May 9, 2024

Embracing Gen Z’s Need for Proactive Digital Banking

New research from Oliver Wyman sheds light on the unique financial needs and behaviors of Generation Z (those born between 1997-2012) in France. As this digital-first generation comes of age, banks must adapt to meet their evolving expectations – or risk losing them to digital-only challengers.

The Transparent, On-Demand Banking Experience Gen Z Craves

According to the Oliver Wyman study, an eye-opening 30% of French Gen Zers have already switched or plan to switch their primary bank within a year, with around half moving to online-only banks. The driving force? A hunger for transparency on pricing and fees that traditional banks often fail to deliver.

Gen Z is truly the first digital native generation, immersed in tech from birth. Unsurprisingly, they overwhelmingly favor digital channels and mobile apps for banking – with usage of apps twice as high as previous generations. Over 60% value 100% digital banking services.

However, the study also reveals that Gen Z hasn’t completely abandoned the human touch. Nearly 60% appreciate the ability for remote advisory, and almost half still want the option of visiting a branch. Clearly, they desire digitally augmented but deeply personalized banking experiences.

Building Trust Through Proactive Money Management

Another key insight: Gen Z feels anxious about an uncertain financial future and daily financial management, with over a third calling money a major source of stress. At the same time, they’re keen on investing, seeing it as an avenue for wealth growth earlier than previous cohorts (62% cite investment opportunities as a key reason to save – far more than the 46% for other generations).

To win over Gen Z, banks must find ways to proactively build trust, provide education, and alleviate the mental burden around finances – while offering tools for financial wellness on their terms. Enter AI-powered money management solutions like Personetics’ data-driven personalization, which leading European banks such as KBC have embraced.

“Our Personetics solution allows our customers to benefit from high-quality personalized data, served in a highly relevant manner that helps them make decisions about their financial lives,” said Karin Van Hoecke, General Manager (Digital) Transformation and Data of KBC.

Customers are increasingly adopting such AI-powered money management offerings. At KBC, in particular, the number enrolling in smart budgets is growing 20% month-over-month. The typical KBC customer sees approximately six personalized financial insights each month and finds them highly valuable – illustrated by the fact that almost 15% of insights are actively rated by KBC customers, compared to just 7% across the industry, underscoring KBC’s success in driving engagement.

Proactive Insights Powered by AI

By analyzing individual spending patterns, financial behaviors, life events, and more, banks can use AI to surface timely insights that provide guidance and advice. Imagine getting an alert that you’re overspending on dining out with automatic budget adjustment suggestions. Or a notification identifying funds to invest based on your goals and risk profile.

This proactive approach to money management checks all the boxes for Gen Z:

• Transparency: AI-driven insights make a customer’s financial situation crystal clear while explaining actions and recommendations.
• Autonomy: Customers stay in control, with the AI acting as an intelligent assistant to facilitate better money habits.
• Personalization: Recommendations are tailored to each user’s unique finances and life circumstances.
• Accessibility: Insights are delivered digitally anytime, anywhere via the channels Gen Z prefers like mobile apps.

As shown, leading European banks such as Ma French Bank, KBC, Akbank, and many others have already embraced AI-powered money management as a way to drive engagement and loyalty with mobile-first customers.

As Gen Z consumers come of age, proactive digital finance tools will be key for traditional banks to remain competitive and build trust with this new generation.

To help your Gen Z customers with proactive digital finance solutions and effective money management that improve their savings strategy, reach out to us for a consultancy session.