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How Gen Z is Defining the Future of Banking

Learn how you can adapt to this not-so-niche consumer, aka the Gen Z, by providing personalized holistic services, adopting AI, designing better UX, while making the world a better place in the process.

Back

How Gen Z is Defining the Future of Banking

Learn how you can adapt to this not-so-niche consumer, aka the Gen Z, by providing personalized holistic services, adopting AI, designing better UX, while making the world a better place in the process.

Lavinia Aparaschivei
| Linkedin
| Content Manager

In Brief

They know what they want and they’re only loyal to brands that deliver it. In the world of modern banking, Gen Z is setting the pace. And they demand more from their experience with financial services than any other generation ever. So, does your banking app pass the vibe check?

Let’s look at what defines Zoomers, how they interact with digital payment and baking platforms, and how you can fit within the lifestyle of this growing group of consumers.

What sets Gen Z apart?

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They are the most racially and ethnically diverse yet, digitally native and globally conscious, and unlike any generation that has come before them.

Gen Z is the first generation to grow up with the internet and social media as an integral part of their lives. This makes them highly tech-savvy and comfortable using digital tools for anything from communication to learning, entertainment, and finances. While it’s tempting to view all these facets of their lives as separate, they are more intertwined than ever before. Work blends into play, passions become means of earning a living, and finances are being gamified to define a new status quo that is the Gen Zers’ playground.

What’s more, they grew up during a recession and a climate crisis; and came of age in a polarized political landscape which makes them concerned about financial security as well as highly motivated to save money and learn about finance from an early age.

iGen reinvented its bread & butter by not only participating in but defining the new gig economy. They are also known for their entrepreneurial spirit and are more likely than previous generations to start their own businesses or invest – especially in crypto (which we’ll talk about in more detail later).

And when it comes to social consciousness, I think we can all rip a page from their book. Gen Z is passionate about social justice and environmental issues, actively engaged in making a positive impact on the world, and more open about mental health than previous generations. Which makes authenticity paramount for brands that want to enter the Gen Z space.

A no-brainer but we’re going to ask anyway: Why enter the Gen Z Space?

Gen Z is made up of nearly 2.5 billion people – 32% of the world’s population. Not only is this demographic no small fish to fry, but their influence will only continue to increase, with exponential jumps in spending and investing power since more members are reaching working age and the group enters its prime earning years.

Plus, we’re witnessing the largest transfer of wealth in history, as Boomers have already begun handing over their assets and fortunes to the younger generations. Close to $70 trillion has been set in motion in the US alone! Highlighting the urgency for banks to more fully understand the habits and preferences of these new kids on the block.

Because, in reality, it seems that not many banks do. Although 88% of bank managers think that their products see eye to eye with Post-Millennials, according to a study by IBM from 2022 only 34% of Gen Z customers believe that banks understand their needs. So, there is a massive dissonance here that Gen Zers could only name as “being delusional.”

But don’t fret, you’re in the right place because we’re going to go step by step through each and every quirk that makes iGen tick and explain how banks can adapt to them in a genuine and smart way.

Hyperpersonalized holistic digital experiences

Gen Z is a digital native user base. So digital banking is not just a must but is no longer a simple service. It’s a living and breathing platform that allows banks to integrate into their customers’ day-to-day. It’s your direct line to their lifestyle by providing them with a comprehensive ecosystem of life solutions that expands to an array of non-financial products. Think of it as a fusion of financial and lifestyle into one.

Because of this overlap, Zoomers will value banking experiences that are moving beyond the basic “Hello, [NAME].” According to research from W1TTY, 64% of Gen Z respondents confirmed that they are looking for customized banking products and service recommendations intuitively tailored to their real-time needs. Which can be seen as a massive opportunity for banking apps to win their loyalty.

crowdtesting for personalized experiences

Why banking on crowdtesting is key for personalized experiences

Discover how crowdtesting is your best ally when developing personalized experiences for your banking services. For Gen Z and beyond.

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But banks will need to use data at a granular level to ensure that Gen Zers are reached in a way that shows they are “known” and “understood.” This data can come from crowdtesting platforms like Testbirds that provide ample and precise information on how younger users interact with banking apps to pinpoint exactly what can be changed, improved, or doubled down on.

Personalization may seem like a buzzword by now, but we promise you, it’s not. There are some real, actionable ways in which it can effectively be put into practice.

