Tink has found that attracting Gen Z is deemed a key hurdle by UK banking executives, with over half (57%) identifying it as one of their foremost challenges for the upcoming year.
This demographic, known for their tech-savvy tendencies, has distinct demands that banks are keen to meet in order to secure their loyalty.
According to the research, two-thirds (67%) of these executives believe that engaging this younger audience is essential to future-proof their operations, while half of them view it as critical to maintaining competitiveness.
The study underscores the shift in consumer behaviour, with a notable 46% of Gen Z individuals already utilising third-party apps for money management, in addition to their main banking services. This trend highlights a significant risk for banks, as 31% of Gen Z respondents indicated they might switch banks if current digital tools and services do not improve.
To retain these young customers, banks must offer more than just basic services; they need to provide innovative solutions that address Gen Z’s financial challenges. Nearly half of the Gen Z cohort expressed a desire for personalised support in achieving financial goals (49%) and tools to manage spending (48%). Above all, these consumers are looking for enhanced visibility over their finances (57%) and assistance in managing living costs (55%).
Despite these challenges, UK banking executives are optimistic about the effectiveness of digital tools in attracting and retaining customers. A substantial 79% believe that banking apps and online features, such as money management tools, are crucial for customer acquisition. Similarly, 74% agree that these tools are vital for customer retention.
Jack Spiers, UK&I Banking & Lending Director at Tink, emphasized the opportunity that lies in adapting to the preferences of younger consumers. He stated, “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.”
Spiers further highlighted the strategic imperative for banks to evolve, noting, “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.”
The commitment to enhancing digital offerings is evident, as 72% of banking executives flagged the development of financial management tools as a priority. However, implementation remains challenging, with 70% acknowledging that customer demand surpasses their current capabilities.
As banks continue to navigate these complexities, they increasingly look to collaborate with third-party partners to bring innovative products to the market swiftly and on a larger scale, ensuring they remain relevant and competitive in the evolving financial landscape.
Keep up with all the latest FinTech news here.
Copyright © 2024 FinTech Global
