Growing Smarter – Banking for a New Year, Pt 2

In episode two of our two-part Believe in Banking podcast series on growth, Sean and Gina discuss the evolving expectations in banking – from generational demands for advisory experiences to neighborhood variations – all impacting how the branch functions. Their conversation covers how generational life stage differences offer an opportunity for banks to step up and serve, especially as Millennials and Gen Z visit the physical bank branch more frequently and Gen X enters their prime earning years. They address the need for financial institutions to adapt to these changing conditions and reimagine their retail delivery. They also share best practices of financial institutions that have successfully updated and modernized their branches by starting with a strategy and establishing a new North Star experience, resulting in branches with the right bankers, the right design, in the right neighborhoods.

Text Transcription

Intro: This is Believe in Banking, a podcast series for decision-makers, influencers, and leaders. Featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.

Gina Bleedorn: Welcome to our Believe in Banking podcast. I am Gina Bleedorn president and CEO of Adrenaline. In part one of our two-part Believe in Banking podcast series called “Growing Smarter Banking In the New Year,” we kicked off 2024 with a discussion on the imperatives of growth for financial institutions. We covered rising M&A activity and organic expansion into new markets. These are two major ways for banks and credit unions to pave the path to growth and boost their competitive edge. Sean and I also discussed the role of CEO confidence in driving growth focused initiatives this year, along with a renewed focus on brand strategy to activate audiences and make deeper connections internally with employees and externally with consumers at the same time.

In part two of the “Growing Smarter” Podcast, we focus on financial institutions responding to the market by understanding and reacting to the demands on different generational cohorts.

While often flying under the radar, Gen X has particular needs as they are sandwiched between taking care of their aging parents and their kids as they grow up. At the same time, interestingly, Gen X is also at the height of their earning power, providing a real opportunity for banks to step up and meet those needs. Then there’s the kids of Gen X parents, Gen Z facing their own financial challenges as they begin to graduate, get jobs by their first cars and homes and all of that is giving banks and credit unions yet another opportunity to answer the call to serve their needs. And Gen Z has never wanted more help with finances than they do today.

Sean and I talk about how these financial realities for generations dovetail into what happens at the branch, specifically, as Gen Z and Millennials are visiting the physical bank branch more frequently than older generations. This is because these younger generations are not only going through major life milestones, but they are aware that there is so much more that they can know and should know about their financial health and what financial health can do for their lives, and they’re not afraid to seek it out. This means that banks and credit unions need to optimize that channel to provide a personalized experience and a relevant experience for all generations, because if you don’t, they may go elsewhere.

So for any institution looking at how to serve more and serve better in 2024, this podcast is made for you.

Gina Bleedorn: A lot of stats we’ll cover here are about generations. The broad brush is that financial literacy continues to be low and the hunger for financial information continues to be high and growing, especially among younger generations. On a Forbes report, Gen Z scored lowest in overall financial literacy, but no generations scored very well. And there’s something else to note, too. The long forgotten Gen X… Certainly Millennials or Gen Y and Gen Z after them have been the sexy generations because it’s the up and coming. But Gen X who are about 43 to 58 ish are a smaller generation, but one that is coming of age into vast needs for financial help, financial products, services and opportunities, and are often overlooked. Sean, as a Gen Xer yourself, right? Because you’re one. As a Gen Xer, talk about the sandwich generation and what that means.

Sean Keathley: Yeah, Gina, I think that we Gen Xers are overlooked and do so with your own peril, for one. Thirty-five percent of us are open to changing banks right now. That’s the highest in four years. Two, generally speaking, when you’re thinking of this age group, you are at your highest earning potential. You’ve kind of hit your sweet spot in your career, been out of school, been able to work through success and get promotions, etc. But from a needs-base, you are, as you say, getting sandwiched. You’ve got teenagers that are driving cars and have expensive insurance, and we’re going to college soon after. And you’ve got parents in their eighties or early nineties and need help.

So, you’ve got really the perfect storm – busy lifestyles, sandwich of needs, good income, but not a group to overlook. And because of all that, they are looking to add products from their financial institutions or better financial institutions. And up to 35% of them are looking to add additional products – two or more – so they have an appetitive for help. And that is what I heard from one CEO. He feels like he has a branch network of order takers and he needs a branch network of advisors. And I think that is a perfect summary of the transition that is happening to the network needs.

