What’s Driving Gen Z to the Branch?
As we move into a new decade, Generation Z (Gen Z) consumers are growing up, landing their first jobs, and turning to financial institutions to learn how to manage their money. A demographic that encompasses nearly 2.5 billion people (more than 90 million in the U.S. alone), Gen Z is comprised of “tech natives,” or individuals born after 1996, who have largely grown up in a world with high-speed internet, social media, and the ability to accomplish tasks with the push of a button on a smartphone. With the threat of third-party fintechs looming overhead, banks and credit unions must closely look at Gen Z’s banking habits to properly accommodate the customers of tomorrow.
Because of their tech-savvy skills, it is often assumed that Gen Z prefers digital banking as opposed to visiting a physical branch location. However, a CivicScience study (2019) on consumers’ use of branches found that Gen Z account holders are the most frequent visitors. Despite the rising popularity of mobile banking, younger account holders still regularly rely on branch locations to make deposits and withdraw cash. In fact, 20% of Gen Zers visit a branch at least a few times per week.
So why is Gen Z going to the branch?
Research shows a strong correlation between having negative feelings about one’s finances and frequent visits to branch locations - and research shows Gen Z has the least confidence of all generations regarding their financial affairs. Many Gen Zers have at least one account with a bank or credit union, but their lack of financial knowledge beyond a simple checking or savings account makes them a perfect opportunity for players in the space. New to managing their own money, the younger demographic views branch locations as a resource for discussions and expertise.
In addition to a place of advice, Gen Z also places heavy emphasis on the branch experience. They enjoy physical interactions that allow them to socialize, view, and try products before making the purchase. This experience is facilitated by an employee, who guides them through the process of finding a product that best fits their needs. To appeal to Gen Z, branches can be reconfigured to provide similar experiences for their account holders as part of their branch transformation efforts. Implementing a system that allows the user to start their inquiry on a mobile device but seek in-person customer support will better utilize staffing resources and ultimately improve the customer experience.
Hospitality also goes a long way with Gen Z consumers, as research shows complimentary refreshments are a driving force behind routine trips to the branch. CivicScience found that 21% of consumers say they are offered something to eat or drink whenever they visit. The ‘branch of the future’ can be a daunting concept and it is easy for financial institutions to overlook the small details, but it is important to consider the hidden value in that free cup of coffee or lollipop. In fact, research shows that free snack is important to nearly two out of every five Gen Z visitors, and it is small touches, like that cup of coffee, that breeds consumer loyalty at a young age.
A common trend across the industry for all generations, financial institutions must also look to incorporate technology in their quest to adequately serve the tech-savvy generation. Self-service tablets, electronic booking agents and chatbots are just a few of the enhanced offerings used to attract the newest group of consumers to a branch. With half of Gen Z spending approximately ten hours of their day looking at a screen, they have been trained to seek authenticity across all platforms in a best attempt to keep their data secure. Delivering a smooth and reliable omnichannel experience is more important than ever, as many Gen Z consumers interact via screens constantly and are among the most sensitive to question when something does not look right.
Controlling approximately $45 billion in annual spending, Generation Z has the power to reshape banking expectations. There is no singular key or secret to accommodating the new generation. Like all consumers, Gen Z wants to work with providers who understand them, their needs, and their challenges. By combining high-tech and high-touch service with a guided navigation through the complex world of banking, Gen Z customers will find the perfect solution that accommodates their unique needs, and those for the newest generation of account holders.