Winning the next generation of customers is always a goal of banks, but attracting Generation Z — today’s 24 year olds and younger — needs a thoroughly modern and comprehensive approach, bankers and experts say. 

Members of Gen Z have had a smartphone or computer at their fingertips since childhood. That has created familiarity with technology that some believe gives non-traditional financial providers like fintechs a leg up on meeting teens and young adults digitally and getting first crack at offering them services. 

Gen Zers constantly are absorbing what they see and hear on digital platforms, using apps and reading online peer customer reviews and “influencer” endorsements to figure out which financial provider might be best for them, according to those familiar with the new generation’s traits. 

“My college students do not have checkbooks,” said Christine Whelan, a consumer science professor in the School of Human Ecology at the University of Wisconsin-Madison. “We still use that quaint anachronism of ‘balancing your checkbook.’ They don’t even know where that phrase came from. This is the generation of Venmo, and PayPal, and Zelle, and all sorts of online banking transfers when it comes to keeping their money and keeping track of their money.” 

Training and development specialist Jennifer Pieper, of JPieper Consulting in metro Milwaukee, said banks need to be where Gen Z lives — on social media. 

“Banks cannot rely on the same old marketing strategies. They should engage their Gen Z clients in online focus groups and ask them directly where they are getting information as it relates to financial services,” Pieper said. “Once they have that data, leveraging that information quickly will be a key to success.” 

A report by the online research firm Survey Monkey showed that while 57% of Gen Zers visit Facebook, the most popular social media platforms among the age group are YouTube, Instagram, Snapchat, and TikTok. 

“Winning Gen Z as a client is one of the biggest challenges facing traditional banks today,” said Pieper, herself a former bank executive. 

Bank consultant Preston Afrank, a Lincoln, Neb.-based vice president with the firm Haberfeld, said Gen Zers are more comfortable with technology than any previous generation, including millennials. But he thinks that as Gen Zers age, they will want more than fintech apps. 

“As Gen Z matures, as they get out of their college years, start entering the workforce and their peak earning years and borrowing years, I think they are going to realize that their financial lives are much more complex than most of what the fintechs have to offer,” Afrank said. 

But banks need to reach out to Gen Z now to set the stage for deeper banking relationships, and be ready to talk with them in terms they understand when they do come in, he said. 

“The best way to reach them is through an omnichannel approach,” Afrank said. 

While of course that includes social media efforts, one study showed that direct mail shouldn’t be overlooked because Gen Zers actually are inclined to read snail mail, he said.  

Whatever type of outreach occurs, banks — especially community banks — need to stress their technology is as good as their competitors’, and that they have branches that are convenient to where they live and work. 

“That’s how you’re going to go about capturing that younger generation,” Afrank said. 

UW’s Whelan said she thinks banks in general have been doing a good job of adapting to the preferences of Gen Z. 

“Banks were definitely onto this,” she said. 

Among banks that have stressed targeting the next generation is Horicon Bank. Early this year, the bank announced it had acquired the fintech Monotto, bringing on not only its RoboSave technology — an automated savings tool that uses artificial intelligence to identify how much money customers can save daily and then moves that amount into a savings account every few days — but also Monotto’s founder, Christian Ruppe

At 26 years old, Ruppe, who is a Horicon Bank vice president and digital banking officer, isn’t very far removed from Gen Z himself and is familiar with that age group’s needs and wishes. 

He said fintechs have been able to reach Gen Z because they have technology that makes banking simple, but that’s not all. 

“They also know how to target them directly,” Ruppe said 

Banks need to find out — using search data, online community reviews and other tech sources — what Gen Z is looking for, and then “get in front of them to show them that’s what we have.” 

While many Gen Zers get their information from TikTok, fintechs are better represented on that social media platform than banks, he said. 

One thing banks should know about Gen Zers is that they want the ability to chat digitally with a banker on their website rather than having to make a phone call. And Gen Zers even would like the choice to begin a business loan application online rather than live. 

Ruppe said, for example, if a 23 year old who is trying to start a business goes to a community bank’s website and it says he or she must contact a banker to start the process, that’s a turnoff. 

“I want to have the opportunity to speak to someone, but I don’t want to have to speak with someone,” Ruppe explained. 

Oconomowoc-based Bank Five Nine begins pursuing the next generation of customers early through its Good Savers program. 

