Banks must keep up with Gen Z’s high expectations, thanks to Neobanks

By Puja Sharma

Traditional bricks and mortar banks are hugely complacent about attracting Gen Z customers, a new report has revealed. Despite spending millions trying to lure them every year, they have failed to convince young people that they understand their needs or have the tech skills to meet them. Yet the bankers themselves overwhelmingly believe they’re already doing enough to satisfy the generation currently aged between 9 and 24.

According to the IBS intelligence report, Customers want two-way, real-time interactions that can solve banking problems as they happen, no matter where they are. Around 53% are frustrated when they cannot reply to a mobile message and one in three under ho have even switched banks to get a better mobile experience.

This desire for personalized banking and being able to communicate easily is more pronounced in younger customers, as over 80% of Gen Z surveyed want to solve even more complex tasks using digital channels including completing a loan application or sharing personal information to get tailored financial product recommendations. Banks must manage risk on a large part of their portfolios, requiring FS to use real-time transaction processing to measure and manage it.

Trust is also gained by knowing when human interaction with a customer is needed. Even with widespread usage of automated chat options, in moments of frustration customers still want to hear a human voice; 95% of those surveyed want an option to switch seamlessly from automated messaging to a human conversation from inside the messaging stream. The real-time database help improves customer experience from managing an investment portfolio to using a credit card, financial services institutions are improving customer experiences in every area.

The rise of internet-only platforms, known in the industry as ‘neobanks’, have raised the bar of expectations. And the report from IBM has found that Gen Z customers are very likely to quit one bank and move to another if unhappy with the service. Banks need to act now, as within a couple of years Gen Z will make up 27% of the global workforce, and their buying continues to increase.

This research was carried out in the UK, Germany, and Spain in September 2022 and surveyed 1000 Gen Z and 250 C-Suite bank execs per country in partnership with Censuswide.

Key Findings:

• Over 89% of UK bankers believe they understand the needs of Gen Z account holders, yet over a third of Gen Z does not believe that traditional banks understand their needs
• Over 89% of bankers believe they have the tech capabilities required to meet the needs of Gen Z, but 38% of Gen Z aren’t so sure
• Nearly 9 in 10 bankers are concerned Gen Z are more willing to switch banks compared to prior generations, and they’re right with 52% of Gen Z happy to switch to a bank providing better user experiences more akin to social media platforms
• However, 61% of UK Gen Z place greater trust in traditional banks to resolve serious banking issues like fraud, compared to just 8% who trust neobanks more
• The rise of internet-only platforms, known in the industry as ‘neobanks’, has raised the bar of expectations