How to Attract Younger Customers to Your Financial Institution

All financial institutions (FIs) want to gain new customers. Strategically, they have to consider who they should work towards attracting. Currently, baby boomers own about half of U.S. household wealth — $78 trillion of the $150 trillion national total — while Gen X controls nearly 30%. In contrast, Millennials and Gen Z combined hold just under 10% of the wealth pie.

On the surface, targeting wealthier cohorts might give FIs a leg up. But in reality? That’s a short-sighted view. 

Millennials are now the largest population segment in the U.S. Much of the country’s wealth will likely transfer to younger generations in the next few decades. And Gen Zers recognize the importance of financial stability. In fact, they’re 30% more likely to open a new savings account than other generations. Plus, they’re optimistic: 55% of Gen Z believes it’s easier to achieve generational wealth now than it used to be — compared to 37% of the general population. 

A focus on attracting and retaining millennial and Gen Z customers will set FIs up for growth and success, but they’ll need to harness the strategy to do so. By enhancing bank customer retention efforts, they can avoid the pitfalls of customer churn and build a loyal customer base among these different customer segments. 

In this blog, we explore the key characteristics of these younger customers, what they care about in their FIs, and what FIs can do to attract them by leveraging new technologies and leaning on digital banking solutions.

What Do Millennials Care About in Financial Institutions?

Millennials have long held a stereotype of being untrusting, uninspired, and selfish. There’s a good reason for that — they’ve battled a constant stream of economic challenges, from the Great Recession to the pandemic to volatile markets during post-pandemic recovery. 

Today, they face a tough job market and wage stagnation. As a result, millennials are rate-sensitive. Nearly half actively track interest rates and are willing to move money to different accounts for better rates, revealing a customer behavior pattern that heavily influences their banking decisions.

Despite economic headwinds, millennials remain focused on key life and financial goals. According to a 2024 survey by the CFP Board, their top aspirations include achieving financial independence or stability, owning a home, and building retirement savings. Encouragingly, most millennials are optimistic about their ability to reach these goals: 63% feel confident about achieving financial milestones, and 55% express optimism about saving for retirement. 

These findings suggest that, while financial challenges remain, millennials are actively working toward their long-term objectives. They also highlight the demand for banks and other financial services providers to develop a strong retention strategy that addresses their specific customer needs. 

When looking at a financial institution to open an account or take a loan from, millennials care most about:

• 24/7 customer service: Whenever a question about their finances comes up, millennials want to be able to get immediate help, reflecting high customer expectations and emphasizing the importance of real-time customer interaction.
• Mobile banking: 93% of millennials use a banking app at least once a month. A focus on digital banking not only helps attract these millennials but also strengthens existing customer satisfaction.
• Low or no minimum deposit requirement: Millennials don’t want to jump through hoops or feel that they might get punished for not having a daily minimum amount of money. Offering flexible accounts can help financial institutions retain customers who prefer building loyalty with transparent, customer-friendly terms.

What Do Gen Zers Care About in Financial Institutions?

Where millennials are considered uninspired, Gen Zers have a stereotype of being entitled and lacking a work ethic, with a (too) strong reliance on technology. Although older generations may look down on the newer ones, Gen Z is reshaping society and industries at large. 

Their dedication to social justice movements and skills at spreading information online are uniquely putting major pressure on companies to share their corporate values. Research suggests most Gen Zers prefer to purchase goods from businesses that align with their values, highlighting the importance of community banks and traditional banks alike to showcase their commitment to ethical engagement.

At the same time, Gen Z anxiety is at an all-time high. Nearly 60% of Gen Zers are stressed about money — a much greater percentage than other generations. More than two-thirds of Gen Zers rate their financial situation as “fair” or worse, and almost 40% are worried about making the wrong decisions. As such, they’re increasing their financial literacy while also holding FIs to high expectations. 

According to a recent Chime survey, 44% of Gen Zers reportedly switched their banking relationship in the past 12 months. They’re much more interested in testing new brands than other generations, and far more likely to switch FIs for the features, values, and rates they want. This underlines how crucial customer feedback and customer engagement can be in improving bank customer retention among Gen Zers.

With primary goals around transparency, authenticity, and an intuitive experience, Gen Zers look to their financial institutions to provide:

• A winning digital experience: Similar to millennial requirements, Gen Zers rarely want to visit or call an FI for simple questions. Only 10% go to physical branches at all. Therefore, investing in user-friendly, digital banking services can strengthen customer loyalty and help attract these younger customers.
• A winning customer service experience: Most Gen Zers hold an account at a particular institution because a parent opened the initial account. But they’ll leave to find better customer interactions elsewhere, whether digital and mobile or in person. For FIs, this emphasizes how important a robust marketing strategy and loyalty programs can be in driving bank customer retention.

3 Ways Financial Institutions Can Attract Younger Customers

Both millennials and Gen Zers clearly prioritize a digital, immediate, and streamlined experience. And both groups won’t hesitate to leave their FI if their experience doesn’t match expectations, especially with so much anxiety and financial challenges top of mind. 

To appeal to these priorities, FIs must prioritize new, innovative methods of attracting younger customers, retaining customers, and boosting customer satisfaction. These methods include:

Going Digital

A fast, intuitive, and valuable mobile app will go a long way for an FI. But more than that, the company’s website needs to be able to guide the customer experience. The right technology solutions will empower these digital experiences while building customer trust. 

For example, Posh’s Digital Assistant provides a conversational AI chatbot that handles common questions, streamlines banking operations, and answers questions while redirecting to human agents when needed. This seamless approach can help retain customers and expand the FI’s customer base by addressing different customer segments effectively.

Implementing 24/7 Customer Service 

Younger customers don’t want to wait until business hours to get answers to their questions about their account or loan payments. 

While some FIs may look to call centers for off-hours support, a solution like Posh’s Voice Assistant can answer hundreds of questions, authenticate users based on their voice, and save call data to make banking easy — at a fraction of the cost of a call center. Providing round-the-clock customer service is an effective customer retention strategy that can help reduce customer churn and improve bank customer retention overall.

Guaranteeing Positive Customer Service Experiences 

Frontline operations can truly make or break a customer’s experience. With membership itself on the line, FIs need a way to quickly answer questions, cut search time, and improve staff confidence. 

Customer support teams rely on Posh’s Knowledge Assistant to find precise answers to questions, answering within seconds rather than minutes. By delivering high-quality, immediate support, financial institutions can build strong customer relationships, reduce churn, and encourage loyal customers to stay.

Attracting and Retaining Bank Customers with Posh

As financial institutions implement new strategies to attract younger customers, seeking out purpose-built technology solutions can create the experiences these types of customers are looking for. By gathering and analyzing customer data, FIs can proactively address customer needs and fine-tune individual interactions, minimizing service gaps and bolstering loyalty. This not only helps in attracting and retaining bank customers but also in enhancing customer satisfaction across the board. 

That’s where Posh comes in. Designed specifically for financial institutions, Posh’s unified AI platform helps you deliver the seamless, responsive service younger customers expect — and makes it easier to scale support without sacrificing quality.

Take the platform tour and see how Posh can elevate your customer experience and deepen loyalty with every interaction.