How Millennials And Gen Z Shape The Future Of Digital Banking
Millennials and Gen Z in digital banking are two different generations with different habits and expectations. The approaches and usage patterns of these two generations to digital banking solutions are quite different.
The Millennials generation generally includes individuals born between 1980 and 1996 and is also called Generation Y.
They are a generation that was introduced to technology at an early age and experienced the rise of the internet. However, Gen Z is a generation that has grown up in the digital world and is integrated with mobile technologies, generally including individuals born between 1997 and 2010.
Developments in technology over the years have caused the preferences and needs of bank customers to change. In order to respond to these changing needs of customers, banks have had to change the way they provide services.
For this reason, the banking sector has offered bank cards, credit cards, ATM devices, telephone banking, internet banking and finally mobile banking applications to customers in order not to remain indifferent to technological developments and to respond to changing customer demands and needs.
All these banking applications constitute the alternative distribution channels of the banking sector. While many millennials do not have a problem adapting to digital banking solutions, there are still those who prefer branches.
However, this is not the case with Gen Z. Almost all of this generation meets their financial needs with fintech solutions or mobile banking tools.
Why Do Millennials And Gen Z Matter In Digital Banking Innovation?
For digital banking innovations, Millennials and Gen Z in Digital Banking are very important because these innovations are addressed to these two generations. It is almost impossible for previous generations to come into contact with these innovations in terms of time.
Although the number of individuals from older generations who are familiar with digital banking solutions is not small, almost all Millennials and Gen Z meet their financial needs with digital banking tools.
Institutions that want to deliver their products and services to customers at low cost, by staying agile and adapting to changes quickly as required by the current period, will ensure that they maintain their place in the sector today and tomorrow.
With the impact of the coronavirus outbreak, customers have turned to digital transactions. While banks continue to offer products and services to their customers with digital transformation under intense competition conditions and legal regulations in the banking sector, they also try to produce fast solutions for changing customer expectations.
Due to this close contact, there is a direct interaction between digital banking innovations and Millennials and Gen Z in Digital Banking. For this reason, digital banking platforms offer products and services according to the reflexes of these two generations.
Digital banking innovations continue to be shaped according to the needs of Millennials and Gen Z in Digital Banking. The decrease in the number of traditional physical branches and the diversification of digital solutions are applications that appeal to these two generations.
How Millennials And Gen Z Shape The Future Of Digital Banking?
Many global financial institutions that continue their operations in different countries are reforming their innovative products and services to meet the expectations of the “millennials and gen z in digital banking” audience.
Because today, more than 80% of the digital banking customer base consists of these two generations. The digital banking of the future will continue to increase the number of personalized solutions in line with the expectations of “millennials and Gen Z in digital banking”.
In addition, the popular technology of recent years, artificial intelligence solutions, and machine learning areas, together with fintech startups, are completely reshaping digital banking to the extent desired by “millennials and Gen Z in digital banking”.
The number of customers of global branchless banks makes the development of branchless banking remarkable.
According to a study conducted in Europe, branchless banks are expected to reach 85 million customers by 2023, and according to a study conducted in the USA, approximately 20% of the US population will have a branchless bank account by 2025.
However, according to a study conducted in the UK in 2020, the number of branchless banking users in the UK increased by 16% in one year and as of January 2021, more than 25% of the British have a branchless bank account.
In addition, it is expected that 38% of the UK population will have a digital bank account by the end of 2021.
Among the branchless banks in the UK, Monzo has reached 5.8 million customers, Revolut 3.1 million, Starling 1.9 million and Monese 1.8 million, while Chime in the USA has reached 13.1 million, Current 4 million, Aspiration 3 million and Varo 2.7 million customers.
Blockchain-based data recording and payment systems have also been proposed for a new, free, and independent financial ecosystem as demanded by these generations.
While older generations tend to prefer more traditional and relatively safer banking alternatives, “millennials and Gen Z in digital banking” tend to prefer more digital solutions.
Top Features Millennials And Gen Z Expect In Digital Banking
When the basic characteristics of these two generations are examined, their demands for speed and flexibility should be a priority.
Digital banking platforms are working to produce more flexible, more practical and more user-friendly solutions every day in line with the demands of “millennials and gen z in digital banking”.
The digital banking solutions most used by these generations can be listed as follows:
- Instant money transfers
- Automatic budget management tools
- Virtual cards
- Minimized transaction or transfer fees
- Integration with different asset classes such as cryptocurrency
These types of features are the features that “millennials and Gen Z in digital banking” prioritize for digital banking solutions. It is very difficult for financial institutions that cannot provide these to remain resilient in the highly competitive markets of the future.
The Role Of User Experience For Millennials And Gen Z In Digital Banking
Today, the spread of digitalization not only in finance but also in almost every field has increased the demand for personalized products and services in people or customers. This has enabled brands or businesses to develop products and services focused on user experience.
Therefore, a user-oriented banking experience is of great importance for “millennials and Gen Z in digital banking”, who have the most widespread digital banking use today.
