Gen AI is the key to making Gen Z love banks

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Gen Z is stepping into the workforce, and as they start generating income, they will need bank accounts. So far, less than half of Gen Z individuals old enough to hold bank accounts have one, so financial institutions are eager to grow their youthful clientele. And the tool banks hope will foster this connection? Generative AI, of course. 

Banks have been fast adopters of generative AI, but most are still only using it in ways that don't excite young people: fraud protection, coding efficiency, customer support and back-office process improvements. When it comes to using AI to create the future of banking for Gen Z, banks need to think a bit more creatively. 

Gen Z wants a new kind of bank: mobile-first, no phone calls, no branch visits and hyper-personalization. They want unique investment advice, since two-thirds are already saving for retirement. And they want all of their financial services to be accessible in one place, with tight integration between all their accounts. That's far from today's reality, even after a decade of digital banking innovation. Consumers have different accounts for mutual funds, mortgages, checking accounts and student loans, and they get investment advice from disparate, and sometimes untrustworthy, sources.

Now, enter generative AI. It offers banks the opportunity to quickly deliver the type of integrated digital banking services young customers crave. It also allows banks to go beyond "predicting and personalizing" to "generating one-to-one interactions at scale."

It is still early days, but banks are beginning to leverage generative AI to meet Gen Z where they're at. They have no time to waste: many generative AI tools are already emerging, such as the Pluto and Candlestick personalized investment apps. Banks need to act now to incorporate generative AI across the customer value chain.

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Most young people are happy to chat with bots, and now that natural language processing is becoming much more advanced, thanks to generative AI, these conversations could become truly one-to-one interactions. A typical chatbot asks: "How can I help you today?" But generative AI can provide human-realistic advisors that become more and more personalized to each customer. A bot might instead speak like this: "Hi Amber! Great that you were able to save $300 this month by changing your commuting plan to a ride-share as we discussed. I know you had your eye on tickets to Coachella. Do you want me to put that $300 into a high-yield savings account with a 4.5% interest rate to save up for that trip?"

Where does Gen Z get most of their financial knowledge? Over two-thirds turn to TikTok, YouTube and Reddit to get punchy advice delivered by financial influencers, or "finfluencers." Gen Z is used to seeing a personalized TikTok feed, with algorithms making no two experiences alike. Banks can use generative AI to deliver short, informational videos and reels offering personalized, visually engaging advice on topics such as savings, investing and mortgages. For young consumers just starting out, this type of one-to-one experience instills a sense of long-term loyalty with financial institutions.

Shopping for financial products is another experience ready for this personalized transformation. Through algorithmic feeds, Gen Z consumers are used to seeing items that match their styles, interests and budgets. When it comes to shopping for financial services, they will expect the same. Instead of seeing an ad for a mortgage every time they log into their bank's mobile app — when they are many years away from owning a home — they want to see a personalized "store" of financial products that meet their immediate needs: high-yield savings accounts, gift points for timely rent payments and even gamified loan repayment plans. Imagine a generative AI app like this: A bank partners with a loan-servicing platform to automatically deduct $10 off a customer's student loan balance for each month they keep their checking account above a set amount.

The financial services industry is at the forefront of embracing AI. Banks have a head start after spending the last decade integrating fintech into highly secure and regulated environments. Now, they're ready to use generative AI to craft financial experiences that resonate with the aspirations, preferences and needs of the next generation of wealth creators.