Transforming banking for Gen Z

Louis Granger at UserTesting explores the generational gap between digital and traditional banking

The advent of digital and online banking has led to traditional banks implementing changes in order to keep up with changing customer needs.

Chase, for example, through excellent customer care and a seamless digital experience, has tripled its customer numbers following its entry into the UK in 2021. But digital transformation isn’t a quick fix - it takes time and resources, and not all banks have kept pace with changing customer needs and expectations.

Many of these unmet needs fall along generational lines, presenting a real puzzle for the modern banking sector. Different customers will want different banking experiences, and it’s crucial for banks to deliver the same level of customer experience to different types of customers. 

Generational banking

In a recent survey, UserTesting asked 1,000 UK adults with bank accounts to share their feelings about digital and traditional banking. The study found that over a quarter (26%) are not satisfied with their bank’s online app and website. The survey uncovered several areas in the banking system where customer needs are not being met and a greater degree of digital transformation is needed. 

Gen Z respondents (those born between 1997 and 2012) were the least satisfied with their traditional banking experience, with 13% saying they were very or slightly unsatisfied with traditional banks.

This isn’t surprising, as younger generations often become aware of new technologies before they become more widely established and feel their absence more when a brand doesn’t offer this. Traditional banks must monitor their needs closely if they are to retain this valuable group as customers. 

To do this, regular customer listening, in line with other customer feedback processes, is crucial. This means going beyond customer surveys and analytics data to accurately identify digital friction points in the customer journey through direct customer feedback. 

Qualitative research allows companies to find the why behind the what, meaning banks can test and analyse the results of more personalised user experiences. Banks can use these findings to improve their customer experience for younger customers without sacrificing what clearly works for the majority. 

High street banking

On the UK high street, there are fewer traditional banks, particularly in rural areas, and this has caused a decrease in customer satisfaction with traditional banks. UserTesting’s survey found that 81% of respondents haven’t talked to a bank teller face-to-face in at least two weeks - despite 43% stating that talking to humans face-to-face was an advantage of traditional banking. Traditional banks clearly still have an important role to play in their customers’ experience. 

Age UK, the leading charity for older people, has also highlighted the lack of traditional banks on high-street risk alienating older and vulnerable customers, and has called for more shared banking hubs to address the issue.

Traditional banks should explore this option in future, especially given that 66% of customers prefer traditional banks with both a physical branch and digital platform over digital-only banks. 

Convenience is key 

Arguably, the biggest factor affecting customer satisfaction across all demographics is ease of use. The study revealed 38% prefer traditional banks, as they find it easier to talk to a bank teller than a chatbot or phone operator. 

While banks may want to focus on improving traditional banking options, it’s clear one size doesn’t fit all. According to the survey, 30% would consider switching to digital-based challenger banks because of their convenience and ease of use. If traditional banks want to fend off these challengers, they must find out what is the most convenient experience for their customers and deliver that. 

Almost half of respondents (48%) said they prefer digital banks because they can access money wherever they go, while speed and not needing to go to a physical location also scored highly when it came to the appeal of challenger banks.

Traditional banking customers also indicated they wished more banks offered instant transfers, no-fee currency exchanging and smoother mobile app support. This shows the type of factors that help make a convenient banking experience and the benefit of personalised banking experiences. 

The bottom line 

Banks need to improve their customer experience if they want to keep up with the experience offered by digital and challenger banks. All customers want a convenient banking experience and this means offering different things to different generations. 

For younger generations, this means more digital banking services, and for older people it means more face-to-face help and physical banking hubs. Bridging the gap between these different customer behaviours will ensure traditional banking retains customers during digital transformation.

The bottom line is that all customers want a convenient banking experience and this means offering different things to different generations. Traditional banks and challenger banks are not one-size-fits-all, their customers are more than just the data. 

In order to meet the needs of their evolving customers, traditional banks need to have empathy for their customers-and understand the needs and preferences of their different customer demographics to retain them and to keep up with the experience offered by digital and challenger banks.   

Louis Granger is Director APAC & EMEA Solutions Consulting at UserTesting 

Main image courtesy of iStockPhoto.com