IBM research highlights ‘disconnect’ between banks and Gen-Z

New research highlights a potential link between banks and Gen-Z when it comes to understanding customer needs.

IBM commissioned Censuswide to survey 3,000 Gen-Z customers and 750 C-suite banking executives in the UK, Germany and Spain – three of Europe’s largest banking markets. It found that nearly nine in 10 bankers (88%) believe they understand the needs of Gen-Z account holders, but their customers don’t necessarily agree with them. Over a third (34%) of Gen-Z don’t believe traditional banks understand their needs, according to IBM research.

This is despite the fact that a large majority of bankers (91%) understand that Gen-Z will have a significant impact on their bottom line over the next five years.

More than half of bankers (53%) believe their legacy systems put them at a disadvantage compared to neobanks when it comes to adapting to Gen-Z, but 86% of respondents still believe they have the technical capabilities to meet their needs . demographically.

The survey shows that banks are afraid of losing Gen-Z customers. 87% of bankers surveyed are concerned that Gen-Z customers are more willing to switch bank accounts compared to previous generations, with 86% concerned that higher expectations around ethics and environmental issues could push them away from traditional providers. However, the survey shows that the real picture is a little less drastic: 48% of Gen-Zers say they would switch to a bank if it had a better user experience, while less than two-thirds of Gen-Z (64%) would switch banks if their current supplier fell short on ethics and environmental sustainability.

The survey also shows traditional banks still benefit among Gen-Z: 55% of consumers trust traditional banks more than neobanks to solve serious problems like fraud, compared to just 11% who trust neobanks more.

Banks ‘must welcome modernization’ to appeal to Gen-Z

Prakash Pattni, MD of Financial Services Digital Transformation at IBM, tells FinTech Magazine: “Traditional banks in the UK and Europe face an uncertain future due to a growing disconnect with the Gen-Z demographic, and the pressure on banks to adapt has never been so intense. Younger consumers want fast and secure banking, and they tend to seek services that reflect their values ​​and beliefs. As Gen-Z account holders live completely digital lives, much of the disconnect comes down to technology. Notably, 89% of UK bankers believe they have the technology capabilities to meet their needs, but 38% of Gen Z are not so sure.

“While this may paint a bleak picture for banks unwilling to embrace digital transformation, they must welcome modernization to meet the demands of younger customers. Gen-Z was born in the internet age, so technological innovations play a crucial role in meeting their needs. This means that it is the banks that are responsible for developing user-friendly apps that can be easily integrated with other platforms. Importantly, as payments become increasingly embedded in technology platforms, consumer interactions with banks are declining. This is pushing banks to adapt by using technology and data to create more personalized experiences.

“On the flip side, the research also showed traditional banks are more trusted among younger consumers, with 55% of Gen-Z trusting banks to address serious issues like fraud, compared to just 11% trusting neobanks. Cybercriminals are adapting and becoming more sophisticated, and trust and security will continue to be at the top of consumers’ agendas. To succeed in the future, banks must continue to stay ahead of security and compliance challenges as regulatory oversight grows, and they must ensure that customers’ personal experiences are reduced, which which provides a safe, tailored and sustainable alternative.”