Discussions of digital banking trends tend to revolve heavily around millennials and how to court them. This is only natural — they’re a large demographic, and an important one, just coming into their own financially — but digital banking doesn’t revolve entirely around the millennial generation.
The older baby boomer and Gen X generations are large and important groups in their own right, and the teens and 20-somethings who make up Gen Z are already showing signs of differing from the millennials in their attitudes toward money. If you’re going to flourish in the coming years, your institution and its digital banking platform will have to understand and honor the differences between those generations.
Don’t Generalize Too Broadly
Numerous studies analyze the differences between the generations as consumers. When it comes to technology, the assumption is usually that the older baby boomers and Gen X are tech-averse, while younger millennials and Gen Z are “digital natives” and embrace technology enthusiastically.
The truth is more nuanced, especially in banking. Accenture’s 2019 Financial Services Consumer Study looked at attitudes toward digital banking among the generations, and found that respondents to their survey fell into four broad groups, or “personas,” defined by their degree of enthusiasm for (and trust in) technology. While age was indeed a factor, there was a surprisingly broad degree of overlap between generations.
Age Does Not Equal Attitude
None of the four personas identified by Accenture correlated directly with traditional generational labels. Their most-conservative persona, the “traditionalists,” came closest. Two-thirds of traditionalists were 55 or older, and therefore boomers, but a third were not. Traditionalists accounted for 21 percent of the total number of respondents.
The other three groups — “skeptics,” “pragmatists” and “pioneers” — showed a broader range of ages. Among the “pioneers” (risk-takers who enthusiastically adopt new technologies and services), a full 50 percent were between 18 and 34 years of age. That also means that 50 percent did not fall into that predictable age range. The skeptics, who are wary and mistrustful tech users, were the largest overall group at 33 percent of respondents. More than a third of those were under 35, and therefore millennials or Gen Z. The pragmatists, who simply view technology as a means to an end, were the most age-diverse group in the survey.
The bottom line? The standard assumptions about generational attitudes are a useful starting point, but only that. In a real-world context, personalization will be more important than generalization. With that in mind, let’s explore some potentially useful ways to connect digitally with each demographic.
The Boomers are Still Important
The boomers are a generation in transition in many ways, with the older segment now hitting retirement age and the younger ones preparing for it. Over the next several years, as their “silent generation” parents die, they’ll also inherit significant assets. At the other end of the scale, many boomers are approaching their later years with modest incomes and assets, and a great deal of financial uncertainty. Their needs will be very different.
Lower-income boomers account for many of Accenture’s “traditionalists,” who may be less accepting of tech in general. Low-quality internet access can be a limiting factor as well. It’s frustrating to use digital solutions with a slow connection, or on elderly and underpowered phones or computers.
Ease of use and consistency in hardware platforms will be important in your outreach to boomers. It’s also important to provide consistent, empathetic support that encourages them to use your digital offerings. Once they’re on board and comfortable with the product, they — and you — will be able to take fuller advantage of the guidance and personalization that digital banking offers.
Gen X is “Generation Stress”
Surveys of digital banking trends often overlook Generation X, whose users fall between the younger millennials and older boomers, because they’re a numerically smaller cohort. That’s a mistake for any financial institution because Gen Xers are currently in their peak earning years, and show it: According to the National Association of Realtors (NAR), they’re currently buying the largest and most-expensive homes and also the most multi-generational homes.
That latter statistic may be the key to understanding Gen X. Branding and marketing consultant Mark Arnold, founder and CEO of On the Mark Strategies, points out that “Gen X is really a ‘sandwich’ generation. They have Boomer parents or even ‘silent generation’ parents who are experiencing ill health, they’re passing away, sometimes moving back in with them. On the other side of the sandwich you have their kids, who are millennials, who now … are coming back to live with them. They’re very stressed out, because they’re trying to take care of their parents while they’re also worried about their kids.”
Arnold notes that “You really want to tap into their stress, from the tactical perspective, because they’re going in so many different directions.” Whether they’re skeptics, pragmatists or pioneers in their outlook, Gen Xers will respond to your digital banking platform if it seems likely to reduce their stress or simplify their lives.
Reaching the Millennials
Any number of articles have been written about the millennials’ role in the economy — often derisive or despairing. The simple fact is that millennials’ attitudes toward money were shaped by the 2008 economic crash and its aftermath. Stuck between the “rock” of low and stagnant earnings and the “hard place” of high debt (especially student debt), their often-mocked willingness to defer life goals like marriage and home ownership in favor of transient experiences was born of necessity.