Gina Bleedorn: I mentioned earlier the life stage idea that is taking hold more and more, in addition to just the generational lines, one of them being the New Millionaires, the new upper middle where median household is worth more than $1 million. These are unexpected emerging pockets of wealth. And there’s also the overemployed people really high in the millennial generation that have two jobs maybe tapping into the gig economy. And there are multi-generational households, more and more of those emerging across the country in different types of ethnicities and age groups, families moving back in together because of the rising cost of living and the rising cost of housing. And speaking of bucking stereotypes, Sean, what’s happening with branch usage?

Sean Keathley: Well, Gina, I would start by saying that study after study where we are seeing branch usage habits do cut across generational lines, but they buck stereotypes. Seventy-two percent of Gen Z consumers visit a physical bank branch monthly, the highest of any age group. That’s according to a new study that’s out. CNN business shows that by Adobe Analytics, sixty percent of Millennials say the same. And surprisingly, older Americans were less likely, with physical bank visits and monthly being much less. And then with Gen X and Boomers and Traditionalists, they’re all doing the same.

Gina Bleedorn: Yeah, and so when you think about what that means for your organization there are a couple more trends. One being that net branch closures finally eased at the end of 2022. We had 172 at the end of 2022, and 117 at the end of 2023. And we don’t know what is going to happen as we look forward. Will openings offset closures? But the real takeaway for you about what the different age groups are doing is that these younger generations that are coming into the bank branch because they want to, because they are seeking information and have a new expectation of banking. And that represents both a risk and an opportunity.

Because if they come in and the experience feels old, feels outdated, feels not personalized, not relevant, the service they’re receiving is not adding value, they will walk out and go elsewhere. So, the time very much is now to capitalize on this momentum of what the younger generations are seeking. You’ve got a gift that they want to come to you, you’ve got to make an experience that gives back to them, so they keep coming to you.

Sean Keathley: Well, Gina, you’ve nailed it, and you can’t even just generalize on these bands of ages. As you well know, neighborhoods look very different across this country. So one general problem, there is a network in banks of order takers, and that is what that older generation thinks of at their bank. But these newer generations are expecting a much different experience, to your point, and that experience can look very different by type of consumer.

I’ll give you an example. We have one client that has a network, highly Hispanic base of new young families. And when they come in to do account openings, they’re bringing the entire family and it takes about three times as long. They’re bringing in all their paper bills and they want help getting them physically loaded on their phone. And the client is saying, when you give them a space to comfortably seat people and you’ve got dedicated smart bankers that are patient and help them go digital with all their bills, you’ve gained a customer for life by that support. But if you staff branches in a traditional way and you get overrun by consumers with those kinds of needs, you get into a problem very quickly.

Gina Bleedorn: And what you just described is forcing many to not just think about the design and what the colors of the branch look like. It’s really rethinking retail delivery holistically. And that has become, from our perspective, one of the major surges in interest that we are seeing and helping clients with. They’re re-imagining really how all of their network should be deployed and that type of smart thinking around taking cost out so you can reinvest it in where it matters. That’s got to be part of the picture here of thinking about how to make the right experience for the right customer in the right place.

Sean Keathley: I think that’s what’s going to challenge the traditional approach of just hiring an architect in an interview and [them] saying, what do you want? How many tellers, how many branches, or how many offices do you need in today in 2024? You really have to start with a strategy.

Gina Bleedorn: Recent case studies, they’re up on our website to see. Why don’t you talk about these, Sean? Where they did just that. They needed more than just lipstick on what the branch looked like. They needed a new North Star experience.

Sean Keathley: Yes, we’ve got a great example with one of our clients, Virginia Credit Union. They are absolutely updating and modernizing branches across their network, but they started with a strategy and they established a new North Star for their branch network. They piloted that North Star as they looked to do new locations in new markets. You adjust accordingly for each neighborhood and you end up with a refreshed brand with the right bankers, with the right design, with the right strategy, for the right neighborhood.

Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision-makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site,