, intuitive experiences that leverage instantaneous access to data with insights (many now and certainly more in the future) enhanced by artificial intelligence (AI) to predict questions and position solutions.
Trust And Security
With Generation Z living their lives so openly online via posts on social media, it might come as a surprise that establishing trust and security remains a concern among this generation. There is a general willingness to trade privacy for productivity, with many of the most popular applications operating as ostensibly free services with a business model behind the scenes that monetizes the data gleaned from users. And while this might hint at a laissez-faire attitude towards the protection of personal information, in practice that only goes so far.
When choosing a bank, many in this generation see value in the established legacy brands over upstarts. In a survey of 3000 Gen Z customers commissioned by IBM, 55% of consumers said they trust traditional banks more than neobanks to resolve issues like fraud.
It should be important for bank marketers to not cede this ground. Promoting safety and security, which have always been hallmarks of traditional banking, should be considered an important part of your digital pitch to all generations.
Economic Uncertainty
Generation Z has grown up during economically turbulent times, having witnessed the impact of The Great Recession, as well as a general unease and growing fear of another recession. Though employment numbers are considered strong, the quality of jobs and their long-term potential remain big question marks that can weigh on them.
Many have embraced the concept of side hustles as a necessity to make ends meet versus an opportunity to get slightly ahead and/or explore new areas of potential interest.
Banks would be wise to orient around these ideas. The 24/7 nature of online banking is a logical solution for those who work non-traditional hours. Having humans available to answer questions during these hours, even via chat, seems like a worthwhile accommodation that Generation Z would find valuable.
Financial Guidance Gap
In a recent report on financial priorities, 70% of Generation Z respondents noted feeling equipped to handle basic financial tasks like managing expenses. Confidence wanes when it comes to specific, more complex tasks, including “building an emergency fund (54%), saving for retirement (43%), and investing (29%).”
A recent Forbes survey showed that 79% of Generation Z respondents have turned to social media for financial literacy and advice. For banks, it should be clear that there are opportunities to educate Generation Z clients on everything from basic budgeting to aid in bridging the gaps in employment to customized financial planning and investing to unlock traditional goals like owning a home.
Ethics and Environmental Consciousness
A recent World Economic Forum report found that Generation Z cares more about sustainability than other generations, with three-quarters of them preferring to prioritize sustainability rather than show a preference towards brand names. This impacts their banking decisions as well, with the above-mentioned IBM survey illuminating that 64% of Gen-Z’ers would switch their bank if it fell short in ethics and environmental sustainability.
Many businesses, not just banks, are confronting the challenges of ethical and environmental responsibility. This task is made even more difficult by the fact that even the most basic bits of information are not universally agreed upon. Understanding one’s core constituency is important, as is having a corporate north star to align with.
Strategies for Reconnecting with Generation Z
According to a recent BlackRock survey, despite the aforementioned challenges of the economy and in finding meaningful, financially sustainable employment, Generation Z saves 14% of their income. Bridging the divide will feel even more urgent as Generation Z becomes the dominant financial and political force across the nation over the next few years. Here are a few areas to consider.
Digital innovation
- Upgrade digital platforms, with an emphasis on user experience and security.
- Consider how AI and blockchain will influence experiences and needs over time and begin to integrate where appropriate.
Financial Literacy and Empowerment
- Introduce programs and tools specifically designed for Generation Z that speak to their unique experiences and expectations.
- Highlight examples of personalized financial planning and educational services that cater to younger consumers’ needs, such as student loan repayment, savings calculators, etc.
Physical Branches
- Explore innovative approaches to reimagining bank branches as community hubs or experience centers that offer more than traditional banking services.
- Propose ideas for making physical branches appealing to Generation Z by incorporating technology and creating spaces for financial education and social interaction.
Alignment and Allies
- Take clear stands on ethical issues and environmental sustainability, integrating these values into their operations and digital marketing strategies.
- Discuss the importance of transparent communication about the bank’s efforts and achievements in these areas to build trust with Gen Z customers.
Measure and React
- Detail the importance of personalized product recommendations and financial advice, enhancing the customer experience for Generation Z users.
- Suggest implementing feedback mechanisms to continuously adapt and improve services based on Generation Z’s evolving needs and preferences.
Gen Z: The Whole World in Their Hands
You can hardly blame Generation Z for their perceived desire to want it all (and want it now). With access to the entirety of the world’s collected knowledge in their pocket from an early age, many traditional barriers no longer exist, and this plays out in their relationships with banking. We should look at this time as a great opportunity to develop bank marketing techniques and tools that bridge gaps while improving functionalities for all customers.
From enhancements in online tools to increased educational efforts that address the specific concerns of Generation Z, banks have a great opportunity to become trusted partners in developing a well-rounded life.
Partner with PrintMail Solutions to Drive Growth for Generations to Come
In exploring the unique needs and values of Generation Z, it’s clear that banks require innovative strategies to reconnect with this digital-first generation. Bridging this gap requires more than just understanding; it demands action. This is where PrintMail Solutions can play a pivotal role in your strategy. Leveraging state-of-the-art communication solutions, PrintMail Solutions can help your bank or financial institution deliver messages that resonate with Gen Z, combining the digital flair they expect with the personal touch they value.
Discover how our tailored communication solutions can help you reconnect with Generation Z and secure the loyalty of this crucial demographic for years to come. Contact PrintMail Solutions to explore communications options for your bank or credit union and receive a personalized strategy consultation. Did you find this article helpful? Subscribe to our blog for additional tips on techniques to grow your financial brand.
