Inside Gen Z: Lessons in Loyalty
This episode of The Purposeful Banker podcast is one in a series of episodes focused on better understanding Gen Z consumers and business owners. In this replay of our “Lessons in Loyalty” panel discussion, three Gen Z consumers unpack the multibank mindset, the importance of personalization, the digital-branch balance, incentives, and the role of education in trust.
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[On-Demand Panel Replay] Lessons in Loyalty: A Live Q&A With Gen Z Consumers
Transcript
Cheryl Brown
Welcome to The Purposeful Banker podcast brought to you by Q2, where we discuss the big topics on the minds of today's best bankers. I'm Cheryl Brown. Welcome to the show.
We usually focus pretty heavily on commercial banking here on The Purposeful Banker, but sometimes a topic is so important that it appeals to the entire financial institution—consumer, small business, and commercial. And today's topic is one of those conversations. In this episode and a few more, we'll be focusing on Gen Z and how best to attract, serve, and retain this segment of customers and members, both from a consumer perspective as well as Gen Z business owners. And we thought, why not just ask them?
So today's episode is a replay of a recent panel discussion with three Gen Z consumers, along with Amplify Credit Union's Stacy Armijo and Stuart Featherston from Q2 Innovation Studio. Listen in as the panel shares their unfiltered feedback on things like the multibank mindset, why personalization matters, and the balance between digital and branch experiences.
Stuart Featherston
Hi everyone. Welcome to Lessons in Loyalty and thank you for joining us live from Austin. I'm Stuart Featherston with Q2's Innovation Studio, and I'm joined by Stacy Armijo. She's the chief experience officer at Amplify Credit Union, where she manages retail marketing, payments, and talent teams and helping optimize experiences for members, employees, and the communities they serve.
Joining us as well is our Gen Z consumer panel. We have Cynthia Bryant, we have Katie Myers, and we have Drew Norman. All three are early career college graduates learning to manage their finances to address their short- and long-term goals.
And now that we've met our panel, let's set the stage with some key data of how Gen Z approaches financial services. We'll use this to frame some of the challenges and the opportunities that we'll be discussing and highlighting today.
First, some of those challenges. There's this idea of a multibank mindset. According to Accenture and Amex, three out of four consumers use multiple providers, and Gen Z uses fintechs just as easily as they do a bank or a credit union. And then there's the widely discussed topic of personalization. And the demand is real. Seventy-two percent say that personalization directly affects where they bank. And lastly is this interesting dynamic between digital and the human touch imperative. We know Gen Z logs in to their financial apps multiple times a day. Fifty-seven percent, however, won't bank with apps that are poorly rated, yet 65% see branch locations and branch access as a trust anchor.
So with the stage set with those challenges, now let's talk about the opportunities. And a lot of this centers around advocacy. So why getting it right matters. Advocacy creates growth. Institutions in the top 20% of advocacy scores grew revenue 1.7 times faster. Advocates hold 17% more products, and they allocate 30% more wallet share. Now the threat of switching is still very real: 63% of both Gen Z and millennials, they would switch if their needs simply aren't met.
So the stakes are high. Loyalty can slip away very quickly, or it can be a proven growth engine. So now let's talk about this in practice. Stacy, I'd like to start with you. What do you think about those trends?
Stacy Armijo
Those trends map to what we're seeing in Amplify. So I would say—and I cannot wait to hear from the panel because we’ve got some first-person perspective, so that's going to be exciting—but I would tell you from what you just mentioned, a couple of things that really ring true for us. The importance of all of the channels. So, you know, and the role that I'm in, and I'm sure there's a lot of folks who have similarly kind of broad roles. One of the biggest challenges that you have is figuring out where to invest. So we have limited resources. Do I put it into further digital interaction? Do I put it into physical interaction? Do I put it into service by phone? I have a lot of choices about how I can invest it, and the reality is, it's the answer that the marketer in me doesn't like but the observer in me knows is true. We have to put it in all of them because what we see is Gen Z really likes our branches, which was a surprise.
So we actually looked at especially when making a new decision. So we looked at members who make a new decision to join Amplify, and we looked at generationally, how were they likely to choose the branch or digital channels? Because at Amplify, you can choose to fully initiate your relationship with us, fully funded online. You can get it done in about 10 minutes. So we believe we have the convenience factor to be able to make digital a viable option. And what we saw was baby boomers prefer the branch two to one, so two to one they go into a branch versus digital, which wasn't really surprising to me. What was incredibly surprising to me is Gen Z chooses our branch four to one. They are four times as likely to choose to walk into a branch to open their accounts versus doing it online, so I'll be interested in y'all's perspective on whether or not this is really true.
But our design principle for branches is confidence and connectedness. So it's not that somebody can't do it digitally, it's that that's probably a new decision. So if I'm establishing a new membership as someone who's in Gen Z, it might be the first time I'm establishing a banking life apart from my extended family. That's new, it's unfamiliar. I want to walk into a place and see eye-to-eye with somebody and do that. Also, I probably never want to have to walk back in. So when I came in and I did a new thing, and now I really need your app to work really well for me because I don't want to have to. I want to choose to. So.
