When thinking about current and prospective bank customers under the age of 30, you likely think of a digital-savvy customer that prioritizes an experience that’s quick and easy. After all, millennial and Gen-Z customers are reshaping consumer preference, workplace expectations and technology innovation.
A recent survey from Oracle, however, paints a more nuanced picture. When it comes to their finances, this subset of young customers – some of whom have already lived through multiple recessions – are often anxious and discerning. These tendencies create an opportunity for traditional banks to build lucrative long-term relationships with this group.
Big Tech companies like Google, Apple, and Amazon are investing heavily in personal finance solutions to try to capture some of the banking market. But traditional banks have an important edge: trust.
For those under 30 years old, “trust” is by far the top priority when looking for a long-term financial partner. According to a 2021 BAI Banking Outlook report, nearly two-thirds of Gen-Z customers between 18 and 24 bank at the same financial services organization as their parents.
Here are some ways that banks can expand their trust among young customers and ward off Big Tech competitors.
Be strategic when picking digital fights
It may be in banks’ best interest to worry less about third parties enabling digital payments for things like paying a friend back for dinner, and more on capturing consumers’ large, long-term purchasing decisions, like buying a home or planning for retirement.
Tech giants have excelled at using customer data to offer customers just the right thing at just the right moment. Banks can mimic this tactic by, for example, offering customers a targeted, next best offer when first signaled about a home search or initial interest in a home purchase. This plays to bank strengths, given that one in four customers under 30 say they automatically chose their primary bank and did not seek advice from family, friends or third-party websites for the mortgage process.
The Oracle study found consumers under 30 are most interested in personalized advice and help when choosing a banking provider, securing a loan or making investment decisions. Younger customers want “in the moment” offers tailored to help them make the decisions they’re more likely to make at a younger age. For example, those under 30 ranked personalized budgeting advice as “most valuable.”
To address personalized budgeting, for example, banks could provide personalized tools, calculators and content that helps millennials and Gen Zs reach their current financial goals, whether it’s paying off a student loan or buying a car. These offerings open the door for a longer-term relationship via future line of credit or investment offers.
Post-pandemic banking will likely consist of a mix between physical and digital channels. Surveys indicate that millennials and younger consumers are among those more inclined to return to physical bank branches. This is likely because younger customers are still uncertain about the financial space and therefore are looking for more guidance to make the right decisions.
Empower customer goals
Although younger customers are often open to experimenting and trying new digital tools, customers under 30 want to protect and build their hard-earned savings. According to the BAI survey, 75 percent of Gen Z customers are planning to achieve a higher standard of living than their parents.
While most Gen Zs aren’t quite at the home-owning stage yet, many under-30 customers are beginning to purchase real estate and could use a trusted banking partner. Potential mortgage customers deserve high-contact service, transparency and access. However, the Oracle survey found nearly two out of five consumers are “unsatisfied” with their mortgage experience. In fact, six in 10 say they chose their primary bank for a first mortgage, but only half of them say they would use the same institution for their next home loan.
To be the go-to for mortgages, banks must invest in upgrading the convenience and simplicity of the mortgage application and approval process, as well as improve communication throughout the lending experience.
While young banking customers have their own unique preferences and habits, banks still have an opportunity to capture their loyalty. By investing in the resources needed to offer a more personalized, streamlined digital banking experience, banks can grow their business along with this new generation of customers.
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