Gen Z consumers are well known as the makers of pop culture, music and fashion tastes, and their influence is quickly spreading to the financial industry as many start looking for banks for the first time. Most of these consumers prefer to bank with financial institutions (FIs) that have physical locations, but 37.5 percent said they would prefer to use digital-only banks for their financial needs. Several factors have shaped the expectations of Gen Z consumers, including their digital immersion from birth and the fact that they came of age during an unprecedented boom in digital banking.
Gen Z consumers and their Gen Y counterparts represent more than 3 trillion dollars in spending and potential investments, giving them a huge voice in directing digital banking for the next half century. Seamless and secure integration is a key demand among these younger generations, and banks scramble to meet their needs in order to make them lifelong customers.
The following Deep Dive explores what Gen Z customers expect when it comes to their digital banking experiences – especially those related to onboarding – and how banks are striving to make their desires come true.
Why a seamless and secure integration is of the utmost importance
Younger banking customers tend to appreciate the user experience when it comes to online banking, some surveys finding that it ranks second behind low fees as their top priority. Digital consumers of other generations have roughly the same opinion, with a Deloitte study revealing that 38 percent Of all digital bankers rank user experience as the most critical factor when selecting an FI.
Onboarding is a critical step in the user experience because it represents the first interaction between consumers and banks, setting the tone for their financial relationships – and bad experiences can lead to abrupt departures from consumers. A July 2020 study of major banks found that opening an account can take 24 to 120 clicks, some FIs requiring clients to wait up to 36 days before having full access to their accounts. This is in stark contrast to the digital interactions that younger generations experience in other parts of their lives. It only takes a few minutes to apply for and receive approval for an Apple card, for example, and consumers can start using the product immediately.
Some banks might be inclined to shy away from the opinions of Gen Z consumers due to their relative lack of wealth and investment opportunities compared to older generations, but this is only temporary. Millennials and Gen Z consumers should represent $ 30 trillion in wealth over the next decade, and their preferences are decidedly digital. Half of Gen Z bank customers use digital wallets, for example, and over 75% of Gen Z adults use other digital payment apps. Younger bank customers are extremely likely to switch FIs if they are not satisfied, bringing huge opportunity costs if their needs are not met.
It’s no wonder, then, that banks are rapidly improving their onboarding processes and other digital systems to meet the tastes of their younger customers. Much of these tweaks consist of two separate but equally important components: new technologies that streamline the onboarding process, and technology platforms that can seamlessly introduce new applications for scalable customer experiences.
Technological solutions to facilitate integration
The first step in ensuring seamless and secure customer onboarding is to have the right technologies in place. Customers are particularly reluctant to enter redundant information in different data fields, such as having to type their name multiple times on different pages. Many banks and companies are addressing This problem is with data capture systems that can automatically fill out forms with information previously provided, and some even take advantage of third-party partnerships with financial service providers like Google Pay or PayPal to automate payment card entry. Partnerships with third parties are also valuable for digital signatures and remote document authentication, both of which can allow customers to bypass branch visits and verify their identity from home.
Banks must continually adjust their integration strategies to keep up with today’s rapid pace of digital innovation. Banks looking to perpetuate their onboarding experiences need to ensure that their back-end systems can seamlessly implement new applications as they grow. Consumers’ preferences are constantly changing based on their experiences with non-financial platforms, like food ordering and e-commerce, and they expect their banks to be just as efficient. Implementing back-end systems that cannot support the latest technology is an almost foolproof recipe for customer friction and abandonment.
The younger generations may hold only a small fraction of the world’s wealth, but they will soon be powerful players in the global economy. Banks not only need to meet their preferences, but also need to keep an eye on how they are evolving to deliver integration systems that meet them where they are.