- Reimagining new ways to provide personalized, meaningful and on-target interactions with their customer
- How to build a digital suite of products that offers
mobile-optimized account opening, access to paychecks early, daily balance
alerts, and around-the-clock customer support. - In order to retain customers, it's important for community banks to show a commitment to environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) issues, and to walk the walk by collaborating with niche organizations that align with their values.
Catherine Leffert (00:06):
I am Catherine Leffert. I'm a Technology Reporter at American Banker. Thanks so much for coming to this panel where we'll talk about how to attract Gen Z younger generations, and we'll discuss how to create products and services that appeal to those folks. So with me, I have Brittany Williams. Brittany is the first Vice President of Digital Growth and Partnerships for People's Bank, a community bank based in Holyoke, Massachusetts. I actually just discovered she's the only remote employee and she's based in Chicago. And we'll talk about why that's relevant. So People's Bank launched a digital brand called Zinlo at the end of 2019 as a grab for younger clients and nationally, especially Gen Z and millennials. Brittany leads the digital growth strategy and banking as a service partnerships for Peoples Bank and Zinlo. We also have Benjamin Conant. He's the CTO and Co-founder of Mantl, a tech company for banks and credit unions. Mantl provides banks with omnichannel account openings, technology for both consumers and businesses and helps banks launch digital branches. Is there anything that I missed before we jump into questions? Great. So we're going to chat about what younger folks want from their banks and what mantle and Zinlo have done successfully to bring in that business. So jumping right into it, Gen Zers are currently in their teens and early twenties, so I want to talk about how you view their financial needs and how those should be delivered by financial institutions. Brittany, maybe you can start and share how Zinlo is catering to those needs, especially compared to people's Bank.
Brittany Williams (01:48):
So yeah, Zinlo is more targeted towards a younger demographic, and this is our national digital footprint, which helps us. So people's bank is the charter bank. Being a regional bank in the Northeast, it's very limited in their community outreach. So that's why Zinlo was built. And focusing more on the younger demographic is something that people's Bank typically just wasn't doing. So how do we cater to them? What we've done particularly is this year we focused on learning more about what their needs are and why they want certain things. So it's really easy to just say, this is a product I think that they want, or this is a feature that they want, but we're just trying to trace back why do they want that? And I think just generally, most people make decisions based on emotion. So did you make a fear-based decision or an excitement based decision? So studying what drives Gen Zs was really helpful, and what we found from that emotional market survey was that Gen Zs actually have a lot of fears as it relates to banking, and I think that stems from lack of financial literacy. They worry that they're not going to be able to pay their bills, they worry whether or not they're going to be able to retire. So what we wanted to do is just tackle that a little bit. So we do this thing in our social page where we call it fin lit. So we're just kind of using terminology that fits with that generation and we're delivering to them little tidbits of information to create a place where they can come and learn how to become more financially literate. So what we'll do is we'll just do something like what is a p y using some terms that everybody talks about, and you probably do the nodding and smile, I totally know what that means. We have no idea. So we'll just break it down in simple terms so that they become more literate and they see us as a financial advisor to them, or what is money market basic things that they wouldn't already know. So that's how we really want to target those guys. And table stakes. Then you'll probably talk about this too, but their hyperconnectivity and mobile situation, shall I pass to you?
