Gen Z is now originating more loans than any generation except Millennials, according to Morgan Stanley. As Gen Z ages and joins the workforce in larger numbers, this group will quickly grow into one of the country’s largest consumer demographics.
With this inevitable shift underway, we see changes in traditional consumer behavior and preferences — that started with Millennials — become even more pronounced.
Take, for example, online banking. These younger consumers are much more comfortable transacting money online than in a brick-and-mortar bank. They’re much less concerned about whether a financial institution has a physical branch and much more interested in efficiency and, above all, convenience. And they’re less likely to remain loyal to the same bank over many years than older consumers.
So what can financial institutions do today to stay competitive in this growing digital-first landscape?
Now more than ever, it’s clear they need to provide consumers with a personalized banking experience that is both easy to use and also meets this generation’s unique financial needs. These consumers not only want instant access to their own cash but also want to have loans and other services available at their fingertips — on their digital devices that is.
Given the expectations of these new consumers, there has never been a better time for financial institutions to leverage digital technology solutions that can deepen core consumer relationships and help make the lending process as efficient and beneficial as possible, both for the borrower and the bank.
To accomplish these goals, there are two areas that financial institutions can start focusing on right now: debt optimization and marketing automation.
Debt optimization is an example of an automated process that analyzes an accountholder’s financial data to determine if there is existing consumer debt that can be consolidated or refinanced within the financial institution.
For example, this can help an accountholder find a lower mortgage loan rate or to qualify for a mortgage that otherwise might not be available to them. Debt optimization serves the dual purpose of helping consumers get the best possible terms for their mortgages while, at the same time, allowing financial institutions to extend client
relations by offering other relevant products that help meet that client’s unique financial needs.
With this type of technology, financial institutions can provide their borrowers with more efficient, top-notch lending and home-buying experiences. And these are exactly the type of services that younger consumers are looking for. Also, internally, this practice can serve to attract top talent to join financial institutions in today’s challenging mortgage market, knowing there is an increased opportunity to grow into loan officer positions within the company.
Marketing automation, on the other hand, expands on the basic ideas behind debt optimization.
Marketing automation technology allows banks to personalize specific loan offers to consumers based on their exact finances and specific needs. Marketing automation is distinct from debt optimization because it doesn’t require accountholders to have existing loans before they start receiving tailored offers, and provides a tool for institutions to provide options to their consumers before they find an alternative solution with a competitor. This allows financial institutions to be more proactive about providing offers to a wider variety of their consumers, potentially preventing more personal financial crises before they even begin.
Given the incredibly wide variety of financial institutions and financial products available to today’s consumers online, having a robust digital marketing presence is the essential element in remaining competitive. Consumers need to be aware of all that a bank can offer, especially those who might be skeptical that a financial institution is up to speed when it comes to technology and accessibility, and digital market is a powerful tool to reach these key audiences.
Financial institutions should leverage their digital platform as a way to promote consumer experience technologies, attract the attention of younger consumers, and grow their reach in this key demographic.
By employing these technologies, financial institutions can empower the marketing teams at banks and credit unions to engage their existing and potential consumers with relevant, personalized offers that have the potential to add real value to their lives. They also can serve to empower institutional transition towards the increasingly digital environment of banking today, and can help attract young talent who can lead that transition effort at these institutions themselves.
Now is the time for banks and credit unions to step up to this digital challenge and leverage the technology that will make for the most convenient consumer experience and adapt the finance industry to this new digital landscape. To remain competitive — or even get ahead — they need to make these upgrades now or they will start losing out on both consumers and talent who look for those first-rate experiences and growth opportunities with an institution that has been more quick to adapt.
Chris Maloof serves as President of Go To Market at MeridianLink, Inc. He oversees the organization’s Sales, Marketing, Partner, and Product Management organizations.