The program is designed for kids and early teen years, said Jeff McCarthy, vice president and marketing director. The bank rewards them for making deposits into a savings account. 

“They make 20 deposits of $5 or more and they earn a $5 gift card. So, trying to reinforce with those younger customers good saving habits,” McCarthy said. “And then as they get a little older, we have a student checking program and we partnered with lots of the high schools on what we call our Mascot Banking program.” 

In that program, participants receive a debit card with their high school’s logo on it. By meeting certain criteria, they receive $150 from the bank, and in addition, the bank donates $150 to the school’s booster club. 

“That’s the way we’re reaching those Gen Zers while they’re in their high school years,” McCarthy said. 

McCarthy said Bank Five Nine also has “a very robust social media program” to get its name and products in front of Gen Z. 

“We really believe that is a great way to reach this segment. Because social media is where they are,” McCarthy said. “It’s the entertainment and the news they’re consuming, so we need to be where they are, communicating with them in a language they’re comfortable with.” 

Pieper suggested banks use information on the habits and preferences of Gen Zers to partner with them in what they feel is important. 

“Banks must think outside the box to earn Gen Z’s relationships.  They should develop checking accounts focused on issues that Gen Z identifies with, including social justice, equity, and the environment,” Pieper said. 

For example, she said, Aspiration, a fintech founded in 2015, allows its nearly one million customers to calculate their carbon impact off their debit card gas purchases. 

“A bank’s ability to profile clients is more important than ever, and they must invest in their employees to ensure they have the skills necessary to connect with this savvy generation,” Pieper said.   

What are some other things about Gen Z that banks should know? 

  • They pay attention to social media “influencers” and online reviews. Influencers are people on social media platforms like Instagram who typically have a large audience that values their opinions on products or services. Often they are celebrities. “If you can get someone like that to say that your product is good, amazingly enough, more people buy it,” Whelan said. 

  • They have seen major worldwide economic trouble twice already in their short lives — the Great Recession and the COVID pandemic economic downturn. “They’ve had a pretty rough go of it in terms of the life events that have happened around us,” Whelan said, adding that it might make them more wary of debt. 

  • Branches are unfamiliar territory for them. “Gen Z has never had to walk into a branch to do their banking,” said Pieper. “Banks’ mobile banking platform should be competitive and user friendly.  To do this, continued pressure must be applied on core providers, FIS, Fiserv, etc., to ensure they keep pace with the rapidly evolving fintechs.”  When Gen Z does come to the bank, she said, they should feel like the bank is ready and able to assist them with their needs, even when they’re not quite sure what to ask.  “Bankers that are trained to empathize and then educate will be the winners in an ever-evolving landscape,” Pieper said.   

Given the affinity of Gen Z and millennials for financial technology, the outlook for physical bank branches could seem bleak. But bankers and experts don’t see it that way, as long as banks adjust with the times.  

“Gen Z is not going to be visiting branches to deposit a check or make a transfer. They will use an app,” Afrank said. “But when they do have an issue and come through your front doors, you’ve got to be prepared to service them. They are coming because they need some expert advice. Bankers need to be able to solve customers’ problems.” 

McCarthy doesn’t see branches going away anytime soon. That’s because when things are too complex to be handled via an app or website, customers want a place to go get help and answers. 

“Maybe that will change down the road, depending on what technology does,” he said. “But for now that brick-and-mortar location is still really, really important as people try to navigate complicated financial issues.” 

Besides, he said, from a marketing perspective, branches are great tools. 

“It reminds people that you’re there,” McCarthy said. “It gives people a sense of security that, OK, that’s where your money is. They like to be able to see it. It’s not out in the ether.” 

Said Ruppe: “I don’t think that they’re doomed at all. Granted, I do think we’re not going to do as much in branches, obviously. We can do so much more online. I know that our branches at Horicon Bank, we constantly have customers. And sure, right now, it kind of skews older. But the second I need a check or something, I’m going in.” 

Pieper said brick-and-mortar branches will adapt. They will be smaller, have more technology and be staffed by bankers who will be able to answer a variety of questions, ranging from how to reset a password to how to apply for a mortgage, she said. 

“Branches will turn into answer centers that allow clients to either start a loan application, open an account, or solve a problem,” Pieper said.  “Additionally, they will be places where bank clients can get advice and counsel on how to improve their financial situation.”