Stuart Featherston
And I think you've shared with us as well, that Amplify isn't focused on being the sole provider, but instead the best partner in their broader financial life. How does that shape and frame your approach to building loyalty?
Stacy Armijo
It shapes it in ways that direct investment. So what we say is every product has to live and die by its own merits. And so that is different from, I think, sort of established financial institution behavior of preferred financial institution and the cross-sell and next-best offer. So anybody who's been in financial services marketing for a while, I'm sure knows all of those, and they have been the Holy Grail for a long time. And the way we think about that is if we won you because we had a great product or we had a great delivery channel, we found you at the right time with the right product and the right price, that's great. And then I'm going to decide that I'm going to try to get you to buy something else just because you're already here that isn't actually that good? That's the dirty secret of a cross-sell. The dirty secret of cross-sell is we're going to make one thing really good, and we're going to hope that just because they're there, they're going to buy these other things that aren't quite as competitive as the other products in that area. We don't rely on that.
And we're not going to leave anything on the table, right? Like if we know we earned you for a reason in that moment, and you might also need these other things, we're going to make that proximate and hope that you want to have it, but we're not going to rely on that as our profit strategy. So every product has to earn its customer on its own merits. And so ironically, in my mind, that's actually how you get the loyalty.
So our industry and especially I would say we credit unions can be bad about believing that because somebody is a member … and we call them members, right? You know what our banking folks would call customers. At Amplify, we actually interchange those on purpose because we believe that a customer has to be earned every day. A member is easier to take for granted from a loyalty point of view. So we actually interchange those to keep ourselves hungry and accountable to the customer. But if you have to earn them every day, you're going to think differently than if you assume, oh, well, this person banks with us now. And so now they're going to want to have their whole financial lives with us. When the fact that I happen to go buy a car today, I need a banking account tomorrow, and I'm going to need a house 10 years from now. These are very different human decisions, and so I better have really different interactions if I want to win every one of those moments.
Stuart Featherston
That's fair. Well, thank you for sharing that insight. I appreciate your feedback. Let's bring in our Gen Z panel. So Cynthia, Drew and Katie, you guys represent the generation that sits at the center of all these shifts. And I think where I'd like to start today is how you think about when you choose a financial services provider, what kind of goes through your mind and your approach. So let's start with this first submitted question. Do you consider a traditional financial institution your primary banking relationship? And before you answer, let's take another step forward. Think about those terms: traditional financial relationship and primary banking relationship. What do those mean to you guys?
Katie Myers
I can start. So I think like traditional financial institution I think the bank or credit union on the corner right down the street. And then my primary, I think, where does my paycheck go at the end of the day? And where do I go and check. OK. Do I check my balances and all that stuff. So that's what I kind of consider traditional versus primary.
Stuart Featherston
OK.
Drew Norman
Yeah. I would also say which app I open the most. Not necessarily wholly that, but I definitely like use my phone or my banking app more day to day than I would like, say, in branch.
Stuart Featherston
That's your primary.
Drew Norman
Yes.
Stuart Featherston
OK.
Cynthia Bryant
I think it's really interesting because, honestly, I don't think that I think about it in terms of a primary banking relationship. I think this is where my direct deposit goes. So I know that's where my money is going to be. And when I think about other relationships, I think, what accounts are my bills coming out of? What accounts do I have that are focused on growing investments or where's my savings account? So I guess I don't think about it in terms of primary. I just think, like, where exactly is my money?
Stuart Featherston
OK. So all right. Perfect. So let's talk more about that idea of a relationship with a bank or credit union. And there's a wide world of fintech apps. We're going to talk about that a little bit more later. Is the idea of a relationship even important to you?
Cynthia Bryant
I would say yes. Yeah.
Stuart Featherston
OK. Why?
Cynthia Bryant
Because kind of similar to what Stacy was saying, I think that it's really important to have good digital capabilities. But at the end of the day, if I'm not getting what I want from something digitally, I want to go in person. I want to be able to speak to a human face to face and identify what challenges I'm facing, so that way they can fix it for me. So that relationship of person to person is still important to me, even though I do extremely value high functioning applications that are going to give me good digital banking experiences.
Drew Norman
Yeah, I want to feel like wherever I'm banking cares about me and I'm not just a number to them. So I guess when I say a relationship, it's more of a one sided thing. I want you to really love me, and I don't necessarily need to call you and ask how you're doing every holiday.
Stuart Featherston
That's fair.
Cynthia Bryant
Another thing, too, that Stacy also mentioned is this is the first time we're really making these decisions. Are we going to open with a new credit union or bank, a new account? And so being able to go in person and kind of get our hand held just a tad is really valuable.
Stuart Featherston
Well, that's a great segue to the next question is when you think about your goals, what do you need a financial institution for? Is it—and I'll give you just some ideas to throw out there—is it investing? Is it saving? Is it lending? Is it the educational aspect of financial services?
