In banking, competition for Gen Z and younger Millennial consumers comes from all quarters, including fintech. Despite their popularity, payment apps like Venmo, Cash App and Apple Pay have considerable drawbacks over more traditional financial institutions, most notably that they’re not federally insured. The highly-publicized delays with money transfers from Apple Savings and calls for people not to leave balances in payment accounts serve as a reminder that, though convenient, payment apps don’t have the distinctive advantages that banks and credit unions do. “When you keep extra funds in payment apps, your money isn’t protected by the FDIC,” says the Motely Fool. “It takes time to transfer funds to your bank, and your money won’t earn interest.”
That said, pointing out the downside of convenient consumer options like P2P payments isn’t the same as improving your own offerings. The reality is that younger Millennials, Gen Z and even Gen A are looking for better banking solutions that are delivered through a seamless, modern banking experience. “They are still young enough that they haven’t had a chance to build any loyalty to a specific financial institution,” reports the Credit Union Times. “So, they’re more willing to switch to a better alternative if one presents itself.” In fact, 82% of Gen Z respondents in a recent Credit Union Times survey said they’d switch their bank or credit union “if an alternative offered superior digital experiences.”
Most banks and credit unions understand the importance of investing in their digital banking experience, something all banking customers, regardless of age, benefit from. One area banks are exploring beyond convenience are tools like gamification to enhance engagement in mobile banking, including built-in dashboards spotlighting banking behaviors and purchasing patterns. And nothing tops actual products tailored to consumer life stages to generate loyalty. “Banks can accomplish this by focusing on understanding long-term pain points and demonstrating how they provide a long-term solution that outmatches competitors,” finds the Financial Brand.
“Over the last 15 years, with interest rates near zero, traditional banking accounts have offered little satisfaction to young savers,” says Lawrence Glazer, chair of Massachusetts Jump$tart Coalition. Now with interest rates on the rise, banks and credit unions are in a better financial position to make a renewed play for Gen Z. And one bank is doing just that. Relying on word-of-mouth marketing, Bluestone Bank’s Milestone Account grows along with its young customers, providing more features and freedom as they age. “Designed to grow with them from birth to age 23, it’s an innovative tiered checking account and savings all rolled into one.”
If you’re a banking leader seeking innovative ways to enhance your brand and branches for emerging generations, get in touch with Adrenaline’s brand to branch experts. And, don’t forget to subscribe to Believe in Banking to stay up to date with the latest news impacting the banking industry.