Connecting with younger consumers — those born between 1995 and 2012 — as they are making decisions about their finances is a critical part of any bank’s entry-point marketing strategy. But Gen Z couldn’t be more different from their predecessors.
Unfortunately, many banks have fallen into the trap of assuming what worked for previous generations will continue to work. Or worse, categorizing attitudes and behaviors under broad stereotypes that lack depth or range of understanding, resulting in marketing that feels dated and may actually be harmful to the brand.
Now more than ever, it is imperative to do some insight digging and myth de-bunking to be effective. For brands to be successful, it’s critical to understand Gen Z’s journey and then market and message to them accordingly.
There are many distinguishing factors to understand. For example, their families are made up of a higher percentage of same-sex households, working moms, and stay-at-home dads. Like Millennials, Gen Zer’s are digital natives and want instant gratification when using the mobile devices they live with — within six-to-eight seconds, to be precise. Independent, ambitious, authentic and diverse are just a few adjectives being used to describe Gen Z. While Millennials are considered optimistic, Gen Z is more realistic. Growing up during the Great Recession of 2008 has this generation looking for great deals and valuing the dollar.
What Does Gen Z Think About Banking?
Gen Z is learning from Millennials’ money mistakes. They have seen the student debt crisis and want no part of that. “Z’s” are working to pay for school as they go, and even opting to attend community colleges and trade schools. Many in this generation have a “side hustle” — a way to make extra cash and often times that “hustle” is via the internet.
According to the Center for Generational Kinetics, 21% had a savings account before the age of ten, and 46% haven’t been inside a bank branch in the last month — most likely because 48% have a money or payment app on their phone.
Gen Z is eager to learn more about their finances, but it needs to be on their terms. A focus on segmentation, attitudes and insights is paramount to define the role of the institution, and what products/services/experiences to offer. Within this trend is the changing role of retail branches, especially in new ways that help fulfill the promise of the brand experience.
Capital One is a brand that is doing this well with their cafe branches. These cafes are welcoming — not focused on selling — which better serves the needs and desires of Gen Z.
Trust And Transparency Are Key
Brand trust is an issue, and continues at a low level industry wide. Members of Generation Z expect greater transparency and honesty, as well as better service than they are experiencing now. Education and information are critical to earning trust, Gen Z must believe banks are acting in their best interest (no teaser campaign fees, etc.). Utilize data to anticipate future circumstances — educate and inform. Service-oriented staff, brand advocates and social responsibility are also “must-haves” in building Gen Z relationships.
Also, these digital natives are hooked on YouTube. Consider utilizing short videos to help educate Generation Z to become more financially savvy. Another distinction: Gen Z prefers to engage with brands via Instagram over Facebook. Here, be sure to focus on sharing how you can help these young consumers be successful — lay low on pushing benefits. And don’t forget to personalize your message.
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Tech Plays a Dominant Role With Gen Z
Many banks and credit unions are attempting to harness fast-moving technology to become more customer-centric to help deliver a better customer experience. But it’s imperative to not do this in a vacuum, particularly with this hyper-digitally savvy generation. Don’t be shy about involving this group as you are designing new products.
For example, the process for onboarding and receiving product and service updates must be seamless and integrated into customers’ lives. Automation/bots/virtual agents can help reduce costs while assisting customers, actually increasing successful completion of applications. Banking providers not only have to make this a seamless experience, but one that overcomes fraud and security risks.
Tech is also helping relationships between banks and customers become more proactive and less reactive with tracking of spending and managing budgets, something that the Gen Z generation appreciates. The downside in “following the leader” in adapting new technology is not truly understanding an unmet need or resolving a pain point, thus creating a gap in relevancy, and spending valuable resources for low ROI. Building a two-way relationship is a key part of the Gen Z success equation.