Banking executives ‘biggest challenge’ of the year is attracting Gen Z customers | Personal Finance | Finance
More than half (57 percent) of UK banking executives say that attracting young consumers is one of the biggest challenges they are facing in the next twelve months, new research has found.
An estimated two thirds (67 percent) say it is a vital part of future proofing their business, with 50 percent believing it is key to remaining competitive according to a survey from d ata enrichment and payment services platform Tink.
Nearly half (46 percent) of Gen Z consumers surveyed are 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.
An estimated 31 percent of Gen Z said their bank was at risk of losing them as a customer if digital tools and services weren’t upgraded.
Tink’s research found that Gen Z consumers could be lured to a competitor by the offer of tailored support in meeting financial goals (49 percent) or tools to manage spending (48 percent).
Gen Z consumers would like to see their primary bank provide more visibility over finances (57 percent) and help them manage the cost of living (55 percent). This indicates that tangible support with day-to-day finances is top of mind for Gen Z.
The survey revealed a recognition by executives that banks need to up their game to win over younger consumers, with 63 percent acknowledging that younger generations expect more and new innovative products and services from them.
Yet the research found that some banking executives still face challenges with acquiring these customers, which they attributed to Gen Z’s perceived lower tolerance for friction (33 percent) or poor UX (30 percent), and preference for challenger banks (32 percent).
Tink’s research shows banks want to take action to invest in digital financial management tools as an effective way to attract and retain customers.
Over three quarters (79 percent) of banking executives believe that banking apps or online banking features, like money management tools, are effective for customer acquisition.
Similarly, 74 percent agree that digital financial management tools are also helpful in retaining customers.
Therefore 72 percent of surveyed banking executives said that developing financial management tools that support customers is a top priority.
However, 70 percent of banking executives surveyed believing that growing customer demand outstrips their current development ability.
Jack Spiers, UK&I Banking & Lending Director at Tink, said: “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.”
