How to rebuild your back office for Gen Z

Smart phones stacked on top of each other

Generation Z has arrived. They’re hitting the age when they’re getting jobs, opening bank accounts and making major life decisions. But their tech-savvy and customer service‑oriented expectations for businesses may strain many banks’ back offices. Here’s how community banks are evolving their operations to keep up.

By Susan Thomas Springer ■ Illustrations by Daniel Hertzberg


To be in front of Gen Z’s needs, your community bank’s back office must be in tiptop shape. That’s because operations is key to a bank’s ability to meet the customer expectations of America’s youngest generation.

For example, if a community bank decides to offer seamless person-to-person (P2P) money transfer capabilities, it’s the technology team that makes the magic happen behind the scenes. This generation, the oldest of whom are out of college, joining the workforce and beginning to make major financial decisions, is a dichotomy, expecting both no-touch and high-touch service. Community bankers say it takes a solid technology base to build upon, insight into the unique demographics of your community and new thinking to capture the emerging needs of a demographic that will soon grow to eclipse other consumer groups.

Members of Gen Z, born roughly between 1995 and 2015, are between 5 and 25 years old. Studies show that older members of this independent, autonomous generation are averse to risk and credit. They want high-yield accounts and are already thinking about saving for retirement.

iPhone with spending on the screen

Nikhil Srinivasan, cofounder and COO of Zebra IQ, a Gen Z insights and trends company based in San Francisco, says it is more than that.

While bankers assume this generation has high technology expectations—which is true—they are also seeking financial guidance and IRL (in real life) experiences. “They expect the world’s information and capabilities at their fingertips, but they also expect really strong brand trust,” Srinivasan says.

That’s great news for community bankers who already possess loyalty and are positioned to be this generation’s experts. The question is: How can operations prepare you to extend your brand into the digital world of Gen Z?

While megabanks may seem hard to compete with, they have a harder time personalizing services in the way many Gen Zers expect.

“Retail banking is not going anywhere,” Srinivasan says. “Yet, they need to evolve their locations beyond a couch and a bowl of candy.”

“Retail banking is not going anywhere. Yet, [retail banks] need to evolve their locations beyond a couch and a bowl of candy.”
—Nikhil Srinivasan, Zebra IQ

Partnerships are key

First National Bank in Las Animas, Colo., focuses on banking business specifically in the agricultural community. The $375 million-asset, seven-branch community bank is planning to meet Gen Z’s needs with a long-term strategy. Rather than actively recruiting young customers now, the bank is building rapport with Gen Z by readying them for their business life. The community bank sponsors sports programs and financial literacy classes, offers free popcorn at basketball games, and maintains an active presence in nearby schools with staff serving as coaches and school board members.

“I think those things are highly valued by the owners of agricultural businesses and their kids,” says Ben Johnson, First National Bank’s chief operations officer.

For back-end processes and technology enabled to meet these younger customers’ needs, the key is new solutions that integrate well with existing systems. First National Bank is working with strategic partners to ensure they share the same vision. Its core provider emphasizes the importance of the free flow of data so that the teller system, deposit system, debit cards and online banking are all integrated. Gen Z, as well as customers across demographics, want fast and easy access to all their financial information in one place without any slowdowns from software glitches.

iPhone with a pie chart on the screen

First National Bank knows the first banking interaction with Gen Z will not likely be face-to-face. So, in 2019, the community bank revamped its website. Marketing consultants told them that instead of offering robust information, as was the advice in past years, with Gen Z, “less is more.” So, the redesign featured less content, simpler navigation and a mobile-friendly resolution.

The community bank is also considering online account opening, a new product that would represent a “big change” for an institution known for its hands-on approach. Currently, customers visit branches to read disclosures and sign documents when opening an account. The new process relies on background systems to check ID and online signatures. While this would be a great product for Gen Z, Johnson says, First National Bank must balance the increased risk of authenticating customers online.

The community bank’s Gen Z readiness includes staffing changes so that silos are broken down internally. It’s a benefit that 20% of its employees are under 25.

