Generational banking: adapting for all age groups among new emerging tech
By: Dana Bishop, VP of Experience Research Strategy at UserTesting
When it comes to banking and finance, people across all generations prefer a human touch. Notably, in the UK respondents said they prefer traditional banks over digital-only banks, attributing that to the fact that many still value face-to-face interactions with bank staff – insight brought to life via UserTesting’s 2023 global survey.
In a world where there’s been recent calls for more shared banking hubs for customers who are less comfortable with digital banking, how can banks cater to all generations globally? Shared banking hubs are a great solution, as they act as dedicated, communal places where communities can access everyday personal and business banking services from multiple banks and even get advice from a bank representative without the overheads of an individual branch per bank. However, the UK is particularly difficult, as almost 30% said they only use traditional banks, shunning digital banks completely, in comparison to just 12% of respondents globally. This is reinforced by the fact that American bank customers found digital wallets more trustworthy than customers from both the UK and Australia.
Generational differences in banking
From the 1,000 adults surveyed in the UK, over a quarter (26%) said that they’re not satisfied with their bank’s online app and website. Notably, the results show that there are several areas of banking that need attention and change.
When it comes to Gen Z respondents (those born between 1997 and 2012), 13% said they were very or slightly unsatisfied with traditional banks, meaning they were the most unsatisfied of all generations. To retain this group as customers, traditional banks need to keep up to date with technology and monitor their needs. Often, younger generations become aware and comfortable with the use of new tech quickly, so they’ll notice if it’s not available to them at their current bank. A key example of this would be Monzo’s “Split this Bill” feature or QR code scanning for transfers between friends.
Direct customer listening is crucial in this scenario, which means going beyond analytics and carrying out direct customer feedback user testing, to identify the most prominent friction points for each generation and to adapt services accordingly.
Digital vs traditional – which banking method comes out on top?
When it comes to digital vs traditional banking, there are some clear takeaways. Less than a fifth of UK residents (16%) said they “strictly” use traditional banks, choosing to avoid digital-only options. This figure is made up of 27% of the silent generation (born 1928-1945) and 22% of baby boomers (born 1946-1964). Comparatively, just 15% would rather use a digital-only bank with no physical presence, and 66% said they like to use both.
Despite this, 55% of all respondents said they still trust digital wallets and mobile banking apps, with these options coming through as most popular in the more middle-aged generations, with 64% of Gen X and 60% of baby boomers. The silent generation were the least trustworthy though, with only 38% stating that they’d trust and use them.
When asked about digital bank transfers, only 30% of respondents said they’d prefer to use it as the most popular way of sending money back and forth, yet 77% said they transfer money up to five times per month via this method. Worryingly, just over one-fifth admitted they are more likely to spend flippantly using digital payment options, in comparison to physically handing money to somebody or going into the bank to process this. This is a concern and customer-wellbeing factor that all banks should consider, and how it can be tackled. Methods could include warnings on banking apps, two-factor authentication for transfers or even customers being able to impose their own limits on how many digital banking transactions they make, or how much they spend.
Those who prefer traditional banks said that it’s because they prefer speaking to humans (43%) or having a physical place to go (35%). Out of all the respondents surveyed, the silent generation preferred talking to humans the most (57%), followed closely by the baby boomers (51%). Millennials (30%) had the least interest in speaking with humans, which again shows the likelihood that the younger generations are more comfortable navigating FAQ pages, chatbots and automated support services.
Risks and considerations for the older generation
The reduction in traditional banks on the UK high street has resulted in a decrease in customer satisfaction there too. Though many said they like traditional banks because they want to talk to humans face-to-face, UserTesting’s survey actually found that 81% of respondents haven’t talked to a bank teller face-to-face in at least two weeks. This therefore shows that traditional banks are what many people want, specifically the older generations who aren’t so digitally savvy, but that actually this ever-growing limited availability may become a problem if human support isn’t available when people do need it.
This is supported by the fact that Age UK, the leading charity for older people, has said that the lack of high-street banks risks isolating older and vulnerable customers. The charity has called for more shared banking hubs to address this issue, to ensure that older people are able to continue to be independent and handle their own finances. Shared banking hubs is certainly an option that traditional banks should consider moving forward, especially as the research found that 66% of customers prefer traditional banks with both a physical branch and digital platform over digital-only banks.
What’s next for banks and how can we accommodate all?
It’s a strange dichotomy here, as physical banks are closing yet the data supports that consumers crave the benefits that traditional banks provide. This can be the older generation who appreciate the face-to-face interaction and support, but it also may also apply to the younger generation too, who appreciate help from a human if they face an issue online or something more severe. Banks should also consider the advice on hand for the younger generation if there were no in-person banks. Many look at their decline as a problem when people have an issue or need help, as there’s nobody on hand, but actually, it could also be an issue when it comes to getting advice, opening new accounts, applying for mortgages, opening ISA’s and more. As a result, when implementing new services it’s important that digital banking platforms take this into account, ensuring the processes and offerings support customers’ human-oriented banking needs and allow alternatives, such as video calls.
There’s definitely space for hybrid institutions to exist, as both digital and traditional banking platforms have their exclusive benefits. However, it is evident that there is a need for physical and digital banks individually too, so long as they can account for the shared perks that are required from both. This is why shared banking hubs are such a great idea. Cost-effective, but still providing the on-the-ground support that users want.
Ultimately, convenience is crucial. The study revealed 38% prefer traditional banks because if there’s an issue, they’d much rather talk to a person than a chatbot or phone operator. It’s also important to note, 30% would consider switching to digital-based challenger banks because of their ease of use, so if traditional banks want to compete, they need to go directly to their customers to find out exactly what the convenience on offer elsewhere is. Is it down to being able to access money from anywhere? Is it the speed of transfer and not having to go to a physical branch or ATM to check balances? Is it requesting money from friends and family, splitting the bill digitally or moving money around? Find out and try and emulate it.
What we’re continuing to learn is that digital banking saves time for the most part. Its popularity, already rising for years, soared during the pandemic and hasn’t let up. However, the human element still prevails. Traditional banks need to improve their customer experience if they want to keep up with the experiences offered by alternatives.
The overarching advice? Adapt your offering for each generation. For younger generations, offer more digital banking options and services, and for older people, ensure there’s more human help if needed. Make processes smooth and easy to follow, make support easy to access and ensure that even apps and websites can be adapted to suit each individual’s needs. This is the only way traditional banks will maintain a strong customer base in the current climate, attracting younger generations, but equally, it’s also the only option if challenger and digital banks want to attract and retain customers from older generations, too. As traditional banks do seem to be closing branches, the future may be digital, but it’s important to make that transition online as easy and human as possible.