Drew Norman
I would just say that I'm going through a lot of firsts, and pretty much all the financial education I have was not taught in school. It was taught by my family members or my friends who are technically financially savvy. So I want to have a partner that I feel like is invested in my success, and I want to grow with them as a result of that. So I would say financial literacy and financial education is a growing thing that's on my mind every single day.
Cynthia Bryant
I would agree, I would say out of the things that you listed, all of the above are important. However, like financial literacy is so important because it's not taught in school. And even though some people are fortunate to have parents that can show them how to kind of be literate, I guess in terms of financially, some people don't. So sometimes the first time that you're learning about investing or saving is either when you're in college or like when you're applying for financial aid and you're kind of starting to understand, like, what is a loan? Like, how does that work? And so I think that's something that I absolutely think is very valuable, is being able to be educated by financial institutions that I'm giving my business to.
Stuart Featherston
OK. When you think about choosing a bank or credit union or even a fintech app, what is driving that choice? Is it they're providing you with the education that you're seeking because it's a first-time experience? Are you getting these recommendations from friends and family? What seems to be a go to source? And I'd like to hear from maybe each of you as to why you're making that choice, because that's ultimately what we're after.
Katie Myers
I would say I initially will start with friends and family because I trust and value their opinions, and I see their success with one of those three things. And so I want to kind of do that as well. And then I normally kind of research on the side and just kind of try to see like, oh, is that something that actually goes with what I'm interested in doing. So …
Drew Norman
I would say like cash incentives or a major thing for me, I want to go somewhere where I feel like I'm going to be rewarded for making that switch because it's a big switch whenever you go and open a new account, like that's a major transition for a lot of people. And then if I have a friend or someone else who's gone through the process that can back it up and they have good reviews online. That's all additive to me. Like, get me in the door with the incentivization that you're offering, I think is the main thing that I look for whenever I'm opening a new account or shopping around for a new bank.
Cynthia Bryant
I totally agree, the first time I ever opened a credit card, it was because I knew that I was going to get 90,000 points for opening it up. And so that was, you know, oh yay, I'm gonna get something right off the rip from just starting the account there. So I think that's definitely a driving force for like when I choose like a new account.
Stuart Featherston
OK, so we got friends and family and then in more of an incentive driven approach. OK, great. Stacy, maybe you can share with us how you're using data to distinguish between preferences and last actions amongst your membership to drive those strategic decisions around which products and services you want to offer your membership.
Stacy Armijo
Sure. So it's interesting to hear your preferences. Can I ask a follow up question before I ask that? So when is the last time you guys made a new banking decision? Like how long ago was it? Was it like six months ago? Was it six years ago?
Katie Myers
Probably in the last six months?
Stacy Armijo
So recently.
Katie Myers
Very recently.
Stacy Armijo
And how did you find that one? Whoever it was. Friends? Was it a group text chat?
Katie Myers
We were at dinner talking about our finances. Super cool. And we were talking about high-yield savings accounts. And how do you save and why are you leaving your money kind of that type of thing. So and then I was like, you know what? Maybe I should do that.
Stacy Armijo
OK.
Katie Myers
And I did it.
Stacy Armijo
Cool.
Drew Norman
For me, it was I bought a car last year for the first time, and that's a major purchase. And that was a big thing that I had been, like, striving for for a long time. And then the car company I bought it for had a partnership with a bank that I just basically had to go to.
Stacy Armijo
You are the magical indirect auto conversion And so for our financial industry partners that know what I'm talking about here, indirect auto is a lending program that banks and credit unions have, where you went to a dealership to buy a car and you walked away with the loan that they had available. Their institutions on the back end have those partnerships with the dealer. And a lot of the reasons that financial institutions have those partnerships is because they want to transition their auto loan customers into banking customers. And so indirect auto as a category, opinions vary on how financially successful it is for community institutions in particular, but a lot of them do it because they want to earn a banking customer. So that is the reason I say you're the unicorn of indirect auto is because most conversion rates are really low on that. So that is interesting to hear that worked for you.
Drew Norman
Cool.
Cynthia Bryant
Yeah. Mine was in January of this year just after the new year. I wanted to start investing a bit more and kind of just decided to do it at that time by the guise of a financial advisor. So.
Stacy Armijo
OK, cool. So the reason I promise I'll get back to your question about how do we use data is because we actually use it in exactly that way, whereas we try not to make decisions based on what we believe to be stated preferences or general points of view. We try to look at what we see our customers doing within our business and figure out where that should lead us. So, for example, transaction data is a big treasure trove that we have access to because we have ... So we issue debit cards to our members. We have roughly half of our members have an active debit card. And so knowing what you're spending on your debit card is a huge resource for what is it that you need that you might be getting from us or what might you not be getting from us. And I would tell you, we're at the beginning stages of really trying to mine that data, because it's weaving together dozens of systems to be able to get to it, act on it, make an offer and get all the way to conversion. It's not easy to do, but we are continuing to put a lot of resources into it because we know if we don't, we will get completely left behind.
