Appealing to Gen Z’s Retail Banking Needs

Banking is undergoing a major transformation, and while digital continues to grow in popularity, many banks are investing heavily in their physical networks. But what should these new and renovated branches look like to attract younger customers, especially Gen Z?

E.J. Kritz, EVP for Training and Insights at ath Power Consulting (apc) is an expert in retail bank design and customer experience. He shared some fascinating insights from his research on what Gen Z is really looking for from their branch experience.

While some assume that Gen Z has no interest in visiting bank branches, Kritz’s research found that’s simply false. In fact, 38% of Gen Z respondents said renovated, modern branches would entice them to visit, and 36% said a comfortable waiting area is important.

Gen Z wants banks to be “fresh, new, and innovative” and comfortable, he said. They don’t necessarily care about things like greeters or teller pods. Instead, they want to feel that their bank is staying current with the times and meeting their needs.

Put simply, they want an experience. It’s a misnomer that Gen Z folks are perpetually on their phones or that they turn their backs on anything non-digital. They seek authenticity and moments that feel like they were made just for them.

"Gen Z had a couple of years stolen from them during their adolescence during the Covid lockdown. They didn’t get to see their friends. They didn't get to go to school,” he said. “It was that experience that’s one of the main drivers as to why they value in-person experiences. What was taken away has become even more valuable.”

Relationships and Problem Solving

According to Kritz, there are two main reasons Gen Z would visit a branch. The first is to get personalized financial advice. Digital banking is full of AI and algorithms, but it still can’t replace the value of in-person advice.

The second reason is to get help with digital banking problems. Mobile and online banking can be glitchy and difficult to navigate. When Gen Z can’t solve an issue themselves, the branch serves as a convenient support center. Kritz said. “The branch should be a place to get hands-on help, like the Genius Bar at the Apple store”

Bank branches should leverage tech that puts the consumer in control – digital displays where customers can upload photos or curate music playlists. Rewards programs that incentivize visiting the branch and promote loyalty. Picture a digital “birthday reward” for coming into a branch, similar to the free burrito coupon program at Chipotle.

“Why are we not rewarding people to come into branches is beyond me,” he said. “Credit card companies are very good at this. We want all these customers to make mobile deposits, but we also want them to come into the branch once a year and sit with a banker to ensure we're doing a great job for you. But we're not rewarding that behavior."

He suggests focusing on creating an overall sense of hospitality at branches. Think warmth, comfort, and intimacy – environments where meaningful relationships can develop.

"Customers need to have a relationship with where their money is,” he said. “It was the banks that stepped away from that. It was the banks that became transactional, not the customer. Getting back to where customers have a real relationship with someone at a branch brings trust, and trust brings loyalty.”

Customize for the Local Community

Kritz said that instead of copying what competitors are doing, banks should pay attention to the unique culture and needs of the local community they are looking to expand into. For example, if coffee shops are woven into the fabric of the neighborhood, then go ahead and add a cafe into a branch. But if an area is more known for dog walking, consider creating dog-friendly spaces.

"What I tell banks is: ‘You do you,’” he said. “Stop trying to do the thing that the guy across the street is doing because you're not being true to your own brand. Find out what you are and then own it.”

The goal should be seamlessly integrating the branch into the lifestyle and rhythms of particular locations. When customers feel like a bank “gets” their community and is responding to actual needs, they’ll be more inclined to make it their go-to financial institution.

“Create an environment where the customer is valued, where the customer is participating in not only their own experience but the experience of others,” he said.

Looking Ahead

The future of retail banking will be defined by flexibility and meaningful customer experiences. To stay relevant, bank branches must move away from the rigid, transactional models of the past and empower the consumer.

"The teller line as we've known it is effectively dead,” he said. “Bury it and put a stake in the ground."

In its place, Kritz sees many more self-service stations in branches, much smaller, market-appropriate branches of 750-1,000 square feet (maybe even located in renovated shipping containers), and spaces to simply hang out.

"I think we're gonna see a lot of self-serve. and a lot more kiosks,” he said. “The interactive teller machine, while a great idea, probably won’t thrive, however.

"I see sleek, beautiful self-service kiosks that are intuitive and easy to use. But you can throw as much tech at the wall as you want to – if you’re not creating meaningful experiences in your physical space, the tech won’t matter.” 

Not to be forgotten are the employees needed to staff next-gen branches. Financial institutions need to understand that quality employees who complement the physical design of a branch can come from anywhere, Kritz said. 

“While experience design is a major component, the missing link in the chain tends to be related to employees. Gen Z, and all people for that matter, trust people they relate to,” he said. “To accomplish that, banks and credit unions must rethink how they hire and train the employees of tomorrow. Hiring a banker from across the street should no longer be preferred over potentially hiring a great person from Best Buy and simply teaching them banking.”