Capitalizing on the Potential of Gen Z Banking Customers

There may be a tendency for banks to overlook Gen Z customers, as they may appear less valuable to those banks that focus on current levels of household income and investable assets. However, banks may already be well-positioned to build relationships with Gen Z customers that may prove beneficial in the future.

Driven heavily by family history and word-of-mouth advocacy, Gen Z customers tend to be loyal to their primary financial institution (at the moment). This is positive news for banks, and they should create opportunities to engage and further educate Gen Z customers with the goal of establishing long-term relationships.

Gen Z Blog

Satisfaction with Big Banks is highest among Gen Z customers, compared with Regional and Midsize Banks. This is driven largely by the ability of Big Banks to satisfy Gen Z’s preferences for digital channel interaction. Specifically, Gen Z customers have a strong preference for mobile interaction. It will be critical for smaller banks to at least ‘keep pace’ with the digital functionality offered by Big Banks in order to both acquire and retain Gen Z customers moving forward.

Gen Z Blog2

Banks should also consider marketing specific checking account features/benefits that resonate with Gen Z customers, such as account alerts, rewards programs and free transfers. Such offerings have a greater impact on Product Offerings satisfaction for Gen Z customers than among other generational groups.

Lastly, the method of communication should be tailored to the unique needs of Gen Z consumers – banks should consider digital outreach strategies such as email campaigns or text messaging, as opposed to delivery via standard mail.

Questions for banks to ask themselves:

  • How well do you understand the unique needs/preferences/behaviors of customers in emerging growth segments such as Gen Z?
  • Does your product set incorporate some of the features and/or benefits that tend to be most impactful for Gen Z customers? If so, how effectively are you marketing/promoting these offerings?
  • Are your proactive outreach campaigns tailored to deliver the correct messaging to different segments? Are you delivering your messaging via channels that most resonate with different segments?
  • How satisfied are your customers with your digital channel offerings? Are your brand’s satisfaction scores comparable to what is being seen at peer banks both large and small?

Note: J.D. Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1995); Gen Z (1995-2004)

Note: Big Banks are defined as banks with $180 billion or more in total deposits; Regional Banks are defined as those with $33 billion-$180 billion in total deposits; Midsize Banks are defined as those with $2 billion-$33 billion in total deposits

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