What matters most to each generation of banking customers
Consumers in every generation have their own ideas on how their primary financial services organization can most effectively help them manage their money. The distinctive financial preferences of Gen Z, millennials, Gen X and baby boomers—which defy a one-sizefits-all strategy—present an opportunity for financial services leaders in 2021 to tailor products and services to each demographic
Four generations of consumers surveyed for the BAI 2021 Banking Outlook report responded with four different sets of priorities to the question: How can your primary financial services organization help you manage your money? The research also revealed several commonalities among generations
Prioritizing protection from fraud, such as identity theft or data breaches, rose in importance across each generation. For Gen Z, fraud protection was No. 4; for millennials, No. 3; for Gen Z, No. 2. Protection from fraud was boomers’ No. 1 priority—no surprise as the oldest generation has the most to lose and the least amount of time to recover from fraud. Each demographic also cited, in various orders of priority, the need for automated savings and investment tools, as well as a desire for faster payments and quicker transfers.
Here’s what matters most to each generation as we embark on a new year.
The youngest generation of financial services consumers cited a topic unmentioned by the older generations. They named online tutorials on best money-management practices as their No. 3 priority. As they launch their financial lives, Gen Z consumers value on-demand content designed to educate them on best practices.
BAI Board Member Rick Calero, who heads lending and deposits for BNY Mellon, says younger generations need more help navigating the unfamiliar financial services system they see as opaque. While Gen Z would like more transparency and education, older generations, who’ve mastered the system, now prioritize advice as they transition from wealth accumulation to retirement. Another hot-button concern for younger consumers, Calero has observed, is their need for speed.
That’s borne out in the BAI Banking Outlook research. Gen Z listed faster payments/quicker transfers as their top priority. Automated savings and investment tools ranked second.
Like Gen Z, this slightly older generation also named faster payments and transfers as their No. 1 priority. And just like their younger counterparts, millennials cited automated savings and investment tools as No. 2.
But unlike other generations, millennials included chat functionality as one of their top four money management priorities. Chat apps, which can handle many core banking services, as well as instant, personalized communication, are growing more popular, especially among younger, tech-savvy consumers. Three-quarters of millennials said they would switch primary financial services organizations for a better app or better digital services. A year earlier, only 47 percent said the same. Millennials, the largest generation, may be an app away from leaving.
BAI Board Member Ameesh Vakharia, who leads Truist Bank’s retail strategy, products and omni-channel team, says all financial services organizations are vulnerable to accelerated customer attrition amid increased digitization, driven by the pandemic. He points to a highly competitive financial services ecosystem where nontraditional entrants continuously introduce new apps and other digital alternatives. Vakharia says digital transformation has dramatically lowered the barriers to switching.
This middle-aged generation says its No. 1 money-management priority for 2021 is relevant product and service recommendations. Netflix and Amazon have a knack for knowing what their customers will like, and banks and credit unions should be no different.
Recommendations and offers that miss the mark are more than a waste of time and money—they’re a source of irritation for customers. Financial services leaders that intelligently leverage their deep veins of customer data are much more likely to recommend products and services customers will welcome as relevant to their financial goals.
Fraud protection, automated savings and investment tools, and faster payments and transfers, respectively, round out their money-management priorities for the new year.
Boomers savor security, listing fraud protection as their No. 1 priority. As they advance in age, older consumers become more vulnerable to fraudsters. BAI Board Member Todd Barnhart, who heads retail distribution for PNC Financial Services Group, says there’s much financial services organizations can do to allay security concerns and build trust. Barnhart says PNC deploys multifactor authentication security methods and educates customers on how to be alert to warning signs for fraud. For example, PNC and most other banks would never email a customer asking for their confidential financial information. Unfortunately, he says, consumers continue to fall for such scams.
Relevant recommendations, faster payments and automated savings and investment tools were boomers’ next three money-management priorities.
Here’s a quick generational money-management playbook for 2021:
» For Gen Z, offer and promote online tutorials featuring your organization’s best money-management experts.
» For millennials, create or enhance a chat app rich with the kind of services and functionality they’re seeking.
» For Gen X, intelligently leverage customer data by using artificial intelligence and machine learning to personalize product and service recommendations.
» For boomers, develop messaging and educational programs on the latest fraud threats, best practices for password protection and how to recognize warning signs of fraud.
Any and all of those initiatives would well serve an organization’s entire customer base, but each generational segment will appreciate a thoughtful, tailored approach to their specific money-management needs in 2021.
Holly Hughes is chief marketing officer of BAI.