More than just banking

Zoomers are hungry for financial knowledge and guidance. They don’t just want to see their account balance sheets; they want actionable insights. 73% believe banks should do more to provide advice on matters such as budgeting, spending habits, paying off debts, and taking out loans. Banking apps can cater to this by offering tips, spending analysis, and personalized recommendations aligned with individual financial goals. Effectively providing Gen Zers with a digital financial guru at their fingertips.

This can mean incorporating a personal finance management tool that seamlessly integrates into the banking app and makes all these personalized features possible.

Beyond financial advice, banks can also provide non-financial services like ridesharing, food delivery, online shopping cash back, exclusive offers like VIP treatment, and exclusive sales, giving iGen even more reasons to keep using their products. Because ultimately what these services do is simplify customers’ daily lives and enable their (almost) every need to be met all at once as fast as possible.

If you’re a Gen Zer, you probably won’t read this article

That’s because research has shown that Gen Z has an average attention span of 8 seconds. This means that the way most banks currently engage online will not engage them. Alongside the fact that they are not going to tolerate some of the traditional lengthy processes synonymous with the way banks used to do business. You might lose them, potentially permanently.

One use case that hits the spot in this category is something as simple as self-service. Younger demographics don’t want to have to call someone or wait for an email response to complete a simple task, like reporting a lost or stolen card. Self-service options should be a priority for all, but they’re an absolute must for iGen.

There’s an AI for that

You didn’t think we were going to write a piece about banking for Gen Zers without mentioning AI at least once.

In a culture of instant gratification, banks should also look for ways to provide quick customer service and near-instant solutions. So, banks can consider integrating a chatbot to offer live customer support.

And if we go back to personalized services, it’s important to note that Gen Z is also prepared to use tools such as robo-advisers in their journey toward financial health.

While simultaneously, AI can aid banks in generating more revenue streams through potential cross-selling opportunities. For example, an integrated AI can recommend specific crypto trading platforms if a customer frequently invests in digital assets. Which brings us to our next point.

Let’s talk crypto

We’ve mentioned how important investing is for iGen. In fact, over half of Zoomers have some form of investment and out of these, 42% have put money into crypto. Which is not surprising considering that they are the first generation to come of age since the creation of Bitcoin. The beauty also lies in the fact that among these demographics, women and people of color stand out with a sizable risk appetite for cryptocurrencies and other virtual assets. Gen Z women are 50% more likely to invest in digital assets and nearly 3 times more Black and Asian Gen Zers invest in crypto compared to other generations.

So as the space becomes more regulated, banks should heavily consider jumping on the crypto wagon by providing bespoke advice or services that operate in this market.

Being self-aware is important

As much as Zoomers are looking for convenience, they’re also actively seeking to do business with companies that are vested in helping bring change about. 64% of Gen Zers surveyed by IBM said that they would switch their bank if they felt it did not place a high enough premium on ethics and environmental sustainability.

However, banks should not simply echo the same sustainability messages – they need to walk the talk by offering genuine sustainability-related products and services.

Wrap it all up in a pretty (and functional) bow

Offering a well-rounded product is just one piece of the puzzle – the way users interact with it is equally as important. Gen Z has different UX needs than previous generations with half admitting that they would switch to another bank if it had a better user experience.

They are more likely to use their smartphones when accessing banking services, so banks need to prioritize mobile-first product designs. And because they are so adept at using technology, iGen is extra sensitive to unnecessarily complicated interfaces, so engagement will have to become more intuitive. While the bells and whistles can be brought in via gamification features that make the entire experience more fun for a generation weaned on so-called play-to-earn videogames.

Data is everything

One thing is clear: Zoomers are determined to take control of their money. They are hungry for information and have an appetite for crypto, digital assets, and changing the world. Gen Z’s influence is pushing banks to innovate and provide experiences that align seamlessly with their digital-first lifestyles. This means they must integrate more flexible, tailored, and technologically advanced solutions into their offering.

Crowdtesting in the banking, finance and insurance industry

Crowdtesting in the banking, finance and insurance industry

Ready to know what makes or breaks your banking app? Our innovative payment testing services ensure that you can evaluate and validate your solutions. Live. Anytime. Anywhere.

Read more

To create a successful banking app that makes Gen Zers feel seen and that continually adjusts to their needs and understands why they do what they do, you need information, analytics, and most importantly, you need data. Testbirds has a plethora of services catered to the banking industry that ensure financial products are secure, user-friendly, accurate, and dependable from any location and any device in a way that makes sense.

Gen Z is steering the course of modern banking and – when push comes to shove – it’s data and testing that will help banks resonate with this tech-savvy generation. So, book your first test today to see how you can use actionable insight to attract Zoomers into your customer base.



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