Gen Z sparking banking revolution

The way banks interact with their customers is changing as a result of millennials and Generation Z (Gen Z), which is good for all customers, businesses, and investors. The tech-savvy and mobile-native demographic force is causing a significant change in financial institutions across all spheres, from consumer behaviour to technology adoption.

Chethan Shenoy, Director & Head –Product & Research, Anand Rathi Wealth Limited told Global Business Outlook in an interview that Gen Z is pragmatic and mathematical in their decision-making. They will be more in the decision-making position in the coming decades. Gen Z kids are not afraid of taking risks if they understand the odds of achieving returns. They also like the idea of personalized delivery of advice. They prefer paperless speedy implementation of decisions and easy online access to their simple portfolio snapshots customized to show them what needs to be seen rather than crowding the performance report card with unnecessary complex data.

According to Morgan Stanley research, millennials are the largest drivers of net new credit demand and will keep this position for the ensuing few decades. While many members of Generation Z are still considered to be "kids," they will also soon enter the crucial 25–40 age range, which is considered to be the prime spending period. These two generations are positioned to shape the direction of banking in the future because of their distinct spending and saving patterns and global worldview.

David Donovan, EVP of Financial Services, Publicis Sapient said, "Modern banks must switch to a digital-first strategy that streamlines customer service and automates procedures as more of their customers come from this segment of "always online" users. They must quicken the pace of digital transformation in order to produce more cutting-edge, individualized fintech goods and mobile transactions."

David Donovan said in order to draw in more clients from this segment, banks and other financial institutions should keep the following thing in mind.

Provide experiences, not products

Due to their extensive exposure to online advertising as children, millennials and Generation Z have a strong sense of scepticism about it. Instead of only promoting their products, banks should focus on providing experiences, entertainment, and personalized interactions to draw in customers. Banks can implement chatbots as well as unique features like EMI calculators, live advisory support, financial planning tools, and online community discussion forums to create an interesting and educational customer experience. Additionally, promoting financial literacy using video or other multimedia will be more effective at luring young customers than traditional advertising.

Build an emotional connection

Even though they spend most of their time online, millennials and members of Generation Z have demonstrated a desire to form more meaningful emotional connections. By providing real-world human interactions through audio and video chat features in mobile banking applications, banks can capitalize on this demand. This can lessen the transactional element of meetings, promote deep professional connections, and guarantee increased client loyalty.

Focus on hyper-personalized messaging

A personal touch is one of the greatest deal-breakers for millennials and Gen Z clients. They desire a special, tailored financial experience that makes them feel important and recognized. So, a major differentiation that will keep their interest is hyper-personalized messaging with customized content. Financial institutions ought to spend money collecting, analyzing, and interpreting data about Gen Z and millennials' preferences, behaviour, and shifting demands. They should then make relevant touch points and tailored product suggestions using this information.

According to a recent study, 83% of Gen Z customers express frustration with banking procedures. This suggests that banks and other financial institutions must analyse their customer experience at a micro level in order to win over younger clients and foster loyalty. Rather than using the phone or visiting a branch, Gen Z prefers to do their financial transactions online and anticipates instant access to customer service. Banks should put an emphasis on simplicity and ease of use