Digital engagement with Gen Z

On October 13, 2021, MX released a joint whitepaper with Finn AI, Q2, and Rival Technologies, exploring the use of financial products and services by Gen Z, Millennials, and Baby Boomers. The study gives valuable insights on the relationship between Gen Z and the future of banking, customer support preferences, and the adaptive solutions of money transfer apps.

With the fast-paced growth of financial services, banks, credit unions, and fintechs are looking for modern solutions to meet the demand of one of their largest consumers -- Gen Z.

Banking habits and attitudes

Significant generational differences exist between the way Gen Z, Millennials, and Baby Boomers’ habits and attitudes toward banking and financial apps. For example, just 47% of Gen Z respondents -- versus 75% of Baby Boomers and 70% of Millennials -- claimed to have an account with a traditional bank, credit union, neobank, or technology company.

Similarly, Baby Boomers are far less likely to utilize mobile banking. When you look at mobile banking, the differences are just as striking with only 28% of Baby Boomer respondents -- compared to 73% of Millennials and Gen Z -- indicating that they’d used a mobile banking platform in the last three months.

Overall, each age group felt similarly about the future of banking. Interestingly, even though Baby Boomers are more likely than other segments to prefer in-person banking interactions at physical branches, 39% still say they believe that there will be far fewer branches in the future. In addition, despite their proclivity for online or mobile banking apps, large subgroups of Gen Z and Millennial respondents speculated that branches will survive. However, 20% of both Gen Z and Millennial respondents -- and 13% of Baby Boomers -- also suggested that banking will be online only.

As for expressed interest in future banking services, at least 57% of each segment indicated that they would like their FI to consider providing advanced identity and credit protection, and nearly half of each segment expressed interest in data protection for digital assets. Security was important to a large subset of the customer/member base. Gen Z and Millennials showed particular interest in FIs providing automated financial guidance or virtual assistants for help in managing their finances. Though money management services showed markedly less interest from Baby Boomers, 14% still expressed interest in automated financial guidance and 13% expressed interest in a virtual assistant.

Takeaway: As financial institutions strategize where to invest in future product development, security services are easily the safest bet among both younger and older customers. Money management tools and virtual assistants should be considered as another opportunity worth exploring, particularly for younger-generation customers.

Priorities in a provider

When choosing a financial service provider, each generation showed less variability in their responses than expected. Nearly half of Gen Z and Millennial respondents indicated that the digital banking experience is very important when they’re choosing a financial service provider, and the majority of all three groups indicated that the digital experience was at least somewhat important.

Among the top priorities when choosing a financial service provider, “level of trust and security” was selected by at least 48% of each group. Among Gen Z and Millenials, “rates, products, services and special offers” was the second-most-important category. While Baby Boomers were more likely to prioritize more personalized features -- including the ability to talk to a person, the friendliness of the staff, and the closeness of the branch -- large subsets of this group also selected the same priorities as the younger groups. Vice versa, large subsets of each of the younger groups also selected priorities that were most important to Baby Boomers.

Takeaway: Regardless of generation, the most important factors affecting how customers choose a financial service provider are (1) trust and security, (2) rates, products, services and special offers, (3) the ability to talk to a person when support is needed, and (4) a great digital banking experience.

Maintaining financial trust

While most respondents from each group indicated that they at least somewhat trust their primary FI regarding their personal financial data, Gen Z and Millennials were less likely than Baby Boomers to completely trust their FIs.

National banks and credit unions still appear to garner the most trust from each segment compared to other options, though large subsets of each group (an average of 13%) indicate a lack of trust in any FI or fintech with their personal financial data. Interestingly, Gen Z is more likely to trust national banks, while Baby Boomers are more likely to trust local and regional banks. Each of the three groups indicated a lack of trust in tech companies and fintechs -- even though it’s clear that many of the respondents regularly use tools that are likely provided by fintechs.

Takeaway: Despite expressing an overall sense of mistrust in tech companies and fintechs, the majority of Gen Z and Millennials -- and 41% of Baby Boomers -- still feel comfortable using payment services offered by these companies. This implies that the experience offered by these companies is so convenient that it overrides customers’ trust concerns. Banks and credit unions have an opportunity to capitalize on their greater levels of trust among consumers by providing convenient payment experiences that are comparable to those offered by tech companies.

You can read the full whitepaper here.

ABOUT MX: MX is the leading data platform for the financial world, providing the industry's fastest, most secure, and most reliable connectivity network. MX partners with 16,000+ banks, credit unions, fintechs, and 85% of digital banking providers to power the money experience for over 200 million consumers.