Unlike any generation before them, Gen Zers began thinking about building wealth and wealth management very early in life. Many have multiple financial assets, including brokerage accounts, businesses they may own, and even some investments in crypto.
Just over half of Gen Zers surveyed by Charles Schwab are funding a healthcare savings account, not only for present needs. Many of them are doing so in preparation for health costs in their retirement years.
Before long Gen Z will be banking’s key market. Many within this demographic group will inherit their parents’ financial institution choices — at least initially.
Whether they maintain their accounts with those institutions or look elsewhere depends on how well banks and credit unions listen to their needs. Our firm interviewed a range of Gen Zers about their attitudes and expectations of banking products, with a focus on how banking institutions can build loyalty by cultivating trust. Here’s what we heard.
Gen Z Doesn’t Know Banking — Or Your Financial Institution — Yet
Gen Z is no stranger to financial apps, investing with Robinhood, splitting lunch tabs with Venmo and paying bills with Chime. Despite this activity, Gen Z is still learning what it means to be a banking customer.
They’re eager to learn more about money, but, compared to earlier generations, Gen Zers want transparency into the factors and decisions that affect wealth.
For instance, they want to know why a bank or credit union requires a minimum dollar amount for checking accounts, and how those minimums are derived. Keep in mind, many Gen Zers witnessed the impact and ripple effects of the Great Recession. Certain banking practices contributed to the hardships they saw. That said, members of this generation are keenly aware that their personal distrust stems from a lack of financial information, which presents banks with a unique opportunity to win their trust.
Education is key. They’ve watched their parents build and manage wealth, and they’re eager to do the same. Many look to financial institutions for guidance on how to be smart with their money. The banks and credit unions that will service these customers most effectively will be those that develop self-guided experiences that educate in the near term and build trust in the longer term.
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Gen Z’s Banking Journey Began With Their Parent’s Bank
Nearly every Gen Zer we interviewed said the first bank they joined was the one their parents used.
“I think family has a lot to do with being able to understand the process of banking. There are some things that a FAQ webpage can’t really give you.”
— Gen Z consumer in study
However, this influence can be fleeting. Gen Z’s loyalty can be swayed once they graduate from college and venture out on their own financial journeys. Many may move to a new city or region for a job. Graduation is a trigger for asserting financial independence by making their own choices regarding where they’ll bank. They put a good deal of reliance on what their own Gen Z friends do, in terms of banking choices.
To capture newly independent banking consumers, financial institutions need to recognize this generation’s level of financial sophistication. Yes, they’ll need a checking or savings account, but their overarching goal is wealth management. This should drive the messaging for campaigns that target Gen Z.
“Chase is the bank my parents have always used. It is where they set up my savings account and first debit card when I was in high school or even younger.”
— Gen Z consumer in study
Another key consideration: transparency into the bank’s processes. Gen Zers want to know when they can access the money they’ve deposited and they expect justification for any holds. They shun “black boxes,” demanding insights into the steps or milestones that affect their ability to use their money as they choose.
Also understand that Gen Z craves financial education. Developing self-guided experiences that educates in the near-term builds trust in the longer term.
Service is Crucial to Earning Gen Z’s Trust
Gen Z wants to interact with organizations the same way they do with their peers — anytime, anywhere, any channel. Same goes for customer service, especially in the financial sector.
Gen Z Lexicon:
Gen Z doesn't distinguish between self service and bank-assisted service. To them it's all 'service.' And they have little patience for 'assistance' that misses the mark.
Finance and money management is new to them and they can be on financial tenterhooks. Any hiccup in their experience — such as addressing a fraud or a lost card — can destroy their trust in their bank or credit union. Conversely, a good save will endear the institution to these consumers.
A key difference about Gen Z: Older generations will put up with more angst to save themselves the hassle of switching banking institutions. But many Gen Z consumers have considered switching banks based on a poor customer service experience. Broadly, in a survey among Gen Z consumers by Talkdesk, just over half indicated that they would change provider over a single instance of poor customer service.
And keep this in mind: When Gen Z contacts customer service, it’s only after they’ve tried to find the information they need or a solution on their own. When they want access to a real human, it’s either because self help failed or because they have a financial emergency.
To service this generation well, banks and credit unions should balance self and assisted service in a way that meets Gen Z’s unique preferences.
Banking Brand Awareness Equates to Trustworthiness
Generally, the fact that well-known major banks have millions of other customers gives Gen Z peace of mind that their money is safe. They have a high degree of confidence that if something catastrophic, such as a data breach, arose, the financial institution would take swift action.
But that doesn’t mean these well-known banks get to dictate the rules of engagement. Never forget that this is a generation that is steeped in a digital world. They have high expectations for an end-to-end bespoke digital experience, and if the bank fails to provide it, they will leave for another that does.
Mid-tier financial institutions have a unique opportunity to attract young adults with new products that larger incumbents have been slow to introduce.
Gen Z is Expectant Yet Patient:
This is a generation that is accustomed to services rolling out one feature at a time, the way Robinhood did. They don't expect an app or bank to include everything all at once.
Perks and Benefits Matter a Lot to Gen Z Consumers
When selecting a bank, Gen Zers compare perks and benefits, such as cash back offers, travel rewards and sign on bonuses. Many of them even create spreadsheets to do their comparisons.
However, while perks are very important, Gen Z doesn’t consider them an excuse for poor service. Perks will help your institution gain Gen Z’s attention, sure. But this group will do research prior to committing to a bank or credit union. They’ll survey friends, read reviews, and pore over what other users say about the bank in the app store.
“As long as the perks are good and as long as the customer service is good, the person has no reason to go anywhere else.”
— Gen Z consumer in study
When marketing to this generation, banks should strike a balance between price, perks and service quality.
In many ways, Gen Z is a more discerning generation. They will be loyal to any bank or credit union that offers the kind of transparency they can trust, and takes the time to educate them on how to achieve their wealth goals.
But if you mess up, they’ll leave you … and potentially quickly.
About the authors:
Eddie Chin is senior director, business development, and Taylor Maples is research lead at Rightpoint, a consulting firm that specializes in digital strategy.