Benjamin Conant (03:53):
Sure, Thank you. I think it's kind of important to think about how big of an opportunity Gen Z is, how important it is to get our act together in terms of serving them. Gen Z currently earns in income around 7 trillion a year, and by 2030 that'll be up to 33 trillion a year, which will represent 30% of global income. So this is a massive wealth generation. I think a lot of times people think, oh, they're not as wealthy as the boomers or the millennials, but they're going to be a significant portion of our market. They're also about to open a ton of bank accounts, about 4 million bank accounts a year over the next three to four years because they actually don't bank with traditional banks. About half of them use a Robinhood or a Coinbase or a Chime or a Clarity Money, one of these FinTech challenger banks. So that's a huge amount of consumers who are growing up and they're just not using any kind of traditional bank. So it's really important that we think about them uniquely because they are unique. I think what they expect really boils down to one word, which is friction or rather frictionless. Gen Z expects a frictionless experience. So where boomers actually want more friction, they actually want to go into the branch, they feel that that's a more secure, fulfilling relationship. Millennials want to do it online. Gen Z wants to do it on their phone, not even in a web browser. And that's why 35% of them say that they would be open to banking with Apple and Apple's making a serious savings play right now. So you really have to treat this generation seriously, and it's really an opportunity for our industry to shine because Gen Z doesn't trust the big banks. They're willing to take a risk on a newer brand. So to serve them, you really have to think about having an excellent mobile experience and having a frictionless onboarding experience. And when I talk about frictionless, I think it's like 50% of Gen Z spends about three hours on a platform like TikTok with video streaming every day. They're buying stuff too. About 65% of TikTok users will buy from small businesses, and I've done it myself. You click an ad, you then click PayPal or Shopify's pay thing, it's two clicks and the shoes come to your house, right? It's like you don't enter any information after the first time. So that is the quality of digital onboarding experience and also digital experience that they will demand. And if banks and credit unions don't serve them, they're going to go to the apples, to the coin bases, to the Robin Hoods of the world over the next 10 to 15 years.
Catherine Leffert (06:57):
Thanks. I mean, I really appreciate you outlining both the imperative to serve this community and also talking about their fears, they are fearful, and also their behaviors. They use mobile. Those are really interesting points that are specific to Gen Z. You both kind of work in this digital brand digital branch space. I think that strategy is really interesting and it's starting to pick up. And I'm wondering what type of performance you see unlocked through these digital branches and digital banks and why a bank would choose to go that route as opposed to just updating their core technology or bringing on more vendors. So Ben, why don't you start on that and maybe give an example where Mantle's worked with a bank to unlock some potential?
Benjamin Conant (07:51):
Yeah, I mean, I think one of the things maybe three or four years ago that I had a strong thesis about was that community banks and credit unions would start to spin off digital only brands. So you have your traditional brick and mortar brand that everybody knows, but then you start a second brand one that is maybe targeted specifically at some subset of folks from Gen Z for example. For example, gen Z plays a lot of video games, a lot more than millennials. They use Twitch, they stream video games. Why isn't there a bank for video gamers? That's a brand that could be created based on your banking license. And that's a huge niche of people that you could be marketing to. So one of the things that Mantl does with our account opening platform is it allows you to have your main brand and then an infinite number of digital only banks. So we actually have a customer here, CSV, that's had a huge amount of success building off spinoff brands, experimenting digitally in that way. And I think with Ivy Bank for example, there's a focus on environmental sustainability and financial literacy, which has resonated with folks.
Catherine Leffert (09:09):
And Brittany, I mean talk a little bit about Zinlo and how that strategy has played out.
Brittany Williams (09:15):
So having the digital brand, like I said, just gives you a regional footprint, a US footprint that you wouldn't have with a smaller community bank. And it allows us to target the younger generations if we'd like. And we do find it to be a valuable target for us because they're so curious, because they're more likely to be accepting of a digital brand. The older generations might be like, where's my branch? Where's my human? Which there are humans behind Zinlo, by the way. We're not just bots, but they're just more curious. With that though, you have this curiosity. They might want a gaming bank, but they're also less loyal than older generations. So you have to continue to retain them. You've got to find a way. If you can get them in the door, that's great, but having customer lifetime value is a challenge. So we'll talk about some more ways to kind of target those groups for retention.
Catherine Leffert (10:12):
Yeah, I appreciate you going into some of that. And Ben, I think you touched also on a good topic there where a bank can target a niche community but still have their separate bank as well operating, which I think is important. I mean, I've seen several niche Neobanks pop up that are targeting a specific community, but there's just not a business case to have a whole separate company targeting that one community. And we've seen some of that play out recently and be negative, but building it on top of your existing bank makes sense with Ivy Bank.