In recent years, millennials have begun to regroup and find their way forward. The NAR survey showed millennials becoming the largest single group of first-time homebuyers, for example. A high percentage of those look as you’d expect — married with children, relatively affluent and predominantly white — while others have had to be creative in their approach to homeownership. They’re more likely to take on multiple jobs or “side hustles,” use some form of down payment assistance, or even form non-romantic partnerships to make homeownership possible. In short, they’re “#adulting,” despite the challenges.
Whether their life experience and personality type makes them pioneers, pragmatists or skeptics, millennials will respond to a digital banking platform that’s as agile and nimble as they are. You’ll have to persuade them that you can provide the flexibility they’re looking for.
Engaging With Generation Z, the Youngest Consumers
Internet memes tend to consider anyone younger than their mid-30s as a millennial, but that’s not really the case. The next cohort — Gen Z, currently ranging from their early teens to mid-20s, are also “digital natives” who grew up with technology, but they’re already showing some distinct differences from millennials. Research by the Center for Generational Kinetics shows them caring about different social issues, spending their time differently online and holding very different views about financial matters.
Millennials traditionally gave short shrift to long-range financial planning, but Gen Z is already showing a strong interest in saving, retirement planning and homeownership. The big question for the next few years is whether the COVID-19 pandemic and its economic aftermath will shape their thinking in the way the 2008 crash did with millennials. “It’s going to be fascinating to study Gen Z and the effect of the pandemic, financially, on them,” says Arnold. “Will there be a greater flight to safety for them? How will this affect their approach toward money? Are they going to be less likely to borrow because of this, because they don’t want to live paycheck to paycheck?”
Simply offering a digital banking platform will earn a shrug from Gen Z, who collectively take for granted that of course you provide your services digitally. “Gamification” may be the key to connecting with them. “From a tactical perspective, if you want to reach Gen Z, make it fun to manage their money,” says Arnold. “One way to do that is through gamification, where they complete badges or get points for things. You can also have them do things that relate to how well they use your products and services, and they get points for that.”
Marketing Strategies With Intergenerational Appeal
Given that attitudes toward technology and digital banking can vary within a generation, not just between generations, it can be challenging to create marketing strategies with cross-generational appeal. Research suggests a few possible approaches that hold that kind of potential.
Leverage Older Users to Reach Younger Ones
Research from PwC showed that half of respondents under the age of 35 valued recommendations from friends and family, and would open a primary bank account based on a trusted referral. That makes boomers and Gen X a real resource when you want to reach younger users. “A lot of them still trust their parents, they listen to their parents; in some cases, they’re living with their parents, so if you’re trying to grow membership, one way to do that is to reach them through their parents” says Arnold.
Proactively Address “Precarity”
Precarious employment and financial situations — sometimes called “precarity” — are mostly identified with Gen Z and Millennials, but they apply across all demographics. While other financial institutions simply see opportunity in that desperation, community banks and credit unions can help break the cycle — and still profit — by intervening.
“There are a number of ways to go with this,” says Laura Gilliam, research and communications associate at the Filene Research Institute. “People need cash, and often the only choice they have is the payday loan. Credit unions can address this issue by providing zero- or very low-interest loans to their members. The CU can create tools and services, but much of the solution depends upon developing community relationships. Any new products and services need to be addressed first with research.”
Support Entrepreneurship and “Gig Workers”
Similarly, it’s important to support gig (people who take multiple short-term “gigs” rather than full-time jobs and seasonal workers, entrepreneurs, and users across generations who rely on “side hustles” to make ends meet. “Most gig workers are hiding in plain sight,” says Gilliam, who points out that the transaction data already in your system can help identify the gig workers among your user pool and reach out to them proactively.
“What is their overall budget? How much do they need to earn each week, month or year to make ends meet and plan for the future? They need tools that help them plan, budget, set goals for income, [as well as] income smoothing tools,” she says. “They [also] lack the social safety net of traditional employment, so if credit unions can partner with other organizations that provide access to healthcare insurance, paid sick leave, retirement options, life and disability insurance, etc., this is ideal.”
Real-world examples can show the way. For example, Canadian credit union VanCity made it a deliberate priority to identify and support independent workers, and the early results have been highly encouraging.
Consciously Bridge the Generations
If you want to have — and appeal to — a cross-generational clientele, you’ll need ways to make connections between them. “That needs to be one of your overall strategies at a credit union [or community bank],” says Arnold. “Look for ways to bridge them. Older members typically are the ones with the deposits, and younger members are typically the ones who need loans.” A credit union or community bank could say to an older member, Arnold suggests, “‘If you get your younger family members to get a loan with us, we will bump your CD rate 10 or 15 basis points.’ That’s one way to bridge the generations.”
