According to Bloomberg’s analysis of United Nations’ data, Generation Z this year comprises 32% of the global population. By 2020, Gen Z consumers will have a greater impact on global banking and payments than ever before as they encroach on the market and emerge as the main customer base for banks. As the first generation of true digital natives, this transition will create a fundamental shift in how banking is consumed.
A 2020 forecast on the banking and payments industry
Gen Z will drive an increase in conversational finance – specifically chatbots. We have already seen this happen in China, which has a very young population. There, the tech-savvy youth are embracing mobile payments and WeChat Pay at an ever increasing rate – according to Shrey Rastogi, Senior payments Strategist at Temenos. In fact, WeChat Pay is on track to handle one billion payments annually. As China adapts its banking models to suit this new customer base, in 2020 we will see the rest of the world follow suit.
Gen Z may not represent the most profitable customer base for banks at the moment. However, their numbers and influence will soon become so significant that banks will have no choice but to redesign their services to suit their needs and requirements. In 2020, banks will need to incentivise their products and services, adding value, personalisation and even gamification techniques in order to retain a customer base that is by nature less loyal to their bank than previous generations.”
The Impact of Emerging Technologies on Customer Experience
“In 2020, we will witness a step change in customer experience, driven by emerging technologies like Artificial Intelligence (AI). Research from The Economist Intelligence Unit found that 36% of retail bankers believe that new technologies like AI, machine learning, and blockchain will have the biggest impact in the short term, and 42% by 2025, over trends like regulation and competition. In addition, 61% of the survey’s respondents think AI will create better value for banking customers by 2025.
AI-driven personalisation will reach new heights as banks utilise real-time data to make intelligent and insightful recommendations for consumers. For example, in the event that a severe flood warning is issued, banks could offer customers in affected areas the opportunity to add coverage to their home insurance policy and better protect themselves against any potential flood loss.
In 2020, we will also see the payments market continue to swell as a result of rising IoT adoption, cashless economies and digital currency. For example, we could see connected cars that have built-in authorisation to make payments for fuel or electric charging without the need for human intervention. To accommodate this, payments will need to become invisible and more seamless, as everyday consumer products and wearables gain the ability to handle them automatically.”
As Banking Evolves, Banks will Branch Out
“The proliferation of open banking and the entrance of big tech players into the banking ecosystem are two factors that are moving the goal posts for banks. With new, agile competitors driving experiential banking and upping standards for customer experience, traditional banks face their greatest challenge yet. In order to survive, banks must deliver truly tailored customer journeys, securely, while respecting their customers’ privacy.
In this race to deliver optimal customer experiences and retain customer loyalty, we will see banks differentiating themselves by branching out into non-banking activities. For example, a bank could partner with a FinTech to give travel advice or find the best holiday suited to a customer’s specific budget. Or, using an AI bot that can monitor foreign exchange market fluctuations, banks might recommend when to book an overseas holiday or purchase foreign currencies
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