Benjamin Conant (10:52):
Yeah, I think banks have a, I mean, mantle started as a challenger bank. What we wanted to do from day one was to build a digital first bank that us we would want to use and our friends would want to use. We learned very quickly that way better idea to serve the traditional FI market. But to us in this David versus Goliath scenario, we're looking at every community and regional bank in America as having a massive advantage of having the license, of having the operations, of having the expertise of how to run a responsible financial institution, which we lacked. So if you're sitting on a banking license, it's actually way easier to start a digital only brand or multiple digital only brands than you might think. It doesn't require another corporate entity or anything like that. And there are FinTech founders scattered across Las Vegas at money 2020 who would kill to have that strategic advantage.
Catherine Leffert (11:52):
Yeah, no, absolutely. And I guess going with that, that's a strong advantage having that license, but what challenges or problems should banks prepare for keep in mind as they're launching digital brands or digital branches?
Benjamin Conant (12:12):
I think there's going to be resistance to change within your institution. You got to have really strong contracts from the beginning around how operations are handled, how your customer support is handled. You got to kind of map it out from the account opening experience through to the retention and the online mobile banking experience through to logos. If you're actually sending out mailed statements or anything like that, you have to really make it feel like its own entity and that can be challenging. And you're also going into serving a fundamentally new type of customer. If your bank is built on, people love us because they love our tellers and they love walking into the branch and you're trying to market to people who really don't want that human interaction and want an internet first experience, that's going to be a bit of a cultural change as well to retain those users. But these challenges are definitely things that can be overcome for sure.
Catherine Leffert (13:12):
And having the right governance in terms of picking your technology partners and vendors and things like that, I'm sure helps with that consistency that you were talking about. So let's say once banks do set up digital branches, I want to talk about how you reach this younger generation. Ben, you told me before this panel that Mantle has a new product to address the growth engine marketing. I was wondering if you could tell me a little bit about that.
Benjamin Conant (13:38):
Yes. This is in pilot, so this is not an announcement of it, but we are experimenting with something we're calling Growth Engine, which is basically pairing our customers with world-class digital marketing agencies. I am actually curious, and everyone on my team is sitting back at that table. It's going, is going to laugh at me, but raise your hand if your bank markets on TikTok. That was one. That's good. And two and two. That was two. Okay. So that's three. All right. We've got some early adopters here. I think changing in simple ways like meeting Gen Z, where they are and where they live. We talked about education around what is an APY, right? Well, the best person to educate Gen Z on what's an APY is an influencer that they follow and they don't even need, you don't forget about the spinoff brand. It can be your own brick and mortar brand that's been around for a hundred years. Gen Z's highly mobile. They're more suburban and less urban. They're all over the, and they like the local feel. If you have someone that they trust marketing, a local brand that they're seeing around them and explaining with financial literacy to them, that's a compelling message. That's how crypto grew so fast. Coinbase was absolutely marketing on TikTok and also finance and also all of those sort of institutions. Gen Z is the first generation that actually has most of its wealth right now today in cryptocurrency. And it's because the crypto companies were marketing where those folks are, right? They're very different than millennials that are on different social platforms. That requires a fundamentally different marketing strategy
Catherine Leffert (15:29):
Using Finfluencers. Exactly. Finance, influencers. Brittany, one thing that you had mentioned before was kind of this element of surprise. Tell me about the mailers.
Brittany Williams (15:42):
Yeah, well, you just gave way the ending You're going to think. This is silly, but digital brand, we're thinking to ourselves, how can we strategically, of course we're going to be where they are. So we're going to be on TikTok and YouTube and Insta, and we're going to use influencers. We have to be there. That's kind of like the table stakes to us, but we're like, where can we be that nobody else is? So we're like, well, we either innovate a new marketing channel or we go old school. And so between me and my marketing partners, we're talking about doing direct mail again, and the reason is stick with me. We can create a digital experience out of this. And also the big banks are there, so big banks are still mailing you, but we're not, right? So we need to compete in all of the channels. So jury's out on how it'll go. I don't know the ending yet, but we are going to resurrect old paper mailer and see how it goes.
