January 30, 2023

banking for all generations
Conversations about ‘The Great Wealth Transfer’ have been making headlines over the past few years. A recent article in the ABA Banking Journal highlighted that more than 10,000 baby boomers are turning 65 every day. Over the next 20 to 30 years an estimated $68 trillion of wealth will transfer to their Millennial and Gen Z offspring who represent a huge part of the market today. This generational shift means banks now need to think about how they can appeal to both their existing and future clients.
This report from the BAI (Bank Administration Institute) shows that less than half of Gen Z and Millennials were using the same bank as their parents in 2021 – a significant drop from the year prior in 2020 where 61% of Gen Z and 54% of Millennials were with the same institution. And with non-bank financial offerings on the rise, traditional banking institutions are under even more pressure to keep up with the digital demands of the younger generations. With both Gen Z and Millennials being heavily invested in technology, it comes as no surprise that they are such a huge part of digital banking’s core market. For many businesses – and banks – this is the first time they are navigating serving clientele across four earning generations and are working to find the strategic direction to serve and accommodate each audience’s unique needs.
In a recent survey, 79% of Millennials rated personalization in banking as “highly important”, followed by 75% of Gen Z, suggesting that banking to these generations is more than just transactional. What’s important to note is that personalization comes in many forms – not just through digital capabilities.
Separately, we are seeing Gen Z advance in their financial life cycles. More than 62% of Gen Z have indicated that they have started, or intend to start, their own business – but when it comes to financing that business, many will learn that human interaction and professional financial advice is key. So how do we bank to all generations? Each generation may present its own unique goals and challenges, however, they ultimately need the same set of core needs met from their financial institutions. We often believe that Gen Z and Millennials expect smarter, data-driven experiences, and while this is true, the same is becoming the norm across all generations. This is an opportunity to take a step back and evaluate the delivery of our banks’ products and services. At the core, the financial needs across all generations are similar – safety and security in their funds, competitive lending and access. What varies is the value proposition and delivery channel. Essentially, banks’ delivery to our audiences will continue to be the same, but we should evaluate our entire model to understand how we can continue to serve our clients
Adapting to the needs of today
The most effective way for banks to serve all generations is to evolve with the changing environment and pay attention to both the similarities and the differences in how various demographics bank. Take the product set for example. The idea of a checking, savings and money market accounts were built around requirements imposed by regulation and limited technology available to the consumer. While Gen Zs and Millennials may never understand the process of balancing a checkbook, the reality is, these account structures don’t really resonate with most of our needs. We’ve already seen this concept challenged with the rise of a number of high yield checking accounts.
Both Millennials and Gen Z are creating an opportunity for us to evaluate whether the same building blocks we’ve historically used still make sense. How can we offer the same solutions through new re-imagined experiences? Much of the innovation banks have faced up until now has been dependent on the traditional building blocks. We went from in-person transactions at a teller line to mobile deposit on our phones, but the transaction is still built around a paper check. Today, we have the opportunity to explore how blockchain can reframe how we power payments. Ultimately, we all want smarter, more secure solutions, and the new generations may just help shape the path to get us there.
Banks are faced with the challenge of shifting from legacy technology models to modernizing their infrastructure and product set, all while navigating the needs of a number of generations. The path forward isn’t about chasing individual trends, but rather building a business that has the ability to be nimble enough to keep up with the evolving needs of its clients’ segments.


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