And then also looking at our customers and what they tell us directly, both through actual feedback mechanisms. So of course we have we call it our voice of the customer program. So we trigger various surveys all the time for a variety of different things. But what we find is that really only tells us right direction, wrong direction. A lot of times it tells you how nice is your customer, right? So like so “Stacy tends to rate things very high” because I'm in marketing and I know how hard it is to deliver things and so I rate things high. That doesn't mean I necessarily had a uniquely positive experience. So what we don't tend to look at is the absolute score, but we do tend to look at is it going up or down? Because if it's generally going up or it's generally going down, you've kind of controlled for sentiment there. So that's a couple of ways that we try to interpret the data that we've got. And then of course we pair it with anything we can find that is industry data. Anything that we can find that says here's what we're seeing in our business. Is that good, bad, or otherwise as compared to what is happening in the industry at large? So anything we can benchmark externally on tells us where we have opportunity.
Stuart Featherston
And I was going to ask. Timeliness is one factor, but context is the other. And making that great intersection for the member experience Sounds like that's what you're doing with the insights as well.
Stacy Armijo
Yeah, we try to pair them. And interestingly, access to information is not our challenge. We can get information almost all the time, like maybe we can't get it sliced and diced exactly how we want it. Our ability to get it and combine it with all the right things and act on it, essentially our ability to digest it, that is what is really the bigger challenge. And so we actually sometimes have to work at just because you can measure it doesn't mean you should be managing it. So it's like there's so many things in financial services that you can measure. And if you just because you can measure it, it might make you think I want to optimize that. Well, if I try to optimize that, I have to recognize that might represent a trade off from this other thing that is actually much more directly tied to our experience.
For example, we recently changed how we provide service by phone, and what we realized was we had a technology application. We turned on some features because it had it. And then we realized that's contrary to our design principle for service by phone. So we could measure this and we could try to improve that score, or we could zoom out and realize, ooh, we actually took a step away from our strategy. Let's go backwards on the technical implementation there so we can make a better match and then focus on optimizing our chatbot, for example, because we were not optimizing the chatbot because we were focused on this voice thing. Wait, we don't have a problem with voice. Let's go back to how we did that. Optimize the chatbot and make a better experience.
Stuart Featherston
That's awesome. Great insight and great feedback. So we focus now on what matters in choice and primacy. I'd like to build on that. And let's talk now about what keeps you there. Let's focus on loyalty. So I'd be interested to know what loyalty looks like to each of you. And the first question is this: what would it take for you to move your financial relationship?
Drew Norman
I don't know if I would say move is necessarily the right word. I'd say pivot because I think it's very unlikely that I'm going to take all my finances and all my accounts and move them to a completely new financial institution. If that's the case, that means the one I'm at messed up, and not necessarily that the other one won my business. I would say it's much more about getting me to explore and plant a seed at your institution, grow my account there, open another account there, and then before I know it, that's the app that I'm opening more than anything else. I grew up in a small town with a community financial institution, and that relationship is really important to me to feel close to my family. But I wouldn't say I'm like necessarily thrilled about being there. Like, it's important for me to keep that tie in that root to my community. But I'm very open to the possibilities of what's on the other side. And the grass is always greener, I guess, until I don't know what everyone else thinks, though.
Cynthia Bryant
I feel like it's tricky. Like when I think about loyalty in terms of financial institutions, I think a lot about convenience and how I'm already established here. I already have my checking and saving with my direct deposit set up. I already have this account that is for my investments, or maybe it's my high-yield savings account Out. And I guess something that would like … I would say if there was like a lot of fraud happening, maybe that would encourage me. But I will say that when I have that and I call and I'm like, hey, something's up, I just get a new card immediately. It comes in the mail within five days, and then I'm rocking and rolling again. So I don't know, it's I feel like a lot of it for me is around convenience and the fact that if I'm already set up there, I'm going to continue that relationship until they do something that makes me not like them anymore, I guess.
Katie Myers
Yeah, I agree with both of them. I like Drew's point of kind of pivoting, because I just think it seems like a lot to have to close an account, and it seems very daunting to do that. And so instead of doing that, maybe I would switch my direct deposit or just start going there. But yeah, and the fraud thing, if there's lots of fraud or I've maybe had a lot of bad experiences lately, like maybe I've called support line and I can't get a hold of them or I've gone into the branch and I can't get the right support that I need. That might kind of start to turn me away.
Drew Norman
It's scary to put all of your eggs into one basket. And I think a common misconception is that, I don't know, sometimes I feel like everyone else got this financial playbook that has all the answers on how you're supposed to bank, and what the right way to jump from a financial institution is. But, I mean, I guess the reality of the situation is we're all just figuring it out and there's no one right way to bank necessarily. There's probably lots of wrong ways to bank, though.
