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Digital expectations and user experiences
Gen Z is the fastest growing customer group in the world and holds enormous potential. But there is a clear perceptual gap: according to an IBM study, 88 percent of bank managers believe they understand the needs of this generation – however, only 34 percent of the Gen Z customers surveyed agree.
Neobanks and fintech companies have recognized this potential and are tailoring their offerings specifically to the young target group. Having grown up in a digitally interconnected world, Gen Z expects banks to offer an end-to-end digital, intuitive and mobile user experience. Lengthy processes and analog services are a no-go for this generation. Banks can improve their digital services through apps, AI-based assistants and integrated payment platforms, thereby building trust.
This trust is of crucial importance to prevent young customers from migrating to new competitors. According to a study, 82 percent of Gen Z are willing to switch banks for a better digital experience. If they do not react to the change at an early stage, banks risk losing a considerable proportion of their earnings.
An overview of young customer generations
The order of magnitude in the Dach region (Germany, Austria and Switzerland)
Trust in fintech companies
Another growing challenge for traditional banks is Gen Z’s high level of trust in fintech companies. Around half of the generation prefer fintech companies over other financial services providers. With their innovative, mobile and user-friendly services, they often meet the expectations of the young target group better than traditional institutions.
Financial literacy as a key to trust
Despite a high level of education, Gen Z often feels insecure when it comes to financial matters. According to the OECD, only 10 percent of young Europeans can be considered financially literate. At the same time, Gen Z shows a high willingness to deal with financial issues. According to a survey, 92 percent of German teenagers and young adults want to learn more about business and finance.
Dr. Michaela Schneider, Managing Partner at zeb Austria, emphasizes the importance of promoting financial literacy at an early age, ideally at school. By offering training and education programs, webinars or interactive financial education tools, banks can gain the trust of young target groups. Combined with social media campaigns, such educational measures could appeal to Gen Z and foster long-term customer relationships.
Banking for Gen Z needs to be rethought. It is becoming increasingly important for banks to better meet the needs of this important target group and win them over with a comprehensive offering. This can only be achieved with more financial education from elementary school onwards.
Dr. Michaela Schneider, Managing Partner of zeb Austria
Sustainability as a core requirement
Gen Z expects products and services to be sustainable, including in the banking sector. Around 64 percent of the generation are willing to pay more for sustainable products. Moreover, Gen Zers expect banks to have clear sustainability strategies. Transparent communication about sustainable investments and offers as well as commitment to climate-friendly practices are crucial to meeting the expectations of this target group.
Flexible and innovative financial products
Flexible products that adapt to changing life circumstances are particularly attractive for Gen Z. Whether it comes to retirement provision or loans: Gen Z expects customizable and transparent solutions. Banks can win over member of this generation with a bespoke package of digitally accessible and easy-to-manage financial services. In this context, an appealing user interface and clear communication are of crucial importance.
Digital channels as a key to customer retention
Gen Z also attaches great importance to authenticity and direct communication via channels they are familiar with – especially social media and online platforms. Banks need to find creative ways to engage with this young target group through these channels, i.e. they need to develop content on topics such as financial independence, investments or savings opportunities that is both interactive and suitable for young people.
Generation Z is changing the dynamic of the market. Their access to technology, their way of thinking and their influence are what sets them apart from previous generations. They are a decisive factor for the success of banks.
Julia Wolfgruber, Senior Manager at zeb Austria
Conclusion: the future of banking is tailored to the needs of Gen Z
To win over members of Gen Z as long-term customers, banks need to become more digital, more sustainable and more flexible. Financial services that focus on transparency, value orientation and personalized experiences are essential to gaining and maintaining the trust of this critical target group. Those who master these challenges can build cross-generational customer relationships and help shape a new era of banking.
