Banking on Gen Z

The financial services industry is at an impasse – even more so than traditional retailers. The banking industry is facing an almost insurmountable challenge of addressing the needs of a wide customer base, and is experiencing an identity crisis, as a result. Traditional banking expectations versus the newcomers: the ambiguous and elusive Gen Z.

As bank branches shrink and the traditional service approach is continually redefined, most of us still conduct our personal banking online – usually on our smartphones. The newest banking customers (and youngest) will have an even more detached approach to personal banking. How can banks attract these new customers and differentiate banking institutions from a seemingly saturated financial services market, without alienating the needs of prior generations?

Perhaps the approach isn’t to target the Gen Z customer. Perhaps the approach is to win over their parents.

Gen Z is comprised of those between the ages of 7 and 22, generally born between 1995 and 2010. The oldest of the generation have recently graduated from college or are in college. The majority of Gen Z’s parents belong to Gen X, a generation greatly affected by the economic recession. The realism of financial burden was, and continues to be, a transparent topic with their children.   

The conversation around debt and financial security was commonplace for Gen Z, and as a result, this generation has developed a pragmatic and realistic approach when it comes to financial security. This group understands the impact of debt and wants to set themselves up for financial security, even at a young age. Although this group has displayed a strong independence in self-learning, they will look to their personal financial managers – their parents – for guidance.

According to the Center for Generational Kinetics (Austin, Texas), Gen Z is turning to their parents to learn about financial topics. Fifty-six percent of Gen Zers have discussed saving money with their parents in the past six months, while 53 percent have discussed earnings. The open dialogue around finances caters to Gen Z’s desire to be financially stable and to their parents’ desire to better prepare their children for financial security. That differs significantly from millennials who think that “college debt is a part of life.”

Because Gen Z is placing trust in their parents to introduce them to the financial industry, their initial exposure to banking services will be through their parents’ bank. This provides a unique opportunity for financial institutions to recognize and provide an approach that supports the parents of Gen Z individuals in their efforts to guide them to path of financial security. 

Here are a few ways banks can appeal to Gen Z’s parents:

• Provide creative educational services, consultation and tools for parents to best educate Gen Z about money and finances.
• Create visually interesting mobile app banking and tools. Gen Z will utilize mobile banking more so than prior generations. The mobile apps will need to appeal to Gen Z as an easy-to-use tool to understand and monitor financial habits with both compelling graphic design and video content.
• Allow accessibility to financial advisors that can assist parents in discussing financial services with Gen Z to “pass the baton” to trusted experts that relate to and engage their children, especially as their financial goals mature.
• Design friendly, comfortable and unintimidating banking environments that incorporate an appropriate amount of technology (to appeal to Gen Z’s natural technological instincts) and also reflect a higher focus on personal interactions and relationship building.

As the banking industry struggles to capture the millennial customer, targeting Gen Z will prove to be even more of a challenge; however, the best introduction to the Gen Z customer may be through their most trusted financial advisors: their parents.

Myra is a principal within the retail market at MG2, an architecture and design firm based in Seattle. From established global retailers to the start-up brand about to make its mark – she enjoys partnering with clients seeking to be pioneers in their industry. By always raising the bar, she seeks to foster collaborative and creative partnerships that generate successful store design and implementation. She brings a constant curiosity of consumer behaviors, brand experience and a passion to retail and architectural design projects.