Stacy Armijo
So one thing that's it's interesting to hear you guys say that because the perspective that we have adopted is we get questions a lot about what is your what's the attrition? what's your account attrition? And it's in an area where somebody turns on a service and turns off a service. It's easy to figure out your attrition. But what we have understood is people don't leave financial institutions. They quiet quit. And so what we're trying to figure out is how can we figure out when somebody is doing what you just described, they’re quiet quitting us. They did one small thing. They did a few less transactions on their debit card. Certainly they change their direct deposit. Oh my gosh, we're probably done at that point. If these are like personal relationships, it's like that person already found their attorney and they're filing for divorce. Like that's what's happening there. But they might their account might stick around for years. Like, you know, these ghost accounts that can stick around forever. You think you've got a customer or a member, and really you've got somebody who just doesn't feel like going to the trouble of closing that account, and they'll get to it when they get to it. And so it's what we talk about is how can we make inertia work in our favor?
So what you each just described is and I heard another colleague say this on a panel, and I loved it. He said, we don't have banking competitors. Our competitor is inertia, and inertia is nobody woke up today and said, I want to go do banking. No one did that. And it was not “I get to.” No one has said “I get to.” I mean, they might have said, I get to go close on my house today. I get to go buy a car. Yeah, they might have said that, but they did not say I get to go bank today. And so how do I make inertia work in my favor? So I've got to make sure I don't mess up in all the ways that you just described. And that's the super unsexy stuff. But it's the stuff that if you don't get it right, that's when somebody is finally going to be like, I've had it, I'm done, I'm out and I'm going to go do something else.
Stuart Featherston
It'd be great when we talk about that data mining, if you find that root cause of that disruption.
Stacy Armijo
I will let you know we are working on it. We are working on it.
Stuart Featherston
All right. Great. All right. So now let's look at it differently from loyalty. What would it take for you to recommend an FI or a fintech app? And what happened? Why would you make that? Would have had to have happened to make that recommendation? Was it a great support experience?
Katie Myers
Yeah, that's what I was about to say is it's kind of the exact opposite of what I just described. Um, if I had a great support experience or the app is just cool, like the digital banking side of things are just really easy and convenient. I'm probably … I have two younger sisters and I'll probably say, hey, y'all should get on this. I did that when I opened my high-yield savings account, So definitely ease convenience.
Stuart Featherston
I think about that scenario you were talking about earlier around the, you know, your friends around the table and high yield savings account. Maybe they had great rates, but maybe it was a great experience that helped you open that account with ease, and it was a flawless experience.
Katie Myers
Definitely.
Drew Norman
I am a thousand times more likely to recommend a fintech app to my friends than I am to recommend a financial institution, and that's because if I don't end up having a good experience with the app, I can press two buttons and it's off my phone and I don't have to worry about it anymore. Versus with a bank that's like a big that's like a big boy purchase to me. So I don't want to … I don't want to lose my cred by offering the wrong institution. And then we're both in a boat without a paddle, I don't know.
Cynthia Bryant
Yeah, I don't know. When I think about making a recommendation in the banking industry, I only think about credit cards. And again, just like if I am like going to get a reward for bringing someone onto the platform, then I'm like, you should get this credit card because you'll get like this many points when you sign up, and I'll get points when I sign up. And then we can book a flight together. So, you know, I don't know. I agree with Drew, though. When I think about a bank account that is like a way bigger commitment to me. So I don't know. I've never recommended like a bank account to someone.
Stuart Featherston
All right. Great feedback. Let's switch over now to the widely discussed topic of personalization. So research strongly suggests that a personalized experience are important to younger consumers. I think that's well known. What does personalization mean to you? What does the idea personalization even mean?
Drew Norman
I don't know if it's as heavy handed as like in-your-face personalization. Sometimes that kind of upsets my stomach whenever I get all these notifications and all this stuff, and it's like just a little too desperate, almost. I feel like I … Katie's talked about this before, but like an algorithm just kind of knows you and who you are. But it doesn't necessarily say, like, we think you'd love these things based off of the last video you watched. It's just more implicit and in the background.
Katie Myers
Yeah. You stole what I was gonna say.
Drew Norman
I'm sorry.
Katie Myers
It's OK. No, I, I mean, our generation has grown up with these algorithms running in the background, so we're used to it, and that is just how the world works to us. I mean, we're so used to that. And when I think of personalization or personalized experiences, I just think kind of similar to what Drew is saying. It's in the background. I'm not ever really thinking, oh, this is totally catered to me, and I this is exactly what I'm wanting. But yeah, it's all algorithm based.
Cynthia Bryant
Yeah. I don't know. When I think about personalization, I think about how a lot of people like, I guess our age are kind of living in their own world and they're like, everything is about me. Like overthinking about themselves, just those kinds of things. And so personalization is kind of when you're on a path and everything that you see are things that you like or things that you're familiar with. And it's less, I guess, like friction. So when I think about personalization, I think there's no friction and you're just being offered things that you already have some sort of positive sentiment towards or you're already knowing about. And I kind of don't like it because I want to, like, I want to kind of be more well-rounded and know different avenues and maybe experience things that are outside of that, I guess. Like when I think about the news, like, I don't want bias. I want to be like able to see all sides of the story.
