The banking sector has seen substantial transformations in recent years. The pandemic hastened some of these changes, but many were bound to happen with the growing influence of digital natives, especially those from Generation Z, in the market. Those born from 1997 onwards, often referred to as Gen Z, were expected to make up roughly 40% of global consumers in 2020. By 2025, the number of Gen Z individuals using digital banking could reach approximately 42.9 million.
For Gen Z, banking looks very different than what their parents knew. A significant change is how banks reach these young customers, with social media playing a major role in their daily lives. A 2017 IBM survey showed 74% of Gen Z spent their free time online. A Credit Karma study revealed that 56% of Gen Z and millennials actively search for financial advice online or on social media, notably Instagram (57%) and TikTok (52%). It’s evident Gen Z wants to learn about finance. However, banks need to present information innovatively, not just on blogs. They should offer genuine products that teach and appeal to Gen Z on their favorite platforms. Since many Gen Zers live with their parents, targeting the parents can be effective. Some financial institutions focus on tools for teens to assist with budgeting and saving.
Banks need to update their customer service for today’s generation, notably Gen Z. They favor quick self-service options for routine tasks. While mobile apps help, they’re not the sole solution. Given the demand for instant answers, banks should also provide quick-support methods like chatbots or live agents via calls. It’s vital for these methods to offer an optimized experience. If a chatbot can’t solve a problem, the next available agent should be informed and ready to assist, ensuring seamless service. While targeting Gen Z, banks must be adaptable. Improvements appealing to Gen Z will also benefit other age groups. Enhancing the overall customer experience attracts and retains customers across all age brackets.
Analysis
Banks should prioritize catering to Gen Z to enhance their business prospects. Born between the mid-1990s to the early 2010s, Gen Z comprises a massive global demographic. As they grow older, they’ll become pivotal for the banking sector. Overlooking this group means missing out on a significant market segment. Although still young, Gen Z is set to inherit substantial wealth from previous generations, positioning them as future major wealth holders. Early engagement by banks can secure long-term relationships. Being digital natives, they have high expectations for online services. Banks must advance their digital offerings to cater to them or risk becoming outdated. Having witnessed the 2008 financial downturn, Gen Z is cautious with finances and values financial education. By offering tailored services and resources, banks can become their go-to financial institutions.
Rajgopal, Sagar. “Council Post: The next Generation of Banking: Using CX to Attract Gen Z Consumers.” Forbes, Forbes Magazine, 19 May 2023, www.forbes.com/sites/forbesbusinesscouncil/2023/05/18/the-next-generation-of-banking-using-cx-to-attract-gen-z-consumers/?sh=5f18caac65c6.
