Attracting younger customers is one of the biggest challenges facing 57 per cent of banking executives in the next 12 months, Tink, the data enrichment and payment services platform, has revealed.
Gen Z consumers demand feature-rich banking experiences and, in many cases, are willing to switch to another provider if their current one doesn’t meet their expectations. In fact, 31 per cent of Gen Z respondents told Tink they would leave their bank if it didn’t upgrade digital tools and services.
Forty-six per cent of Gen Z consumers are also already using third-party money management apps in addition to their core bank, indicating that consumers are increasingly turning to other providers to help them understand their finances.
Tink found that Gen Z consumers could be lured to a competitor by the offer of tailored support in meeting financial goals (49 per cent) or tools to manage spending (48 per cent).
Gen Z consumers want to see their primary bank provide more visibility over finances (57 per cent) and help them manage the cost of living (55 per cent).
An estimated two-thirds (67 per cent) of banking executives in the UK said the biggest challenge for them is future-proofing their business, with 50 per cent believing it is key to remaining competitive. Sixty-three per cent of executives also acknowledged that younger generations expect more and new innovative products and services from them.
However, some banking executives still face challenges with acquiring these customers, which they attributed to Gen Z’s perceived lower tolerance for friction (33 per cent) or poor UX (30 per cent), and preference for challenger banks (32 per cent).
Driving young loyalty
With younger customers expecting more and more from their bank, Tink reveals that banks are planning to invest in digital financial management tools as an effective way to attract and retain customers.
Around 79 per cent of banking executives believe that banking apps or online banking features, like money management tools, are effective for customer acquisition. Meanwhile, 74 per cent agree that digital financial management tools are also helpful in retaining customers.
Given this, it shouldn’t come as a surprise that the top priority for 72 per cent of surveyed banking executives is developing financial management tools that support customers. However, some implementation challenges remain, with 70 per cent of banking executives surveyed believing that growing customer demand outstrips their current development ability.
Jack Spiers, banking and lending director at Tink
Jack Spiers, UK&I banking and lending director at Tink, commented: “More than ever, retail banks have an opportunity to focus their long-term strategies on keeping customers engaged. Continued strong competition in the retail banking market is offering consumers a myriad of options and providers to choose from.
“Banks are understandably keen to attract younger customers and become their provider of choice throughout their lifetime. Therefore, many are focused on keeping up with evolving consumer expectations of this younger cohort, to deliver the digital financial management tools which will win them over.
“To future-proof their business in the long term, banks can invest now in upgrading their digital offerings. As competition grows from fast-moving challenger banks and third parties, greater collaboration with trusted third-party partners can help banks bring innovative products to market at greater speed and scale.”
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