By W.B. King
Among findings from a recent Q2 research report is that digital, customer data-driven banking features are not limited to younger demographics and that increased security and fraud protection are critical to enhancing personalized online banking experiences.
“Consumers in all age groups show a strong preference for personalized online services. Sentiment around these experiences shows both success and room for improvement,” the Q2 The Personal Bank: Delivering personalized experiences across generations report noted. “Financial institutions (FIs), and regional banks and credit unions in particular, can build on this momentum and grow their business by innovating faster and providing comprehensive digital consumer journeys.”
The Austin, Texas-based Q2 provides digital banking and lending solutions to banks, credit unions, alternative finance, and fintech companies in the U.S. and internationally. In the first quarter of 2024, the company commissioned The Harris Poll to survey consumers about their banking preferences and attitudes towards the banking industry. Respondents included Gen Zers (18-26), millennials (27-42) and Gen Xers/boomers (43 and older).
“Gen Z shows strong trust in banks and credit unions to support their financial journeys. This level of service could become the new normal for financial institutions as Gen Z grows up,” Q2’s Principal Product Manager Jaime Dominguez said.
“To remain competitive in the long term, financial institutions must maintain this trust and be prepared to support these customers as their earning power and assets grow,” Dominguez continued. “This means using tools to anticipate the financial needs of consumers across income levels and behavioral segments, all while maintaining investment in the personal support that drives Gen Zers to visit physical banks.”
Report findings include:
74% of respondents across generations want more personal banking experiences.
50% agree that their current digital banking app anticipates their needs.
66% of all consumers are comfortable with their financial institution using their data to personalize their experiences.
41% say their financial institution occasionally surprises them with relevant support or options.
22% say it regularly feels like their financial institution is reading their mind.
The Need for Digital and In-Person Experiences
While younger consumers lean into digital banking experiences, older people tend to want both physical and digital experiences, the report found.
“Compared to their older counterparts, Gen Zers rely more heavily on digital banking services to help guide their decision-making and improve their financial status,” the report noted. “At the same time, in-person banking services are important to them too, further signaling Gen Z’s dependency and trust in financial institutions.”
As Gen Z consumers advances in age and grow respective bank accounts, the report added that there is an opportunity for credit union unions and banks to “gain primacy and Gen Z deposits by using segment analysis and differentiated banking capabilities to evolve alongside this cohort.”
To support the aforementioned stance, the report offered the following data points:
55% of Gen Zers access their bank’s mobile app or website every day, compared to just 41% of Gen Xers and boomers.
60% of Gen Zers said they have noticed a positive impact on their financial habits or goals due to personalized digital banking features, compared to just 33% of Gen Xers and boomers.
Though 100% of Gen Zers had banked online in the past month, only 43% prefer banking online, compared to 63% of millennials and 57% of Gen Xers and boomers.
65% of Gen Zers prefer opening an account in person, compared to 58% of millennials, Gen Xers and boomers.
The AI Factor
As artificial intelligence (AI) evolves, consumers will expect their FI to securely weave related technologies into the banking experience, the survey found.
“While most consumers trust banks and credit unions, they also expect technological improvements to drive better security for their data and assets,” the report noted. “To encourage customer loyalty and remain competitive in the coming years, financial institutions of all sizes must continuously harness emerging technologies to enhance security features and communicate these efforts to their customers.”
The following data points support these findings:
70% of consumers agree the banking industry is trustworthy.
70% of consumers are on board with the use of AI for advanced fraud detection.
When asked how their financial institution can improve their customer experience, 44% listed higher levels of financial data security as their top priority.
48% expect their financial institutions to implement increased protection for their financial data in the next five years as AI becomes more prevalent.
“The superpower of Gen AI (generative AI) is being able to mimic human behavior, language, and even the way humans look and sound. Because of this, the entire way financial institutions have designed their authentication systems can now be unraveled,” Q2’s Vice President of Product Management Corey Gross said. “To combat fraud, financial institutions need to use Gen AI as a proper defense posture to stay ahead of fraudsters and increase security within their organizations.”