“I see department lines being blurred,” Johnson says, “because customers want to talk to a trusted person about the wide array of products we offer and receive good answers rather than being sent someplace else.”

“I see department lines being blurred, because customers want to talk to a trusted person about the wide array of products we offer and receive good answers rather than being sent someplace else.”
—Ben Johnson, First National Bank

Delivering the Apple experience

Maine has one of the highest percentages of senior citizens in the country. Its population is also growing slowly. For $4.7 billion-asset Bangor Savings Bank, that demographic mix means it’s crucial to capture the next generation now, and that requires back office preparedness to reduce friction.

“Ten years ago, if your website was down for a few hours, it wasn’t the end of the world,” says Bob Montgomery-Rice, the community bank’s president and CEO. “Today, if your mobile banking product is down for minutes, it really impacts a consumer’s ability to bank and it’s a real threat to the relationship.”

“Ten years ago, if your website was down for a few hours, it wasn’t the end of the world. Today, if your mobile banking product is down for minutes, … it’s a real threat to the relationship.”
—Bob Montgomery-Rice, Bangor Savings Bank

Today, Bangor Savings Bank is focused on an internal culture shift to move beyond the traditional thinking of process, order and controlling risk. Montgomery-Rice says he’s always asking, “How [is Gen Z] going to drive us to be different?”

iPhone with a budget chart on the screen

“We’ve been focused on creativity and innovation, because if you’re going to meet Gen Zs needs,” he says, “your bankers, project managers and operational people need to be more nimble and quick.”

Bangor Savings Bank’s teams are prepared to bank Gen Z thanks to its solid technology base, Montgomery-Rice says, plus good client lifecycle management, a platform that can be built upon. The community bank frequently considers when to expand to 24/7 operations, and it’s beta testing a debit card that rewards consumers for shopping with local merchants. Finally, the bank keeps its board aware of efforts to attract Gen Z customers that require time and money before receiving a good return on investment.

Gen Z’s technology demands and customer service expectations may just be the tip of the iceberg. Montgomery-Rice says older generations follow their kids and grandkids in embracing the newest technology in an effort to stay connected. Increasingly, all age groups may expect your community bank to offer security, speed and access without needing them to take action.

In short, all generations grow to expect the Apple experience. Gen Z’s expectations are inherent in digital natives who grew up with smartphones. As Montgomery-Rice says, “Thank you, Steve Jobs!”

Three coworkers sitting around a laptop together at a table outside

Product Preparedness

The two youngest generations have key differences. Nikhil Srinivasan, chief operation officer of market research and consulting firm Zebra IQ, says there’s a noticeable line between Gen Z, a generation that grew up never knowing a time before the internet, and millennials. Here are five areas where Gen Z is differentiating itself:

Gifts
Millennials like gift cards, while Gen Zers prefer gifts via mobile payments apps like Venmo and Cash App. When young teens are broke and call out to their friends on social media, they’re rewarded with multiple low-dollar, in-app gifts. That phenomenon offers back-office teams an opportunity to reconsider how the popularity of social lending could influence their community bank’s products.

Knowledge
Gen Zers learned from an early age by searching for answers on YouTube. Banks would be wise to offer educational videos to educate this generation about financial planning. They want to know how to allocate investments as small as $50. They may seek guidance on managing their monthly “burn rate,” Srinivasan says, so that they can budget for higher housing and tuition costs.

Fees
Gen Z likes free experiences without fees. But, because they are accustomed to in-app purchases, they may better tolerate paying for new features in real time rather than a blanket charge that appears to come out of nowhere.

Influence
Gen Zers grew up reading online reviews and influencer testimonials. So, while millennials may prefer big brands, Gen Z cares more about making value-aligned decisions and voting with their dollar. “They are thinking more critically about who they partner with,” Srinivasan says.

Tech
Does your community bank provide push notifications? Are you prepared to provide a subscription service fee model rather than traditional monthly charges? Have you considered automated financial advising? Having a strong tech platform may earn you Gen Z customer loyalty and help them to avoid “hopping around” between different financial services providers, Srinivasan says.


Susan Thomas Springer is a writer in Oregon.

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