Generation Z : a new wave of customers reshaping banks
Generally defined as the generation born after 1995, Generation Z is the first digital native generation. Having always known the world as a connected place, this generation has a privileged relationship with technology. In fact, beyond its social and psychological impacts, this technological disposition can indeed be perceived in the consumer behaviour of a whole generation. Reaching out to these new customers therefore requires understanding their expectations and aspirations… and the banking industry is definitely not spared! The eldest members of this generation are now entering adulthood, creating new challenges and opportunities for banks to attract them as new customers and gain their trust and loyalty, provided that they speak the same language and play by the same rules.
Why does it matter?
Nowadays, Generation Z counts a population of 2.52 billion (Population Reference Bureau Data) which is so far the largest generation after baby boomers. Its spending power is estimated to reach 200 billion dollars by 2018, constituting thus a significant target for the banking industry.
Also, the technological revolution and the changing demographics have considerably altered the way banks are perceived and accessed. With the extensive use of mobile devices, the diversity of payment methods and the appearance of new competitors in the landscape, banks are now repositioning themselves and rethinking the customer relationship to target the youngest generations. However, one can wonder how Generation Z is so different from its predecessors.
A connected yet human generation
It might not be surprising that the digital natives use mobiles in general, and mobile banking more specifically, at a higher rate than the two previous generational groups. However, a more unexpected result of the J.D. Power Retail Banking Satisfaction Study (2015) shows that Gen Z customers visit bank branches at practically the same rate as the older Gen Y and Gen X groups (more or less 12 times a year). There is in fact a common misconception that Generation Z customers would privilege technological solutions over in-person services, but this assumption appears to be wrong. As a matter of fact, this generation gives a lot of importance to human contact and quality of physical services.
According to the Retail Banking Satisfaction Study conducted by J.D. Power (2015), it appears that in the United States, Generation Z is more satisfied by big banks, compared to regional ones. This preference can be justified on the one hand by the good balance between digital and in-person interactions provided by some big banking groups, and on the other hand by the variety of product offering, facility of processes, ATM and branch services. The question now is whether preferences among Generation Z in France will shift following the American model, knowing that as of today, French cooperative banks register very important satisfaction rates …
A more visual generation
Generation Z is the most visually engaged generation when it comes to social media consumption. Behavioural studies have shown that the digital natives absorb information at a very accelerated pace, so their attention spans are even lower than millennials’.
This connected generation is thus much more responsive to quick and visual messages that can be grasped within only a few seconds. For that reason, while “Facebook” is clearly millennials’ favourite social network, more visual and easy to use platforms such as “Instagram” and “Snapchat” have seduced the new generation. The digital natives are also more likely to be on YouTube more than any other website (85%). The video-sharing website was even elected as their favourite website against Amazon for millennials.
From a marketing point of view, banks should adapt their communication style to this new generation. As mentioned earlier, pictures and videos are the perfect format to reach out to these young customers. Besides, banks should make cross-platform campaigns to effectively impact their target population. According to Nielson, 84% of Generation Z members watch TV while they are using other connected devices.
It is also important for messages to be authentic, appeal to humour and address Gen Z customers like responsible adults to make them feel understood and valuable.
Finally, banks should sustain an in-person contact with the young generation. Whether it takes place in the branch or through video calls, banks should be able to provide a human contact that would be aligned and complementary to the rest of the customer relationship. Customers should be able to find in their bank advisors the authenticity, openness and flexibility that go in line with the digital experience.
An open generation
No, Generation Z is not lazy! This “Do it yourself” generation is not afraid to test and learn. They believe in the power of a community to innovate and drive change and have global aspirations. They do not like to be limited geographically and see themselves as a multicultural generation. Besides that, being sensitive to the concept of sustainability, Generation Z is attracted to socially responsible brands. They support human and environmental causes and naturally share their commitment with their online and offline communities. This “green” card can therefore be a real asset for banks to attract young engaged customers by adopting a responsible positioning and taking active initiatives.
So will Generation Z constitute a turning point in organizations’ strategies or is it just a more digital Generation Y? In any case, catching customers at a young age gives banks a chance to build a long-term loyal relationship, not to mention that a satisfied Gen Z customer is very likely to sell his experience around him. So one thing is for sure; not putting effort to understand Gen Z customers may cost companies an opportunity to anticipate the future and maybe spot a subversive change in consumer behaviour.