“You could have a lot of fun with this,” he continues. As an example of bridge-building in the opposite direction, he suggests offering incentives for younger members to help train older members in the use of banking technology. “Make it fun for the younger generation to teach their parents how to use home banking, or how to use mobile banking [to] deposit a check.”
Testimonials, word-of-mouth and high ratings on review sites are all useful tools, but full-fledged narratives are even more effective, and community-based financial institutions can draw on them to drive cross-generational engagement. “Storytelling is extremely powerful, “because every family has a story and every generation has a story,” says Arnold. “In ‘credit union land,’ you will see some members [with a] parent [who] was a member and they’re a member and their kids are members of the credit union. That’s really powerful storytelling, and there are stories out there to be told from a different generational perspective. You could talk about your products and services, and how different generations have used them. Rather than calling them ‘case studies,’ as in business-to-business, you could say, ‘Here’s the Arnold family story in our credit union.’”
If you do this, Arnold warns, don’t put your institution at the center of the story. “The member is the hero of the story,” he says. “Too many times I see where in financial institutions’ storytelling they put themselves at the center. No, no, no: it really is about the member or the consumer. The credit union is the guide; how did the guide help that member achieve their goals?”
Educate the Users Who Need It
Another powerful tool that crosses generational boundaries, but favors younger users specifically, is financial education. “They need it so, so much,” says Arnold. “Sixty-five percent of millennials live paycheck to paycheck, so they’re really struggling right now, and of course, COVID has hit them very strongly. They’re going to need education about student loans, about debt management, about buying a home. They don’t know a lot about money, so they need that education.”
The need for financial education is a recurring theme at the Filene Institute as well.
“I think with all the technology, we forget that saving whenever possible, even in small amounts, is necessary to reduce precarity,” says Gilliam. “Times are hard, but there are some simple prompts … that help with the human tendency to spend any extra windfall, rather than save. Filene piloted and supports the idea of ‘Save-to-Win’ programs, which have the effect of promoting savings behaviors among people who typically don’t save.”
Back It Up With Training
When you’re building out your cross-generational market strategy, spare a moment to look at how it applies to your own personnel. You almost certainly have generational differences among your staff and management, and between your users and front-line staff.
“You need to teach your staff how to engage with someone from a different generation,” says Arnold. “A lot of our clients do that and they’re seeing great success. If you think about your front-line folks, a lot of them are typically from the younger generation, whereas people who are coming into the branch are from the older generation. That can lead to a culture clash, so if you could coach [staff] and teach them how to connect, that’s going to increase your sales and service to those generations as well.
“You also need to train your leaders on how to lead folks from different generations. We’re seeing a lot of success with generational training, both online and in person, right now. It’s a solution to solve a big issue, which is generational membership and diversifying your membership.”
Analytics: Personalization Beats Generalization
For community banks and credit unions, the next couple of decades will present substantial challenges. A Filene Institute report titled “The Credit Union of the Twenty-First Century” identifies several of those challenges, from the increasingly precarious nature of employment — and the corresponding difficulty of financial planning — to simultaneously meeting the needs of both young and old users.
Your institution’s ability to meet those challenges will be largely driven by technology. As the Filene report notes, credit unions that harness artificial intelligence (AI), machine learning and predictive analytics will be able to use those technologies to streamline operations and enhance proactive outreach to consumers. Without a sound digital platform, it would be nearly impossible to create personalized, meaningful offerings for all users in all generations. With such a platform, it quickly becomes routine.
With every transaction, and every interaction with your app or website, your software should be building a tightly focused profile of each member. With that information to draw on, you won’t have to guess whether they’re Gen Z or Gen X, pioneers or skeptics — their own activity will tell you what their needs are; you’ll simply need the predictive tools to analyze the data, and then offer services and products to meet those needs.
Lumin Digital Delivers on Personalization
The success of your intergenerational outreach doesn’t depend entirely on your digital banking platform, but the tools provided by the right platform can have a substantial impact. Lumin Digital is designed and built from the ground up to be that kind of platform.
Lumin’s fast, cloud-native software coaxes the best-possible load and execution times even from older hardware and poor-quality connections, and its interface is consistent among all hardware platforms. That makes it easier to learn and less-frustrating to use, no matter whose eyes are on the screen. Just as importantly, its AI and predictive analytics enable your institution to provide powerful personalization and timely prompts, offers and assistance to your users. You’ll also have first-class support and access to Lumin’s API as part of the package, which will make both your users and your IT team happy.
Contact us today to request a demo and learn how Lumin Digital can help your institution improve its competitiveness across generations.