Catherine Leffert (16:33):
It's definitely surprising. I certainly don't get mailers from banks anymore, and I think if I got one, I would be interested enough to look it up.
Benjamin Conant (16:44):
Especially if it had a QR code on it, you might just get it in the mail, scan it with your phone, and then you'd be in a mobile experience. Right, exactly. That's how it's fundamentally different from boomers and millennials.
Catherine Leffert (16:55):
And you had a QR code strategy too.
Benjamin Conant (16:58):
Yeah, So I think all of, we've talked a lot about how to market to Gen Z in a good way. I think you're just going to burn money unless you can convert them into long-term customers with high value. The second step after getting marketing or maybe operationally, the first step is to have an absolutely frictionless onboarding experience. And this is really what mantle is designed to do and to help banks achieve. We've had customers who have just with their physical branch presence, put up ads on their branches with QR codes, and before running any additional marketing, they just start to see spikes in application volume. Now, they already had the QR codes before mantle, but it was that as you're literally walking and chewing, you scan the QR code, you try to sign up, you've got two minutes with that person, that person's going to need to get a taxi or get on a bus or walk into a coffee shop. You have to get them through the flow that quickly. So it's very, very important to focus on time to submission, time to actually having an account in that way.
Catherine Leffert (18:09):
The QR code is really interesting. And then that's where you're, like you said, the frictionless experience gets them on.
Brittany Williams (18:15):
And also, I was just going to add, so this is from a previous life, but if you can blend the omnichannel experience, so you've got maybe paper mail driving you to digital or you're in a branch and then you connect digitally, it does actually create a greater affinity with that customer. I've seen it, like I said in previous life, but connecting those channels where they know they can call you and a human will answer, you can go to a branch, but if you get spooked, you can just apply signs, see how it goes, and then go in or whatever you want to do and kind of meet them everywhere they want to be in all possible ways.
Catherine Leffert (18:50):
And proves, like you said, that reliability builds that trust. That's a good segue into something I want to talk about, which is retention, onboarding and engaging with younger people is grand, but loyalty is not a given at this point, especially not with younger people, especially not as all banks have or as banks are developing easier onboarding systems and they can move their money, what's important to them so that they don't jump ship into another tech savvy bank. And Brittany, what's effective at Zinlo, for instance?
Brittany Williams (19:27):
So we want to provide features and products that a lot of the big banks, so we know that the big banks, the top 15 I think take up 75% of deposit market share. The top five take up 55%. So the rest of these 5,000 regional community banks, we're all fighting for a 25% market share. So it's easy to jump ship. So we need to give them a reason to stay with us. So at Zinlo, we've created a pairing between the checking and savings product. So it's almost considered one when you go through our onboarding experience for you both of those products at the same time. We want you to get both. And the reason is because one of our value propositions is this product called Zing. So basically every time you transact with your debit card, we'll round up your purchase to the nearest dollar deposited into your savings, and then the bank will match it. So this creates something like an instant gratification cash reward, which we know Gen Zs want. That was another takeaway from our emotional study, and it's kind of a simulator to why people would use a credit card, for example. So we've got instant gratification and we've got cash paying back, and a lot of the big banks, they're not doing that. We also have a 2% APY checking product, which a lot of banks aren't doing, and then to support them in, I mentioned the worries and fears at the beginning of this, how do we give them financial literacy and empower them to manage their finances and feel super confident about it? So we have two features in the servicing side. So online banking side for Zinlo, and one of them is a goals feature. So in your savings, you can create goals, so you only have to have one account. A lot of the big banks are going to want you to, if you want a holiday fund, you have to create a new account. You want to put a fund for your kid, you got another account. So suddenly you're like me, you've got 20 of them. So at Zinlo you can have one savings account, create your goals, set your barn, you can start saving for your mortgage down payment. So what I like about that is paired with the Zing product, this teaches Gen Zers that it's good to save. You can reach goals. It's very visible. They like to see again that instant incremental. Then the other thing we're doing is called savings folders, where this is more on the checking side. So whenever you make a purchase, if you're learning to budget, for example, I want to spend $500 per pay period on groceries and whatever, a hundred dollars on entertainment. So you can set those spending folders, and as you spend, you kind of allocate to that and it will dwindle down. So now you're managing your money, you feel empowered like, well, I know how much I have, I know how much I have left. And then they can start to see that it's just a behavior that I think is good to learn. The younger you learn it, I wish someone taught me when I was younger. So those are the types of features that I don't find with my big bank. So it's those types of things where I think we can keep retaining them and showing them that we want to be a teacher, that we're an advocate for them, and also teach them how to manage their money.