The digital banking experiences of these two generations are mostly dependent on solutions such as easy-to-use mobile applications, transparent transactions and reliable ecosystems, fast and accessible customer support, and unique financial suggestions.
Digital banking institutions that can provide these elements will reach more participants or customers from these two generations.
How Gen Z And Millennials Drive Mobile-First Digital Banking?
The most common demographic using digital banking, “millennials and Gen Z in digital banking”, is driving mobile-first digital banking. Individuals belonging to this generation have habits of meeting their financial needs quickly and practically with mobile solutions.
Meeting their financial needs through a mobile banking application in seconds instead of physically going to a branch or reaching bank employees by phone is more suitable for the expectations of “millennials and Gen Z in digital banking”.
This also causes the number of mobile solutions of digital banking platforms to increase. Solutions such as payment with QR code, contactless payment, applying for in-app loans or other products, and 24/7 accessible live support lines meet the expectations of this generation and enable the development of mobile banking.
Security Expectations Of Millennials And Gen Z In Digital Banking
It is possible to claim that “millennials and gen z in digital banking” are more conscious about security compared to older generations.
While individuals from previous generations may occasionally be exposed to incidents such as phone fraud, these types of security problems are much less common among members of these two generations.
“Millennials and Gen Z in digital banking”, the two youngest generations in contact with banking solutions today, also have high expectations about security.
Digital banking platforms or financial institutions develop and offer security measures such as multi-factor authentication methods and biometric verification methods to meet these expectations.
Especially with the development of blockchain-based data recording technologies, the formation of a completely independent and secure banking ecosystem in the future has also been formed with the expectations of “Millennials and gen z in digital banking”.
These are technologies and solutions that meet the needs of these generations.
How Fintech Startups Target Millennials And Gen Z In Digital Banking?
In today’s world, the target audience of almost all teams managing startup projects in the fintech field is “millennials and Gen Z in digital banking“. This ensures that the products or services they will produce are aimed at the needs of these generations.
While fintech startups target “millennials and gen z in digital banking” in their work, they have highlighted the following services:
- free banking services
- low transaction costs
- subscription-based financial support
- social payment alternatives
- flexible, easy, and practical investment processes
- easy interfaces of mobile banking applications and digital solutions offered
The vast majority of today’s fintech startups continue their work targeting “millennials and gen z in digital banking” by taking these elements into consideration.
Because when they turn into a successful business model in the future, more than 80% of their customer base will consist of these generations.
Spending And Saving Habits Of Millennials And Gen Z In Digital Banking
The majority of the customers of digital banking solutions, “millennials and Gen Z in digital banking”, have very different reflexes and habits in terms of spending and saving habits compared to older generations.
These two young generations prefer methods that are more flexible and provide faster returns in budget management and investment alternatives.
They usually expect to optimize their investment processes through a mobile phone. Their spending usually consists of subscription-based services and online shopping.
Many participants from these two generations have also been interested in innovative and digital asset classes such as cryptocurrencies in recent years.
These two generations, whose financial awareness is more developed than older generations, are mostly used to managing their savings and budget processes with fintech solutions.
This enables them to offer faster, more practical and more customer-focused products every day, igniting the digital banking sector.
Digital Banking Loyalty Trends Among Millennials And Gen Z
“Millennials and Gen Z in digital banking” are a customer base that can be described as more impatient than older generations in terms of loyalty.
In particular, their dependence on traditional banks is decreasing day by day. Almost all of these two new generations have digital banking applications and meet their financial needs with these innovative tools.
Today, the most used digital banking habits of these two generations include digital wallets, virtual cards, contactless payment systems, and cryptocurrencies. Many of them have almost finished their interaction with traditional banks.
In addition, these two generations are no longer a group that traditional banks can provide competent answers to in terms of customer experience and security standards.
These two generations, who tend to turn to transparent and innovative solutions, are more interested in fintech solutions and tools. This decreases their loyalty to traditional banks a little more every day.
Future Outlook: Millennials And Gen Z In Digital Banking Evolution
Today, digital banking conditions are changing very quickly. This indicates that many service or product formats will be reshaped especially for “millennials and gen z in digital banking” in the future.
It is easy to predict that more personalized and more innovative products will be more popular in the future. However, I do not think that the current working methods of traditional banks will be included in the future perspective.
Blockchain technologies, artificial intelligence, and machine learning, which have been on the rise in recent years, will also radically change digital banking rituals.
It would not surprise me if there are the following types of banking services for “millennials and Gen Z in digital banking” in the future:
– artificial intelligence-supported financial advisors,
– blockchain-based transactions,
– widespread use of cryptocurrencies,
– widespread use of sustainable banking practices.
Perhaps other digital solutions that may be considered too innovative even for these two
generations will meet us in the future. However, this concerns the next generation, the Alpha generation. Who knows, maybe in the world of the Alpha generation, there will not even be a need for a financial institution.
See you in the next post,
Anil UZUN