Banking Features: Gen Z and Millennials
To understand what features Gen Z and millennials are seeking from their banking products and services, including checking accounts, saving accounts and payment accounts. To additionally understand what these consumers dislike about traditional banking. This information will help provide background to evaluate a banking product targeted toward Gen Z and millennials.
Gen Z: Banking Usage and Perceptions
- A Raddon Research survey found 33% of Gen Z (under 25) have their own bank account, while 34% have a joint account with their parents. 47% of those with an account use a major bank (e.g., Chase or Wells Fargo).
- Gen Z is also more likely to switch banks than other generations, with 19% saying they would be likely to switch banks in the next 3 months.
Gen Z: Top Banking Features
- Gen Z is looking for financial products that are social, digital, educational, and offer value. They do not want their financial services to be static over time, but instead, evolve with their needs.
- Gen Z would prefer to bank online (47%), compared to 20% who said they'd prefer to bank in person. However, they may be less likely to use a traditional web-based banking model and more likely to use a mobile banking app (which they may abandon if it does not maintain relevance for them).
- Gen Z does visit bank branches, which may be linked to a general preference for shopping in brick-and-mortar stores. This generation may be driven by the social experience of in-person banking. Some banks, such as US Bank, are responding to this trend, opening up cafes within their branches to offer a social experience versus a more transactional experience.
- Gen-Z is seeking a checking account without overdraft fees. Nearly 40% of Gen Z (compared to 15% of all adults) said they were "extremely" or "very" likely to use a checking account without overdraft fees.
- Having physical checks are less relevant for this generation, with only 52% of Gen Z noting they had written a check (compared to 75% of millennials and 88% of Gen X).
- Gen-Z is seeking digital payment options, such as digital wallets (over 50% of Gen Z use digital wallets monthly), digital payment apps, or digital P2P apps (e.g., Venmo or Zelle). Three-quarters of Gen Z use digital payment or P2P apps.
- Bank-provided budgeting tools are also appealing to this age group, with 68% of Gen Z consumers saying they use budgeting tools, and 37% saying they take advantage of bank-provided budgeting tools.
- This generation is also highly-focused on saving, and banking features that would help them measure progress toward their savings goals are desired.
- Gen Z is also intrigued by the concept of a prepaid card, with 46% of Gen Z saying they are likely to use or already use prepaid cards.
- Fintech startups, "Challenger Banks" offer unique banking features that appeal to Gen Z, including charitable giving features, savings envelopes, savings roundups, and social media-friendly apps. Still, traditional banks, such as Wells Fargo, appeal to Gen Z as well.
Gen Z: Dislikes About Traditional Banking
- Gen Z generally dislikes the complex landscape of traditional banking, personal information requirements, and unnecessary services (like physical checks). As an app-driven banking consumer, this generation also feels bank apps do not typically meet their needs, as they focus mostly on online payments and do not always offer a smooth user experience.
Millennials: Banking Usage and Perceptions
Millennials: Top Banking Features
- Millennials are seeking convenience, traditional products (with premium features), and strong customer service.
- Millennials prize convenience in their banking experience, and typically leverage technology for this benefit. 47% of millennials use mobile banking to conduct transactions, including payment transfers and reviewing their transaction history. Interestingly, this generation is just as likely to turn away from mobile banking if it does not deliver a convenient experience.
- Millennials place importance on rewards, with 83% of this generation willing to switch banks for benefits including a high deposit account interest rate, cash back on purchases, or foreign ATM fee refunds.
- Similar to Gen Z, millennials place high importance on no-fee accounts.
- Neobanks, which offer the convenience millennials find important, offer additional features that are relevant to this generation. These include mobile banking, low or no fees, a broad ATM network (or ATM fee refunds), and money management and budgeting functionality.
- Neobanks are often able to offer higher interest savings, which is important to millennials.
- While their interest in a personalized, in-person experience is not as high as other generations (including Gen Z), this groups still places some importance on in-person banking. 66% of millennials visited a bank in person within the past 6 months, indicating a brick-and-mortar bank presence is still relevant.
- Millennials also seek customized assistance from their banks in setting financial goals, and highly value privacy and account security.
- In a 2019 Cornerstone Advisors survey of US consumers, service was cited by 44% of millennials as a reason for banking with a "megabank" (JP Morgan Chase, Wells Fargo, and Bank of America). "Service" is related to both customer service, and service-related mobile banking features, such as biometric login, cardless ATM, chatbots, and credit information.
Millennials: Dislikes About Traditional Banking
- A Medalla Institute survey highlighted reasons millennials are frustrated with traditional banking, including technology issues (55%), long lines (37%), lack of online banking (37%), negative employee interactions (22%), and inability to customize the experience (16%).
Summary of Early Findings Relevant to the Goals
- In this early research, we were able to identify a number of features desired by both Gen Z and millennials in their banking products and services, as well as highlight some specific issues that drive negative impressions of traditional banks.
- Gen-Z is an app-driven generation, which carries into their banking preferences. They are savers, value budgeting and planning tools, and strongly dislike fees in banking (particularly checking overdraft fees). This generation also places value on human connection, and therefore values the in-person experience (though an enhanced in-person experience, that isn't entirely transactional, is more appealing to them). Gen-Z does not like the beaureacracy they perceive with traditional banking, including paperwork and the need for personal information, and they also wish traditional banks could deliver more technology-enabled, unique, banking benefits (via an app).
- Millennials value convenience, premium benefits, and service in their banking, with features such as high interest rate deposit accounts, customized support from their banking personnel and mobile technology, no-fee accounts, and cash back resonating strongly with this group. This generation also places importance on privacy and account security.
- Our research recommendations are based on the information we uncovered in early research.
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