The top three customer needs to be identified in Velmie’s Fintech Forecast 2023 are that bank customers are looking for personalized service, it needs to be secure and trusted and available across all channels.
It’s significant that personalized service came ahead of data security, transparency, and trust, highlighting the importance bank customers attached to being treated as individuals and how crucial they feel they are offered products and services that meet their unique needs and desires where and when they need them. Also, customers ranking the provision of a modern and engaging omnichannel experience as their third most crucial consideration adds to the weight given to the experiential nature of banks’ offerings.
Customers want to have a seamless, consistent, and compelling experience of a bank across all its touchpoints and, while engaging with the company, want to feel that they are understood and that their relationship means something to the bank. Channels range from web portals on desktop and mobile, chatbots, in-app support, on the phone, and in-store, and the good news is that customer activities over all these channels give banks a valuable trove of data to guide their interactions with their clients.
It’s no surprise that data security, transparency, and trust together are viewed as the second most important consideration for clients in 2023. Hacking is becoming ever more sophisticated and persistent. Customers expect banks to keep their personal data safe and in accordance with the protection of personal information regulations that have been put in place globally. Trust needs to be top of mind for banks because it is easily lost, and without it, a bank runs the risk of publicly losing its status and reputation.
Another highly ranked priority for customers in 2023 is accessing a greater variety of features and offerings. That’s a need that banks can quickly meet if they have taken advantage of open banking and built a banking technology platform that allows new offerings to be added via APIs to their existing products and services over time.
Better customer service is also something customers want to see during 2023 – an age-old request and one that is unlikely to disappear. Respondents to the survey also prioritized participating in engaging loyalty and reward programs because these make banking with one bank over another worthwhile.
Facts banks need to know about Gen Z
Born into an online world, Generation Zers will up the ante for banks in the decades ahead. Described as the cashless and digital generation, they are also known as the lockdown generation because they have lived through Covid during a formative time in their lives. This extremely challenging experience will likely shape many of their financial attitudes and behaviors in the years ahead.
Gen Zers have an online appetite second to none, largely a result of the time they spend on their mobiles, which they use an average of five hours a day. Many are already banking online, which lays fertile ground for banks looking to onboard them as customers. According to Morgan Stanley research, Gen Zers are banking on their mobiles at a 50% to 80% faster pace than millennials.
Generation Z is, without a doubt, the customer base of the future for financial institutions. They already account for a third of the global population, and their income is set to increase fivefold to $33 trillion by 2030 – surpassing millennials’ income by 2031, according to Bank of America research. The Global bank expects Gen Z to be the most disruptive generation to economies, markets, and social systems.
Aged between 10 and 24, many of them have already been working for a few years or are entering the labor market, which gives us a good indication of how they approach money and investing. The Covid crisis has also impacted their approach to money.
Research shows they take their financial futures much more seriously than previous generations. They want to know everything they can about how they can save right across the time spectrum, from owning a house to retirement. They also loathe paying fees for financial services, and many are eager to incorporate disruptive investment alternatives, such as crypto assets, into their financial portfolios.
So what are the primary considerations banks – including the new-generation banks run by millennials - should consider when servicing these globally-conscious, highly individual digital natives?
Made-to-measure customization
Gen Zers want made-to-measure, personalized banking products and services rather than being treated as one of many customers. Recent research by W1TTY, a neobank specifically targeting Gen Z, found that 64% of this generation wanted a deeply personalized banking experience that served their needs. Even the fintech disruptors don’t go far enough yet it seems because although they may offer innovative solutions, they are still structured as one-size-fits-all offerings. If banks are going to win over the Gen Z customer base, they will need to hyper-personalize their offerings, and to do that, they need to know everything about them by mining the data that shows their online preferences and decisions.
24/7 omnichannel experience
More than any other generation, Gen Zers are highly comfortable navigating online and mobile banking and shopping because they are so profoundly attached to their mobile devices. But, interestingly, the latest research is showing that they still want to be able to connect instantly and easily to a human for assistance. Even though Gen Zers live online, many still want to be able to visit a branch to discuss their finances if need be.
This highlights how important it is for banks to give them a smooth and comfortable omnichannel experience that fits in with their lifestyles – enabling them to interact with the bank through the channel of their choice where and when it suits them.
Education and empowerment a gamechanger
Early evidence shows that Gen Zers have a much greater propensity to seek financial education to help them make the right personal financial choices throughout their lives. The W1TTY research found that 84% of Gen Z rely on information from their parents and family, and 34% get information from TikTok and YouTube. So-called fin-fluencers are also playing a role in empowering Gen Zers.
However, this desire for financial education and empowerment offers financial institutions an excellent opportunity to use all their experience and knowledge to equip Gen Z customers with the tools they need to make the most informed financial decisions. In so doing, they can build trust – a must-have for Gen Zers who are only loyal to those that have proved to be worthy of their custom – and loyalty.
5 essential tips on how banks can attract younger customers
1. Become an integral part of customer lifestyles. It’s not just about building a bank, it’s more like creating a lifestyle Gen Zers want to live! To achieve this, banks can create a network and collaborate!
2. Educate. Banks need to become financial coaches for their customers by integrating chat functionalities and wealth management tools that encourage engagement and contribute to their empowerment.
Velmie can help financial institutions integrate a wide range of innovative tools to increase the engagement banks can have with their young customers. For example, we have successfully launched an advanced wealth management and brokerage platform that offers customers the best-in-class omnichannel experience.
The modularity and API ecosystem of the Velmie banking solution reduces the time to market to just a few months versus the two-plus years it would take an in-house development to build this type of sophisticated financial services platform. Built on microservices and other unique software architecture features, the client can continue to extend the platform offerings and enter new markets by introducing new modules or partner APIs.
3. Communicate to Gen Z on their terms. Banks need to leverage and create mobile in-app chats, gamified chatbots, customer feedback forms, relevant questionnaires, and short personalized videos to keep Gen Zers engaged. Clear communication helps address their concerns and determines where and when they need help. Use social media as a financial literacy hotspot – an environment in which they are completely comfortable and ready to listen to banks that communicate with them in their language and have something valuable to offer.
4. Develop a customer-centric business model. At the same time, the market is actively transitioning to digitalized operations and being transformed by emerging technology. The use of robo-advisors, AI, Big Data, and Blockchain has become common among the players. But these technologies must be used in conjunction with the understanding that they need to serve the customer’s needs by offering a hyper-personalized, customer-centric experience.