Catherine Leffert (22:24):
But it's engaging. It's not like patronizing or condescending. It's very, and it's brings them along.
Brittany Williams (22:31):
I am not going to tell them what their goals are, what their spending should be. I just facilitate whatever it is that they set out for themselves.
Catherine Leffert (22:36):
And the personalization is really important. Ben, tell me a little bit about, you mentioned that embeddable personalized products are really important for banks. Where do you see that success being successful?
Benjamin Conant (22:50):
Yeah, I think you got to look at your online and mobile experience, and you got to try and make that experience something that is more than just a balance check every couple of days. Integrating PFM into that experience is super important for loyalty. I think if you can get someone actually budgeting through your app, you get a little bit more attention into your app, it starts to feel a little bit more like a long-term relationship. I also really agree with the sort of, I think Gen Z is really focused on values that are almost not profit driven. They care deeply about the environment. They care deeply about social issues. They're less likely to want to go make a ton of money than millennials or boomers. And so if you can build CD products, savings products, checking products that align with their values, that's a recipe for a long-term relationship even as they move around. One thing is, I think there's a kind of a trap in thinking about branches when you think about Gen Z, because a Gen Z basically doesn't want to go into the branch sometimes, but very much less than other generations and they move around a lot. Average job length for someone in Gen Z is about two and a half years. If they switch jobs more quickly and they move around more. So you're going to just get an increase of the issue of, Hey, we've got a brand presence in Massachusetts, but not really elsewhere. You kind of have to make your brand a digital native brand that they can carry around with them.
Catherine Leffert (24:27):
And I mean, they also kind of go together. You mentioned that Gen Z move around a lot, having this national brand is really important, and it kind of ties back to how their priorities differ as well and having this very personalized niche product like finding them in their communities. And I appreciate you bringing up the ESG ideas because I think that is something that's increasingly important to younger folks. It matters to them if their bank is evil or if they can plant a tree every time they swipe their credit card. So I want to go over a few big takeaways and then I think we have a little bit of time for a couple audience questions. So the importance and really how vital it is to engage with Gen Z, which is this massive market and this massive opportunity, especially in the next three years, and some of their priorities, how they are fearful of saving for retirement and not knowing how to take care of their financial wellbeing, meeting them in certain niches, targeting their interests, ESG, things like that. They need a mobile experience and a frictionless onboarding experience is really important. So with that said, I was wondering if anybody in the audience wanted to pose a question for Brittany or Ben about some of this?
Audience Member 1 (26:06):
Have kind a curve ball so I apologize, but how much of a Gen Z is really focused around ESG? And I've had conversations with two Gen Z children, and maybe they're the exception, but they do on SSG as a concept. They don't, in other words, two investments, all the other one, but the one that isn't is returning 10% and the one that is at negative 1%, they're investing. What are you seeing is ESG or Generation?
Benjamin Conant (27:08):
I don't think it's everyone. And I think that there's definitely many, many folks in Gen Z that take a more traditional attitude towards investing. They may even be the majority of Gen Z. I think the population that puts social concerns first though certainly is growing just based on poll data, survey answers. People are kind of even electing to take careers that are more government style careers versus finance or legal style careers. There's a shift in the type of work people are looking for. This isn't a complete 100% thing though, so it is sort of just talking on trend versus on absolute terms.
