Gen Z is defining digital banking

Gen Zers are the true digital natives. From streaming to sharing, those between the ages 18 to 24 expect seamless connectivity — and their finances are no exception. The banking industry has shifted servicing dramatically from its beginnings as a brick-and-mortar stalwart to become far more digitally flexible. As one of many pandemic impacts, having a choice for complete online banking is an ageless expectation, however for Gen Z it has become a table stake.

Gen Zers, despite being born into a digital age, clearly still find comfort in brick-and-mortar stability. Part of this may be attributed to how their parents initiated their first bank accounts, as well as influenced by where their parents primarily have banked their money. A physical branch’s tangible, reliable, and person-to-person aspects are notably different than the myriad of digital startups that Gen Zers have seen fail. Furthermore, nearly all physical banks already have online and mobile solutions, helping bridge the divide between the traditional and the future.

Still, a significant number (37.5%) of Gen Zers would only choose a digital or online bank. Thanks largely in part to better UX, state-of-the-art security, and always-on availability, digital banking has taken a surprising hold on the collective Gen Z psyche. Whether this is a byproduct of the contactless movement accelerated by COVID-19 or an indication of where the market was already heading, the end result will be the same: Gen Z expects the option for an entirely digital bank.

Having established where Gen Z banks nationwide, the next logical question becomes what their expectations are from a digital or online bank.

While a frictionless customer support experience represented a commendable number of respondents, no other perk to digital banking held a candle to the desire for fee-free banking. Clearly FinTech are listening, based on the fast rise of existing and new entrants to “buy now, pay later, no fee installment loans” that have dominated a new fintech lending market.

Compared to our previous question though, where respondents felt more or less the same across the board, the demographic data here offers considerable insight for FinTechs to bear in mind:

  • Gender: Whereas men felt more strongly about avoiding fees than women (68% compared to 64%), women were far more interested in some of the less obvious aspects of online banking, particularly connectivity to other payment apps (9.7% women to 6.5% men) and automatic, built-in savings tools (8.4% women to 3.4% men). Regardless of gender differences, the unimpeachable fact that digital banks offer more options than brick-and-mortar ones can lead to a proliferation of unique experience tailored to consumers’ values.
  • Region: Whereas question one’s results were disparate only between the Midwest and the rest of the country, respondent data here was as different as account numbers:
    • South: Whereas 70.3% valued no bank fees and 14.2% valued always-on support, there was very little interest in the other options.
    • West: In a considerable shift, 62.5% wanted no fees, 11.9% wanted 24/7 support, and 11.3% wanted app connectivity.
    • Midwest: Interestingly, the region where banking preferences were quite different than the overall sample was closest to the median when it comes to perks. There, 67.2% valued a fee-free system, 11.6% valued 24/7 support, and nearly 9% valued app connectivity.
    • Northeast: While only 59.7% turned out in support for no fees, 10% did for app connectivity, 9% for automatic savings, and 8.7% for always-on customer support.

Let’s face it: “No bank fees” was always going to have the widest margin of consumer support, and 24/7 call, chat, and email customer support has always been a major draw to all ages, genders, and regions. However, connectivity between payment apps seems to be taking on considerable steam among Gen Zers — especially compared to the other automated, built-in services that are already widespread perks within both online and brick-and-mortar banks. A recent SYKES poll exploring digital banking shifts in the era of COVID-19 reveals that 11% of users of mobile payment apps, such as Venmo and Cash App, only began using them in response to the pandemic, and a further 12% will only use contactless payment after the virus has subsided.

Source : Fintech News