Stuart Featherston
Yeah, that makes sense.
Drew Norman
This is a totally random aside and you can stop me, but I recently like, wanted to watch this movie and I looked and it was nowhere available on streaming for free, so I paid for it. I paid the $3 to watch this movie, and a week later, Netflix updated it and it had that exact movie on there. And it's like, I don't know if they've just done the research to know the perfect algorithm or if the universe is against me, but I feel like that's happened like three separate occasions where like this data is there. Like it's already reading us and it's already like knowing what we want. And sometimes before we even know it. And I think to not utilize that in an effective way is something that everyone should be doing.
Stacy Armijo
Well, and you'll get return on it for beyond Gen Z as well. Like I think about our customer base, the people you will make mad fastest if you don't have personalization as part of your experience are the people who banked with you a really long time. They have banked with you a long time, and they are going to get annoyed when they say thank you for the seventh offer of a home equity loan when I've told you six times I don't own a home. So you can have benefits of personalization beyond even the Gen Z audience. Yeah.
Stuart Featherston
So I do want to ask one more question on this idea of loyalty and maybe how you're influenced. So we talked a little bit earlier about friends and family being influential. But I want to also talk about social influencers. And I've seen where social influencer marketing is like a $32 billion dollar industry now. So do you pay attention to social influencers to guide you at all? I mean, there's many mediums with which you could get this information, but is that important to you?
Cynthia Bryant
I feel like it's impossible not to have some sort of interaction with, I guess, social influencers. I think it is important to an extent, but ultimately, like if I listen to something that I've seen from a social influencer and I have a different experience where I don't like it, then I kind of don't trust them after that.
Drew Norman
I just always have in the back of my mind, like they're being paid to say this. Like, I doubt any influencer gets up in front of the camera and is like, let me tell you about this great thing that I just really want to use my platform to talk about. But if like three or four people start to say it and then it becomes this like wave of information that's pushing for it more than just one voice that I really look up to. So yes and no.
Stuart Featherston
OK. All right.
Katie Myers
I agree.
Stuart Featherston
OK. Stacy, one question for you. How do you design experiences to make your members feel truly known and subsequently building loyalty?
Stacy Armijo
So what's most important to us in helping our members feel known and well served is our design principles. So one thing we've had to realize is you cannot be all things to all people and all channels. It is impossible. Not only is there not enough money in your organization to go around to make that happen, there's also contradicting priorities for what somebody wants and what we've determined is before even, like, demographics, generational breakdowns, age, all those sorts of things. It is how did you show up for us? That dictates so much about what you want from us. So we actually start there.
Our design principle for service online is availability and efficiency. If you went online, you want it to work no matter what time of day, night, holiday, etc. and you want it to work efficiently and fast. You want what you want it quickly. You went online for that reason. You weren't trying to create a relationship with us online. You were trying to accomplish something if you went for service by phone. Our design principles are empathy and effectiveness. So our theory is if you picked up a phone to call us the first, you probably didn't call to compliment us. I mean, I'd love to believe you did. You probably didn't. You probably called because either you certainly you need something, or maybe something went wrong. Right? And so our agent is going to answer that phone, and they might know how to fix your problem in the first 10 seconds of what you're saying, if they interrupt you to tell you how to fix it, you will be very mad. You will not feel well-served. You're going to need to let them know here's the pain that I have undergone for the fact that transaction got declined because there was a fraud alert on it, and I got embarrassed when I was trying to pay for dinner in front of my in-laws. They want you to hear that before you tell them how to set a travel alert.
And so empathy first you got to let people hear it. And then effectiveness. Effectiveness is pointedly not efficiency. So we're a little bit different that way. Most people running a phone operation, they're optimizing for efficiency right. And it's all about calls per agent and all sorts of metrics that you can measure. We don't focus on those. We focus on effectiveness because I could get you off the phone and I could look really efficient, and I didn't actually solve your problem. I want to solve your problem. I want to get it all done. And so we choose to measure effectiveness as opposed to efficiency.
And then lastly service in person is confidence and connectedness. So you're coming in person for a reason. You chose that. There are very few things you cannot do with Amplify digitally. I mean, maybe if you want to get a bajillion dollars in cash, you might you're going to have to walk into a branch. You need to print an official check. Short of that with your phone or your computer, you can do pretty much anything you want to do. So you chose to come in for a reason, and you probably want to have confidence in what you're trying to accomplish, or you just want to feel connected to other human beings, and you want to have that in-person interaction. And so we design the branch experience for that. So again, we aren't necessarily optimizing things like the shortest wait time. I mean, we don't want you sitting and waiting for a long time, but we aren't trying to optimize to get people through the branch. We're not staffing teller lines to try to get people through the branch. We're going to make sure that you have the time while you're in there to do what you want to do.
