Last year, 3,000 U.S. bank branches closed. Only one-third reopened.
Why?
It’s due in part to the rise of online-only banks and fintech innovations tailored to younger generations. A staggering 99% of Gen Z respondents use their bank’s mobile app for everything, from checking balances to depositing paychecks. What once required a trip can now be done with just a few taps, meaning banks are losing valuable in-person touchpoints.
Younger customers, raised in a digital world, expect their banking services to be just as advanced. Instead of steering them back to physical branches, banks are embracing the shift and turning to technology to build connections. And, with 72% of these customer segments open to using entirely digitally-based banking services, some branches are investing in online platforms like chatbots and apps to form new relationships.
With banks looking to build on their existing digital tools, many are turning to in-app offerings. In 2016, Goldman Sachs launched Marcus, a digital banking app offering debt consolidation, competitive loan rates and additional savings opportunities—all services traditionally limited to physical branches. This early move into digital banking, ahead of both COVID-19 shutdowns and Gen Z’s entry into the workforce, positioned Goldman Sachs for significant growth.
Marketing efforts are focused on social media platforms like Facebook, LinkedIn, and Instagram to connect with younger audiences; its Instagram presence (@marcusbygoldmansachs) has attracted nearly 88,000 followers. Through Marcus, Goldman Sachs has expanded beyond its traditional high-net-worth clientele to serve younger consumers with more modest incomes. Its digital-first approach provides flexibility and adaptability that traditional brick-and-mortar banks often struggle to match.
Following a similar path, Bank of America developed an AI-powered virtual assistant, Erica, in 2018. Erica’s integration into the bank’s mobile app drives personalized recommendations like savings tips and bill payment alerts—and, as it’s grown with the bank’s demographic, it’s made it easy for Bank of America to accommodate the 90% of Gen Z and 67% of millennials who say they prefer tech-based solutions when they help streamline financial tasks. It’s become crucial in improving customer retention for Bank of America. Since its launch, Erica has handled over 2 billion customer interactions, managed personalized financial guidance for 42 million customers and accounted for part of the bank’s 19% rise in earnings.
The rise of online-only banks, like Chime and Varo, are the next step beyond traditional digital banking features. By appealing to younger customers’ desires for a seamless user experience—eliminating the need for phone calls or in-person visits to complete transactions—they serve as strong alternatives to brick-and-mortar branches. Much like other banks’ AI assistants, they capture attention with financial advice and engaging visuals.
But, as a fully remote service, they place more emphasis on tailoring their offerings and advice to individual users. It results in faster, more customized service—an attractive feature for a generation that values strong customer care.
But the shift away from in-branch interactions doesn’t mean all face-to-face meetings have halted. Seeking a new way to reach its customers, Capital One pioneered something different—the Capital One Café. Open to both bank customers and non-customers, the cafés operate as a coffee shop and a space for Capital One bank ambassadors to answer questions. They even host financial literacy workshops and offer a free community meeting room.
For Capital One, leveling up its customer engagement has been invaluable. It currently operates more than 50 cafés across 18 states and Washington, D.C., attracting—and retaining—a widening customer base.
As traditional branches close their doors, the banking industry is leaning into digital platforms, AI-driven customer service and creative in-person experiences to meet their customers’ changing desires. And the future of banking lies in embracing that shift and delivering seamless user experiences. Ultimately, these changes lead to stronger relationships—benefitting banks and customers alike.
These generational shifts affect financial marketing strategies. So how do you adapt?
While many financial marketing trends may be temporary, Gen Z’s expectation for seamless omnichannel experiences is not—meaning, to keep their business, you’ll need to audit and adjust your bank’s strategy. We’ve highlighted three key steps to take below.
Audit Customer Engagement Channels and Preferences
Start by conducting a thorough review of how customers currently interact with your bank. Look into digital preferences, communication habits and channels where they’re most active—like your app, website, social media or even in-person visits. Survey customers to understand their needs and assess digital usage data to pinpoint where your bank’s efforts are resonating most effectively.
Why It Matters: This assessment will highlight any disconnects between what your customers want and what you currently offer. For example, if customers prefer mobile alerts over email notifications, reallocating resources toward improving mobile push notifications could improve engagement. This audit can also reveal underutilized channels, opening opportunities for strategic shifts that align better with customer behavior.
Use Customer Insights to Guide Investments in Product Development and Marketing
Armed with insights from your audit, focus on areas with the highest potential for impact. For product development, consider creating features that address specific customer pain points—like budgeting tools, quick loan applications or personalized saving suggestions. For marketing, identify which channels resonate best with your target demographics and tailor messages accordingly. Young customers, for instance, might respond best to authentic and interactive content on Instagram or TikTok.
Why It Matters: Customers increasingly expect financial services to feel responsive to their needs. Targeted product features show that the bank understands its clients, while strategic marketing across the right channels can drive new customer acquisition. This approach also ensures that marketing dollars are spent on initiatives that have a higher chance of resonating with the intended audience.
Evaluate Customer Touchpoints to Identify Missed Engagement Opportunities
Take a step back to view your brand’s engagement landscape holistically. Look at every customer touchpoint, from account setup to daily interactions. Are there moments where the experience feels lacking or impersonal? For instance, banks can add value with welcome messages, tips based on spending patterns or personalized financial advice prompts in-app.
Why It Matters: Younger customers expect an omnichannel experience that feels consistent across platforms. Addressing overlooked touchpoints (like a more engaging welcome experience or easy-to-find resources for support) can enhance customer satisfaction. Emphasizing these smaller interactions makes customers feel more connected and valued, ultimately strengthening loyalty.