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Building next-gen relationships through lending

Millennials and Gen Zers put a premium on fast, easy and convenient banking, and credit products can be a path to making a lasting connection.

Dec 1, 2022 / Consumer Banking

Millennials and Gen Zers put a premium on fast, easy and convenient banking, and credit products can be a path to making a lasting connection

Millennials and Gen Zers have been a major force in the retail space for years now, and as they head into their prime, they’re attracting more attention from the banking industry.

But according to BAI research, attracting a millennial or Gen Zer is one thing, and holding them for the long term is another. These younger Americans want fast, easy and convenient access to products and services, and they can be quick to jump to another banking institution for what they believe will be a better experience. 

BAI recently spoke with Rajesh Shah, head of engineering at Citizens Bank, and Balmukund Shukla, a partner at Infosys, about how digital lending products may be the best avenue to connect with these younger generations.

The interview has been edited for length and clarity.

BAI: Why is lending the right banking product to use as the foundation for building strong relationships with millennials and Gen Z customers?

RAJESH SHAH: First and foremost, if you think of lending, just the diversity of products allows us to sell to a very wide range of customers. We cover everything from student to auto to credit card to mortgage to buy now, pay later. The diversity of products is a tremendous asset in terms of attracting or engaging our customers. I’ll also say that lending gives us an amazing tool to be able to learn from their transactions, their behaviors, to be able to deepen the relationship with our customers.

The leading edge of the millennials are in their late 30s and early 40s. What do they want, lending-wise, and how do banks best deliver it?

BALMUKUND SHUKLA: If I look at the economy life cycle and what has happened since 2008 and 2009, there’s been a huge change in the lending landscape. A lot of new banks came in. The intent was always to disrupt what is not working today, and during the pandemic, this disruption further accelerated. Customers want a seamless experience as they go through their life cycle. What they look at is, “What’s my experience from an onboarding perspective? How do I do payments and remittance? Do I have end-to-end experience?” Customers are looking at the banking firms that they’re working with and thinking about their options to find a better experience.

On the other hand, the oldest members of Gen Z are only in their mid-20s. What does Gen Z want, and how do you connect with them now?

SHUKLA: It’s very important to bring what we call creative financial education to these customers, because that builds confidence in the system. We also need to connect with them where they spend most of their time. This generation is what they call the “TikTok generation,” and new things are coming up now like NFTs (non-fungible tokens), the metaverse, new games and more. The intent here is “How do we bring great products over their life cycle and then connect back to where they’re going to spend most of their time?” That’s how I would say we take it forward.

As you’ve been working together to create the technical capabilities needed to support relationship building, what’s that process been like and what are some of the key challenges that you’ve run into?

SHAH: Like any financial services or any large organization, I think there are two key challenges that we have to address. The first one is talent. Everyone knows how important talent is, especially if you are trying to build some of these most leading- and bleeding-edge solutions. The ability to hire the best talent has been a very important piece. The second one is really simplifying our internal processes. We had to almost re-imagine our process front to back. Partnering with Infosys has helped us understand the crowdsourced intelligence of what’s happening—not just on the financial services side but also on the fintech side.

Millennials and Gen Zers are notoriously fickle when it comes to banking—they tell us they will happily switch banks for a better experience. Catching one of them is one thing; keeping them is another. How do you keep them?

SHUKLA: Banks need to focus on three important things. The first is providing a mobile app-first experience throughout the end-to-end journey. The second is business domain-based platforms where decisioning becomes a service across multiple lending products so the customer doesn’t have delays. And third, very important, is a customer-centric data ecosystem with simplified data structures so banks can quickly mix and match the data attributes available to learn from it.

SHAH: Products can always be copied. I think where you win the game is in terms of how you differentiate the experience. First and foremost is creating a modern vibe and experience. Also, a conscious shift toward omnichannel. Mobile-first is extremely important, but it doesn’t have to be only mobile. If the customer is coming through a phone or online or coming into the branch, we really want to make sure that they’re able to start from where they left off. And then leveraging the power of data to simplify cross-sell and upsell opportunities, whether it’s in lending or moving into wealth management space or our retail space.

Terry Badger, CFA, is the managing editor at BAI.

Explore ways technology can help financial services providers reach the right customers with the right credit products and compete more effectively against nonbank players in the BAI Executive Report, “Technology is pushing lending in new directions.”