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Personalized recommendations to better serve Gen Z

Providing specific suggestions to improve the financial health of younger customers can help banking leaders build a mutually beneficial relationship.

Jul 12, 2023 / Consumer Banking

According to BAI research, the top frustration Gen Z customers have with digital banking is a lack of personalized recommendations. Building and maintaining relationships has always been a crucial component of a successful banking strategy. Providing personalized recommendations to this significant customer base builds trust and allows the bank to act as a valuable tool and partner for its younger customers.

While Gen Z may have grown up with technology, they are new to making their own financial decisions. They are opening savings accounts for the first time or looking to take out a car loan. Being tech-savvy and digitally connected,  these customers are highly receptive to personalized recommendations tailored to their needs.

Digital banking gives customers easy access to their transactional data. Bankers should put that data into context for their customers so they can make informed decisions about their finances. By providing that context and insights into spending habits, financial institution leaders can then take that data and provide personalized financial recommendations to an increasingly huge customer base actively seeking advice.

Realize the power of personalization

Gen Z customers are accustomed to receiving personalized messages tailored to their interests and needs from the brands they interact with. Their bank should be no different. Take advantage of the data from their past banking behaviors and preferences to provide informed recommendations and messaging to speak to their unique needs.

By providing specific suggestions aimed at improving the digital experience or financial health of customers, financial service leaders are building a trusted and mutually beneficial relationship. BAI research also shows that Gen Z customers are the most likely group to switch financial institutions. Providing a personalized customer experience along with insights specific to their needs and concerns will increase loyalty in a generation currently not feeling loyal to one financial institution over another.

Promote financial wellness

Gen Z is highly educated and informed, and it values transparency and authenticity. The oldest members of this generation are in their mid-20s and will begin to seek out information and resources to make significant financial decisions. Some might be buying houses while others are opening their first bank account. By acting as more than a place to keep their money safe, leaders of financial institutions have the opportunity to reach this generation who might not have the tools necessary to set themselves up for a healthy financial life.

Offering tools to help them reach their goals – whether it’s savings, budgeting, investing or borrowing for a major purchase –can help Gen Z customers grow their wealth, which will in turn help the financial institution for decades to come.

Use digital customer communications

Gen Z customers are more likely to opt out of receiving a physical banking statement each month in favor of receiving a digital statement. This generation is accustomed to doing everything online and it makes sense they prefer keeping everything digital. Financial institution leaders have an opportunity to take the data available to them through transactional information, as well as their insights and advice surrounding financial health, to provide Gen Z customers with a statement that is both informative and suggestive.

More data is not always the answer. By taking the information typically displayed in a traditional bank statement and providing context while displaying it in a digestible and easy-to-understand way, financial institutions are more likely to engage with their customers. The context provided in digital communications can help customers understand if their spending habits indicate the need to focus on savings. Financial institution leaders can then provide personalized recommendations and resources to improve saving habits.

Reaching Gen Z is increasingly important as they become a larger percentage of potential customers. Attract them with a personalized digital banking experience with tailored solutions that fit their needs while also providing them with recommendations and educational tools to promote financial wellness. Going above and beyond is going to instill a deeper personal relationship and promote loyalty to the financial institution.

Griffin McGahey is president at HC3.