By Roy Urrico
Finopotamus aims to highlight white papers, surveys and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.
As digital banking continues to expand, consumer preferences are shifting, behaviors evolving. Many of these attitudes and actions vary by generation.
Research by Chicago-based BAI, which provides in-depth comparative analytics and market research to the financial services industry, revealed how the pandemic accelerated changes in consumer banking preferences among baby boomers, Generation X, millennials and Generation Z customers.
“Ensuring a continued understanding of generational banking preferences will remain pivotal for financial services leaders as they build the appropriate strategies to prioritize products and services for their customers,” Karl Dahlgren, managing director at BAI, said. “By recognizing these behaviors, financial services leaders can best serve their customers, and use these insights to better predict future behaviors and preferences, positioning their organizations for success.”
Each cohort presents specific financial characteristics, according to BAI:
Gen Z (18-24 years old) is ambitious and ready to take charge of their lives.” Some 59% of Gen Z consumers say they are financially independent (up from 47% in 2019). “Having been raised in the digital age, this generation is very comfortable with digital banking, such as opening deposit accounts online and relying on their mobile banking apps.” When asked about how to improve digital apps: 24/7 customer service was their No. 1 choice.
Millennials (25-40 years old) are career and investment focused. They are also stable: 85% say they are financially independent, and 71% are employed full time. “Raised in the digital age, they value speed—they want faster payments and quicker transfers—along with a seamless omnichannel experience.” They also average 114 interactions a month with their financial services organization. That is nearly four times the number of average interactions per Boomers+, and 50% more transactions than either Gen Z or Gen X.
Gen X (41-56 years old) is similar to Gen Z and millennials in their comfort using digital services, but they align with Boomers+ consumers in other areas, such as their preference for traditional financial institutions. Gen X trusts their primary financial services provider more than any other generation. While only 39% of Gen X consumers have experienced fraud or identity theft, 95% of them believe their primary financial services “did enough to resolve fraudulent activity on my account quickly and efficiently.”
Boomers+ (57+ years old) are less likely to prioritize digital and mobile services; instead, they want convenient and nearby branches. Sixty-three percent prefer to open a deposit account at a branch, more than twice any other generation and more than four times the number of millennials. They are also loyal and content with their current banking situation. They are the most likely generation to continue with the same financial institutions next year and their satisfaction rating is the highest of any generation.
Some other survey findings:
· Gen Z respondents ranked debit cards (44%) followed by cash (28%) as their preferred payment choices. Mobile Payments ranked last among all generations.
· Three-quarters of millennials would switch financial services organizations for a better mobile experience.
· Only 63% of boomers feel their primary financial services provider will protect them from fraud and identify theft, which is the lowest among the generations.
Even as generational preferences vary, about half of consumers surveyed plan to give all of their future deposit business to their current primary financial services organization. However, these numbers decrease for all generations when asked if they plan to give their future loan or investment business to their current primary financial services organization. “Those numbers fall rapidly for loans and investments, but are consistent across all generations,” the report stated.