UK banks are intensifying their efforts to attract Gen Z consumers, but they’re finding that this demographic shows less brand loyalty compared to older generations.
In an attempt to draw in younger customers, banks are offering sign-on bonuses, referral rewards to encourage friends and family to join, and even children’s accounts to foster early loyalty among the youngest users. This was highlighted in a report released on August 21st.
The report also notes that banks are enhancing their digital offerings after observing Gen Z’s usage of various mobile apps, aligning with their expectations for banking services.
However, banks seem to face challenges convincing Gen Z to open accounts. This group tends to open accounts primarily to take advantage of bonuses and often maintains multiple accounts, typically using one main bank and separate apps for specific financial tasks.
This behavior correlates with the Current Account Switch Service introduced in the UK in 2013, which makes it straightforward for consumers to change banks.
According to the March 2022 edition of “Digital-First Banking Tracker®” by PYMNTS Intelligence, customers in the UK are utilizing switching services more frequently, not only for financial incentives but also for service-related reasons.
At that time, over half of those switching accounts indicated they were looking for improved online banking options, while many others cited a need for better mobile banking and customer service.
In a July report from PYMNTS Intelligence titled “Credit Union Innovation Preparation Report: Actual Stories Behind Member Churn,” it was revealed that credit unions are struggling to retain young customers. There seems to be a disconnect between the expectations of modern financial consumers and the services offered by credit unions.
Among Gen Z, only 23% are credit union members, and just 14% consider a credit union their primary financial institution.
The findings also show that Gen Z consumers prioritize strong customer service, higher credit limits, no-fee ATM access, and lower interest rates on loans.