So I would say that we try to focus on those things, and then we measure each of those delivery channels with those principles in mind, and then we put the staffing in systems behind that.
Stuart Featherston
That makes a lot of sense. Great feedback Stacy. So I mean, to me, loyalty depends on those day to day experiences and really especially in the digital channels. So now I'd like to shift to the tools you use most your apps, whether it be digital payments. And I'd also like to kind of anchor around the branch and the role the branch access, the role it still plays. So first question is this when we think about the tools that you're using, what are the top things you do on your mobile banking app?
Katie Myers
I pay my credit card, OK. I check my account balance weekly, daily, and I transfer money to my other banking accounts.
Drew Norman
Yeah, I would say internal transfers are the main thing.
Cynthia Bryant
I would say that as well. I feel like every day I'm logging on to my mobile banking app to transfer from my checking to my savings account. So that way my checking account looks a little lower. Maybe I'm not using it as much. And then obviously if it's in my savings account, it's hopefully accruing some sort of interest on it as well.
Stuart Featherston
Yeah. OK. What about digital payments? How do you pay people digitally?
Drew Norman
I prefer Venmo, Venmo more than anything else.
Cynthia Bryant
Venmo. When it's a common like smaller amount. But like I pay my rent to my landlord via Zelle. So it's directly out of my bank account and into theirs. With Venmo, it's like, oh, my coworker got me coffee. I'm gonna Venmo her for it.
Drew Norman
Yeah. Zelle's like a more serious payment method.
Cynthia Bryant
Yeah. It feels that way.
Drew Norman
So, like, whenever I'm out at dinner with friends and it's like, oh, you can Venmo me. It's not Zelle me. It's always Venmo me. I think just like how you don't, you could take a Lyft, but you're gonna Uber there. Yeah. I get annoyed when it's like $12 and they have to Zelle me $12. I'm like, that's for when we both go on a trip, and then you have to pay me back for the trip. And it's a bigger, substantial amount of money.
Stacy Armijo
Yeah. That's interesting. It's fascinating because in my head, I'm thinking all about limits as you're describing every one of those different platforms. There's different fraud protections or the absence of fraud protections for both the individual and especially for the institution. And so when I'm hearing you guys talk about all this, I'm thinking about what are the limits that we've got in each channel and what do we allow our members to do or not do based on those. And that's fascinating.
Stuart Featherston
Very interesting. Yeah. All right. So let's switch back to this idea of financial health and education. How important is that education and literacy component to you and where have you found it successful.
Katie Myers
So that's where I go back to my friends and family. I rely heavily, I mean, I feel like this whole talk, I've been just talking about my family. I look up to how they have structured their lives, my life growing up. But that's where I feel like going to a financial institution would probably help me because it would teach me different ways and kind of open my eyes to, oh, you're saving this way, but maybe this is a new approach you could take or something like that. So that's kind of my …
Drew Norman
Yeah, I don't think the problem is the absence of information. I think it's I'm drowning in information and I don't know which one to trust and which way to swim. So I think if a financial institution where like I showcase trust every day by banking with you, if they provided me with insights that I feel like were valuable to me and not just to, like, sign me up and cross sell me another service, but more so around, like buying a first home or something like that, or like how to open a loan or like what are the benefits of it. I think that's something that would really move the needle for me.
Cynthia Bryant
Yeah, I would say probably meeting with a financial advisor has been where I've learned the most in terms of financial literacy. I think if maybe if, like my primary banking relationship offered specific, tailored information about how I could become more literate based on, like where I'm at in life, or maybe it's looking at some of my transaction history and kind of saying, hey, if you did it this way, you'd actually save money or something like that. I think that would be super interesting. I don't know of anything like that right now that exists. But I would also say again, going back to financial advisor, the one-on-one connection of talking to a human being makes me like kind of believe and trust it more, rather than just like reading an article online about the latest and greatest.
Stuart Featherston
OK. All right. So what's more important to you? Digital or branch access. And then I've got a follow up which is if there's limited branch access, does that affect your decision to go bank with a traditional financial institution.
Katie Myers
See I would say my banking experience has been mostly digital, but knowing that there is a branch nearby I'm in.
Drew Norman
Yeah. I mean, obviously I feel like most people in their day to day banking mainly use digital, but when I do go into a branch, it's more of an event. And like Stacy has said, it's like sometimes it's not always the most pleasant reasoning for going into a branch. So I want to have that access, but I don't necessarily need to have one around the corner from me.
Cynthia Bryant
I don't know, it's really hard. I would say my direct deposit, I would always want there to be a physical location because I don't know, I would want to be able to like, go in and speak to someone about my direct deposit money, like whatever's going on there. However, when it comes to like a high-yield savings account or some investment accounts, I wouldn't mind a fully digital experience just because I don't know. It's just I guess the way that I think about it. But that could be for no rhyme or reason.
