All financial institutions (FIs) want to gain new customers. Strategically, they have to consider who they should work towards attracting. On one hand, half of the wealth in America belongs to baby boomers, and a third is held by Gen Xers. On the other hand, millennials and Gen Zers combined hold less than 10 percent of the federal wealth. On the surface, targeting wealthier cohorts might give FIs a leg up.

But that’s a short-sighted view. Millennials have overtaken the lead of the largest population segment. In the next few decades, much of the wealth will likely transfer to the younger generations. And Gen Zers recognize the importance of financial stability. Most have multiple checking and savings accounts, and consider wealth-building a priority. In fact, Gen Z holds $360 billion in buying power.

A focus on attracting and retaining millennial and Gen Z customers will set FIs up for growth and success—but they’ll need to harness the strategy to do so. In this blog, we explore key characteristics from these younger customers, what they care about in their FIs, and what FIs can do to attract them by leveraging new technologies.

What do millennials care about in financial institutions? 

Millennials have long held a stereotype of being untrusting, uninspired, and selfish. There’s a good reason for that—they’ve battled a constant stream of economic challenges, from the Great Recession to the pandemic to volatile markets during post-pandemic recovery. Today, they face a tough job market and wage stagnation. As a result, millennials are rate sensitive. Nearly half actively track rates and are willing to move money to different accounts for better rates.

Despite these challenges, millennials have big goals. According to a 2022 survey from YPulse, they want to save money, increase income, be debt free, gain financial stability, and buy a home. And those goals are starting to be fulfilled; a report from CoreLogic shows that millennials made up two thirds of first-time home purchase applications and one-third of repeat home purchase applications in 2021.

When looking at a financial institution to open an account or take a loan from, millennials care most about:

• 24/7 customer service. Whenever a question about their finances comes up, millennials want to be able to get immediate help. 
• Mobile banking. 93 percent of millennials use a banking app once a month or more.
• Low or no minimum deposit requirement. Millennials don’t want to jump through hoops or feel that they might get punished for not having a daily minimum of money. 

What do Gen Zers care about in financial institutions? 

Where millennials are considered uninspired, Gen Zers have a stereotype of being entitled and lacking work ethic with a (too) strong reliance on technology. Even though older generations may look down on the newer, Gen Z is reshaping society and industries at large. Their dedication to social justice movements and skills at spreading information online is uniquely putting major pressure on companies to share their corporate values. 59 percent of Gen Zers care about purchasing goods from businesses that align with their values.

At the same time, Gen Z anxiety is at an all-time high. More than two-thirds of Gen Zers rate their financial situation as “fair” or worse, and 40 percent are worried about making the wrong choices with their money. As such, they are increasing their financial literacy while also holding FIs to high expectations. In a recent Lightico survey, 82 percent of Gen Zers responded that they would switch FIs if they were offered a superior digital experience. And half would switch if they had a poor customer experience. 

With primary goals around transparency, authenticity, and an intuitive experience, Gen Zers look to their financial institutions to provide: 

• A winning digital experience. Similar to millennial requirements, Gen Zers rarely want to visit or call an FI for simple questions. 75 percent of Gen Zers dislike going to a physical branch.
• A winning customer service experience. Most Gen Zers hold an account at a particular institute because of a parent opening the initial account. But they’ll leave to find better customer interactions elsewhere, whether digital and mobile or in person. 

3 ways financial institutions can attract younger customers

Both millennials and Gen Zers clearly prioritize a digital, immediate, and streamlined experience. And both groups won’t hesitate to leave their FI if their experience doesn’t match expectations, especially with so much anxiety and financial challenges top of mind. To appeal to these priorities, FIs must prioritize new, innovative methods of attracting younger customers, including:

1. Going digital. A fast, intuitive, and valuable mobile app will go a long way for an FI. But more than that, the company’s website needs to be able to guide the customer experience. The right technology solutions will empower these digital experiences. For example, Posh’s Digital Assistant provides a conversational AI chatbot that handles common questions, streamlines banking operations, and answers questions while redirecting to human agents when needed 
2. Implementing 24/7 customer service. Younger customers don’t want to wait until business hours to get answers to their questions about their account or loan payments. While some FIs may look to call centers for off-hours support, a solution like Posh’s Voice Assistant can answer hundreds of questions, authenticate users based on their voice, and save call data to make banking easy—at a fraction of the cost as a call center.
3. Guaranteeing positive customer service experiences. Frontline operations can truly make or break a customer’s experience. With membership itself on the line, FIs need a way to quickly answer questions, cut search time, and improve staff confidence. Customer support teams rely on Posh’s Knowledge Assistant to find precise answers to questions, answering within seconds rather than minutes.

As financial institutions implement new strategies to attract younger customers, seeking out purpose-built technology solutions can create the experiences these types of customers are looking for. For more information about applications of AI in banking, read our blog Generative Al and Large Language Models: Applications Shaping the Banking Industry.