Brittany Williams (27:52):
Maybe it's just more about, I'm a big proponent about right place, right time, right offer. So it's about what's compelling. So to your point, if it's that easy to, not easy, but you get the point, if it's more simple to create a new brand, a new niche brand affinity brand, that might be super compelling to some, but not everyone, but it's okay because we're not trying to be the big five. We're fighting for the small piece of the pie. There's 5,000 banks, we're all doing the same. So it's just, okay, it's super compelling to the ones that it's compelling to.
Catherine Leffert (28:25):
And on that, I mean, we've talked solely about reaching Gen Z customers, but there's also been research that shows Gen Z employees. It matters to them the values of their company and where they work. And if those companies value ESG values, again, probably not across all of Gen Z, I mean, I don't think that any of what we've talked about applies to a monolith. Gen Z isn't a monolith. So anyway, but thanks for the question. I think we can take one more last one. Yeah, in the back. Oh, thanks Penny.
Audience Member 2 (29:09):
Hi. So I'm 25, so I guess I'm Gen Z technically, but I was just wondering, so looking at all these different channels like TikTok and I don't know, Instagram, you're venturing into these populations and segments that are much younger people, A lot of people my age aren't really financially literate, A lot of them aren't saving as much as they should be. How do you make sure you're contending with that kind of credit risk, the increased credit risk with people basically my age who don't potentially know what they're doing with these credit cards, these different accounts to that you're not exposing yourself to much more risk than let's say with someone who's 40 or 50 who has a mortgage, who has a lot of a good credit file because they don't understand what they're doing. And so by reaching out to Gen Z, how do you ensure at least at a local credit unions or smaller regional banks to ensure that you're managing that credit risk in, I guess a good way? That said, thank you.
Benjamin Conant (30:06):
That's a great question. I think perhaps many people in the room know that the industry term for this is a flat file. So you've got someone who's young, there's not a lot of credit history there, and how do you perform KYC on that person in a way that is fair, but is also sort of trying to control your credit risk? There's a lot of things you can do. One of the things that Mantl is very focused on is just incorporating best in class data sources and being able to add new data sources into your automated KYC flow. So I think LexisNexis just a month ago, released a product specifically for how to perform KYC on Gen Z. And so if you have a partner in terms of onboarding customers that can keep up with that pace, you're going to be ahead. The other thing is flexibility in the products that you're offering. You can offer and market products that have more controls around that credit risk to Gen Z versus products that you would market more to boomers. There's also things you can do within your bank, within how you're opening new accounts that can mitigate that risk a little bit. So that's sort of what we see from looking at a lot of banks and how they onboard customers. I'm interested to see if you have experience.
Brittany Williams (31:37):
Yeah, I think I have a credit background, so there's obviously no credit check happening, but obviously there's a lot of fraud monitoring and such. So looking at the customer in particularly KYC, we just set all of our parameters very specifically, and we don't have different parameters for if you're opening a money market account versus a checking your savings account. But as your file grows, you can just start to model a little bit better and tweak those so that you're keeping your risk down. And then of course, post-acquisition fraud is a big piece of it too, so we might approve you for the account, but there's a fair portion of our new accounts that get closed soon after coming in because we recognize fraud. So I think we probably open the door a little bit more to see how it goes and then quickly close it, and that leaves us with the remainder of good quality customers.
Benjamin Conant (32:33):
Just building on that one, I think very good idea in terms of marketing your bank, I think many folks in Gen Z have actually tried to apply for a bank account and been rejected. So providing that education on how to build your credit and your history up so that you can be approved, there's a lot of opportunity there.
Catherine Leffert (32:52):
Yeah, that's where that financial education kind of is both a retention factor and also a risk mitigation. Yeah. Well, look, we are out of time. In fact, we're past time, but this was really interesting conversation. Thank you, Ben. Thank you for Brittany so much, and thanks for coming everyone.