2018 is the year that those born at the turn of the millennium will turn 18. Nicknames ‘Generation Z’, this is a generation that have grown up completely immersed in the digital world, and that has shaped their attitudes to sharing information about themselves and their lives, and how companies use this data. They are also a generation which has grown up in a world with very different attitudes to retail than their parents, completely at home in the world of online shopping and other services.
As they start to get jobs and head to university, they are making important decisions about their bank accounts. But what do banks need to know about the most digital of digital natives? How can they earn and keep their loyalty?
What has shaped digital natives?
Those born in 2000 were just seven when the first iPhone was released, and eight when the financial crisis took hold. Their views towards banks and technology are markedly different than the generations ahead of them.
This is a generation for whom the idea of shopping online or banking online are completely natural, why wouldn’t they be able to shop as easily through their phone as on the high street. Unlike their older, millennial counterparts this generation didn’t witness the digital revolution, they were born into it. In many ways, this is the omnichannel generation.
But what does this mean for banks? How can banks engage with a generation with different values and methods of transactions than their typical customers?
Don’t rule out the bank branch…
While many people will assume that Generation Z would rather reach for their phones than face any sort of social interaction at a branch, this assumption could be wide of the mark. In fact, research by consultancy group Accenture found that one in four members of Generation Z are using their branch at least once a week, and a Money Saving Expert survey indicated similar results. Accenture also found that more widely, Generation Z preferred to purchase in stores, and this is likely translate across into bank branches.
There could be several factors at play here. Perhaps it is to do with trust? Perhaps it’s an extension of the fact that they are more in control and aware of their financial situation, and branches make them confident in this? Whatever it is, it is important that banks continue to tap into it.
That doesn’t mean banks don’t have to work hard to keep them coming back into branches however. Research suggests that Generation Z are the most self-educated generation out there, so branches should give them the tools and assistance to manage their accounts rather than waiting for an advisor. Make sure they aren’t queueing, and ensure they get the same experience at your kiosks as on your mobile app.
…but don’t skimp on technology
This is a generation born almost 20 years after the Bank of Scotland offered ‘Homelink’ home banking service in the UK, the year after Barclays launched online and were just 12 when Barclays introduced mobile banking. Technology isn’t just something they embrace, it’s an integral part of the society they were born into. According to the ONS (Official for National Statistics), they use mobile phones more than any other age group.
It’s not just technology to access services either, banks need to make sure they communicate with technology as well. Generation Z are spread across several social channels, and while they are less likely to share data, they are ‘followers’.
Creativity and new approaches will be key for banks. The past two years have seen a wave of challenger banks, which are geared towards the technology driven mindset of Generation Z, so it’s important that technology is a top priority
Loyalty needs to be earnt and then kept
Generation Z are more likely to ditch brands who are not up to scratch compared to their millennial brothers and sisters. Banks who can capture the market therefore need to work hard to not only get them but to keep them. Switching bonuses might not go down so well if the bank’s infrastructure can’t support Generation Z’s banking habits.
Generation Z are also more aware of their data. They will be coming of age in a year when Britain’s most vigorous data protection laws come into force, and research suggests that Generation Z expect something in return if a company wants their data. Banks need to make sure they have the masses of data in shape, so that they can use it to really improve services across all of their channels.
Top tips for banks
Generation Z may be significantly younger than the typical bank executive, but that doesn’t mean they can’t understand each other. Generation Z is set to be a powerful consumer force in the coming years, so banks need to get their strategy right now, in the year that those born in the millennium come of age.
Here’s three tips for banks looking to embrace Generation Z:
- Embrace omnichannel – Generation Z are omnichannel natives and you need to keep pace
- Get your data into order – Generation Z want to see a return so you’d better make the most of the data you collect
- Customer first – whether that’s in a bank branch, or on your web platform, put your customer at the centre of the banking experience