Banks used to keep customers for life. With a new world of payment apps, online-only banks and money portals to choose from, young people receiving their first pay packet won’t stick with one bank for 40 years. How can the established banks engage these young people?
There’s a tendency for businesses to lump all young people into the category of “millennials” – despite the fact that the oldest millennials are now past 40 themselves. Gen Z, aged 15-22, and the subject of a recent post here, has a totally different take on money management.
Here’s how banks can make a start:
- Build trust. Banks have always been about trust. What’s changing is how this trust should be established. Around 35% of Gen Z say that user-generated content has more credibility than content (anything from advertising to thought leadership) from a company or independent source. Banks should take heed of the role of influencers, and target Gen Z peer networks. There is also a key role for authenticity.
- Be connected: Gen Z is more likely than any other to shop, bank and communicate through digital channels, from the ever-present phone to VR experiences. From integrated self-service portals which deliver the same experience across all channels, and which are customized around individual service needs and preferences, to roboadvisors that blend virtual reality and artificial intelligence, banks should be aiming for an omnichannel experience, and building the skills to make this possible.
Banks will have to adapt their business models as Gen Z matures. However, they do have some valuable breathing space. For the time being, customer relationships for banks in Switzerland are secure. According to one survey, just 1% of Swiss banking customers had firm plans to switch their primary banking relationship. But there are strong signs that tomorrow’s customers will not be so loyal, Banks can start adapting now.
Building rapport with young target audiences is a tough call for any business. With awareness of how generation Z makes purchase decisions, and an ability to engage with these thought processes, banks can position themselves as trusted partners for a new generation of consumers.