Adobe Analytics Research: How Different Generations Bank
A lot of banks are worried about their physical branches. They saw what happened in the retail industry, as the Internet flipped the traditional business model. Stores were perceived to be such a liability that “the apocalypse” was termed. Retail is not alone, and similar trends are happening in banking. For one, digital banking services have improved and are driving more people online, but upstarts in areas like payments and personal finance have grown as well. It has made the landscape more complex and competitive, without a clear roadmap on which channels to invest in and how to best optimize an existing network of branches.
New research from Adobe Analytics provides a pulse into how different age groups approach their banking needs. With over 1,000 US consumers surveyed, we have uncovered some surprising trends in how younger generations manage their finances, especially as it relates to the physical branch. We looked across GenZ (8% of respondents), millennials (36%), GenX (17%), boomers (35%) and traditionalists (5%), and also got a sense of how consumers are embracing emerging technologies such as chat bots and voice skills, as well as how things like reputation factor into the way people choose a banking provider.
The state of physical branches
Across every age group, the majority of people agree that the physical branch is an important part of the banking experience, as indicated by 66% of GenZ and 68% of millennials (GenX 70%, boomers 83%, traditionalists 92%). 72% of GenZ visit a physical bank branch at least monthly (the highest of any age group), followed by millennials (60%), traditionalists (58%), boomers (55%) and GenX (50%). On a weekly basis, traditionalists top the list (25% do so weekly) but is followed closely by GenZ (18%) and millennials (16%).
Over a 12-month period, making deposits (per 54% of respondents) and getting paper money (35%) tops the list across all age groups, but is followed closely by face-to-face customer service (24%). GenZ differs slightly, with deposits first (45%), followed by paying bills (28%) and face-to-face customer service (25%). Other notable activities include getting checks/money orders and turning in change for paper money. For more specific use cases, GenZ and millennials are getting documents notarized and applying for loans/mortgages more than other age groups.
These findings are surprising, given the mindshare of mobile banking and payment apps. But as we have seen in retail, no one channel can address all of a customer’s needs; Service like BOPIS (buy online, pickup in-store) have seen incredible growth and is breathing new life into physical stores. And with personal finances, we see that face-to-face contact still holds a premium. Moving forward, banks have an opportunity to evolve the in-branch experience, bridging it with digital and augmenting the relationship it has with customers over time. To be successful, banking brands will need to centralize and standardize omnichannel customer data, to understand the types of online activities that drive people back into branches, and vice versa. And while less than half of GenZ (42%) and millennials (49%) would consider an online-only bank with no physical branches, these figures should also incite a sense of urgency.
Emerging tech for personal finances
44% of GenZ and 31% of millennials have interacted with a banking chat bot (GenX 17%, Boomers 6%, Traditionalists 5%), showing that some of the investments in emerging tech are catching on. Of those people who have, 66% of GenZ (53% of millennials) found the bot experience to be better than interacting with a human representative. However, when asked about customer service needs, only 21% of GenZ (23% of millennials) prefers a bot over a human rep.
Is this a warning sign for bank tellers? Not so much. The invention of the ATM did not kill the bank teller role, but rather evolved it. For some, ATMs were simply more helpful when it came to paper money. That was its “hero feature” and has remained so in many cases. New channels are often most useful when the brand can identify the right hero feature, just like with mobile apps. They can solve very specific needs and make a customer’s life easier, but with more complex tasks, the data shows that human interaction is still preferred.
We see a similar trend for voice skills (on platforms like Amazon Alexa or Google Home): 37% of GenZ and 28% of millennials have interacted with one (GenX 15%, Boomers 5%, Traditionalists 6%). And of those that have, 64% of GenZ (54% of millennials) found the experience better than interacting with a human rep. But, when asked about customer service needs, 27% of GenZ (21% of millennials) feel comfortable leveraging a voice assistant. The same goes for personal banking needs, where 22% of GenZ (25% of millennials) feel comfortable leveraging voice assistants over human reps.
Top considerations when choosing a bank
When consumers are in the process of choosing a financial services provider (or switching from their current one), security and location of branches have bubbled as top concerns across all age groups, followed by reputation. Younger generations (GenZ and millennials) are more likely to consider digital services in their selection process, but still value branches. Here is the breakdown:
- GenZ: 32% ranked security no. 1, followed by reputation (17%), digital/app (12%), location of branches (11%)
- Millennials: 30% ranked security no. 1, followed by reputation (15%), digital/app (13%), location of branches (12%)
The older generations diverged slightly, with digital/app falling out of the top set:
- GenX: 36% ranked security no. 1, followed by location of branches (20%), reputation (14%), in-person support (11%)
- Boomers: 30% ranked security no. 1, followed by location of branches (24%), reputation (12%), local brand/credit union (12%)
- Traditionalists: 25% ranked reputation no. 1, followed by location of branches (23%), security (19%), in-person support (19%)
We also see a trend of banks driving longer lasting relationships with their customers, moving from more transactional relationships in capturing share of wallet to ones where they can be a trusted adviser, guiding financial confidence and well-being. Currently, 50% of GenZ and 48% of millennials find that their bank provides helpful guidance and content on how to achieve better financial health and money management (GenX 43%, Boomers 41%, Traditionalists 46%). This is at or below the halfway mark across all age groups, leaving opportunity for banks to promote these services more. This is another area that could potentially reinvigorate the in-branch experience.