To better serve customers, banks need to improve their services and offerings, with a fundamental shift from a product-centric to a customer-centric focus. Banks must adapt their credit strategies to meet customers’ changing needs and preferences.
Understanding generational differences is critical to understanding those needs. For instance, banks have traditionally been focused on the human touch, which is important to older generations, but are now shifting to the personalization and convenience that younger generations demand.
Generational differences and opportunities in banking
Banks should understand the generational differences in attitudes toward credit use to create market-leading credit products. Having watched their parents survive the Great Recession, many millennials struggle with student debt and have now lived through the COVID-19 pandemic. Moreover, Gen Z—largely practical and with a deep desire to gain financial literacy—is also more averse to risk than their older counterparts. As they become more established in their careers, more than half of Generation Z is increasing their credit use for better spending management, according to research from PYMNTS and i2c. Baby boomers and older seniors are the most likely to pay credit card balances in full, with half saying they do so every month.
Differing sets of financial challenges lead each generation to make divergent choices in credit products. While earning rewards drives established and more financially secure consumers to use multiple credit cards, buy now, pay later (BNPL) adoption has grown among millennial and Gen Z consumers, per the research mentioned above. BNPL improves cash flow management with access to funds that come with better terms, often including flexible payment plans outside the traditional 30-day schedule.
What do these insights mean for your bank and your credit programs? Consider the following:
A single view of the customer.
Having a single view of the customer across all touchpoints and at all times means knowing what products they are using and how they engage with each product. Understanding generational differences and product usage data can help your bank deliver seamless support and a truly personalized approach.
Banks should offer more personalized and convenient digital banking experiences. This includes investing in advanced analytics and artificial intelligence to better understand customers’ needs, preferences and behaviors and providing tailored financial advice and recommendations.
Seamless digital services across multiple channels.
Give your customers the ease and simplicity of mobile banking from anywhere in the world. Doing so means compliance will have to evolve so that texting, virtual interactions and online access to accounts are supported both for clients and advisors—even through social media platforms.
Integrated infrastructure with open banking APIs.
In the next five years, banks should provide a unified view of financial data, streamline loan apps and offer personalized loan options. By leveraging new tools, your bank can proactively engage and provide ongoing cash flow support. If neglected, those same clients will leave for innovative competitors.
Speed and ease.
Speed and ease win the day for banks because clients expect quick, if not real-time, responses. Your customers do not have time to wait or sort through complicated requirements for securing a loan. Navigating the process needs to be straightforward.
While generational preferences will drive the next generation of credit products, it’s crucial to uphold two fundamental principles: be relevant and be respectful. Being relevant means not oversaturating customers with unrelated or unwanted services. And being respectful means making it easy for your customers to opt out of marketing messaging and abiding by their decision to do so.
Banks must adapt to evolving customer needs by adopting customer-centric approaches to improve their credit card marketing strategies and offerings. Credit product strategies should be driven by careful generational research and active listening. Through thoughtful implementation, banks can become industry leaders while growing and strengthening their customer relationships.
Jacqueline White currently serves as the president of i2c, Inc. and has held global senior leadership positions throughout her distinguished 25-year career. Prior to joining i2c, Jacqueline served as president of the Americas Region for Temenos, where she achieved 30% year-over-year growth, consistently leading a team that overachieved quarterly ARR targets. A passionate fintech advocate, Jacqueline serves on the board of various companies, such as authID.ai, Monovo Health and StrongHer Ventures.