Stacy Armijo
OK, that's interesting. From a data point of view that really maps to what we found is we actually looked at even digital online account opening and we overlaid it to our branch footprint. So we actually did when we went fee-free, we did a big out-of-home advertising push for that, and we actually did it all over the Austin area thinking we would get online opens all over. And we actually found the online opens clustered all around our branches. So for us it was like, yeah, it doesn't matter that you could bank with us if you live way in South Austin where we don't have a branch, you were more likely to open in North Austin when you were within a stone's throw of where we do have a branch.
Stuart Featherston
Very interesting. What's it going to take to drive your decision to use a specific fintech app or a traditional financial institutions digital banking platform? And we've touched on this a little bit with some of the preferences and how maybe you would be influenced to use some of this. But is there, is it ease of use? Is it the type of product and service? Is it the fact that you got a firsthand look from a friend?
Drew Norman
Cynthia mentioned this earlier, but if there's an incentive for bringing or recommending it to a friend …
Cynthia Bryant
That's exactly what I was going to say. It depends. What's the benefit to me? That's what I would measure it on.
Drew Norman
I mean, I want to help my friends out and get them that extra point or rewards or whatever. And then if we delete it later, we delete it later.
Stuart Featherston
Fair enough. Yeah. Stacy, what's Amplify's approach to branch access and expansion?
Stacy Armijo
So we are, for the first time in probably 15 years, thinking about expanding our physical footprint. So I find that so fascinating because we have been we've called ourselves a digital-first credit union for a long time, and that has been true for a long time. And I feel very fortunate that we invested in a lot of digital technologies earlier than some other credit unions did in particular. But what we found is we also need the branch access. We’ve got to return to a broader physical presence for all the reasons that you guys just described, which is essentially that confidence piece. Right? That what I heard you say is like, I don't want to have to go into the bank, but one day I might need to go get cash at the place where I send my paycheck. And I want to know I can, you know, and that's really different than I have confidence that I can move money digitally here, there and everywhere. So I still want to be able to move money here, there and everywhere. I want my rewards, right? Like I want to get rewards checking and in some of those pieces. But ultimately the anchor tends to become a physical branch.
And so for the first time we are looking at expanding our footprint. We are going to maintain a really close footprint though. So we already have a very small branch footprint as compared to our assets, we're going to maintain a really tightly knit branch footprint, because what we know is, if you dot your branches in a bunch of places all over a city, especially … we're in Austin. So the fact that I have a branch in South Austin is irrelevant to my members who live in Hutto. Yeah, that that doesn't make any sense. Whereas if I can get within, say, a seven-minute drive between my branches, then it's like I had somebody tell me, yeah, you guys have branches everywhere. And I asked, I said, where do you live? And then they happen to live right in front of our largest branch. And I'm like, that's why you think we have branches everywhere. And it's really a supplement to what we're doing digitally. So the either good or bad news for financial institutions that have to limited resources that we have to apply across all our channels is it's not like we cannot do digital. Like we're looking at things like real time payments. And those are the areas where we're innovating. You've got to do it all, which is figuring that out when nobody wants to pay more for money. Yeah, it's an interesting trick.
Stuart Featherston
Well thank you, Stacy. So we've looked at this for the essentials of access and experience. I'm going to try to work in one more topic with a couple of questions and we see another factor as rewards. You guys have talked about incentives a lot already. So specifically I want to touch on just a couple of questions with rewards programs, loyalty programs. So first question is a loyalty program. Is it enough to keep you with an institution or an app? We talked about the one-time incentives with maybe a credit card offer, but long term, is that enough to keep you there?
Katie Myers
Yes, I would say yes, as long as there's not other negative experiences also happening. Because even if the rewards are so great, if I'm continuing to have these negative emotions when talking to someone on the phone or going in person and not enjoying my experience, then that would kind of for me, take away from the rewards.
Drew Norman
Yeah, I'm not going to ignore the negative things because of the positive things. But I will say, like, if I'm feeling like I'm getting something out of a relationship with that sort of thing, like, like I'm being rewarded for my loyalty, that's when I feel like that is going to keep me at the financial institution.
Stuart Featherston
OK. OK. Is there any particular kind of rewards programs that you're using today?
Katie Myers
Yes. Yeah. Chick-Fil-A. We use some rewards right before this. But, yeah, lots of Starbucks, lots of clothing.
Cynthia Bryant
Food based. Sephora. Other, like, points accumulation and different retail stores. Travel.
Drew Norman
I'll say like, I feel like sometimes people overcomplicate rewards programs. And I think sometimes the simpler it is, the better. Like, for instance, I have Cabo Bob's punch card for any people who are in Austin. It's like the burrito place and it's old school. They just punch it in every seventh burrito, I get free and that's like one of my favorite reward systems. Yeah. And it's the simplest piece of paper ever. So I as long as it's a good deal and it's easy to understand, I don't feel like I have to, like, divide by the third and go to the eighth power. And then I get half a brownie. That's when I'm gonna really use the reward system.
Stuart Featherston
That's great. Stacy, what makes a great loyalty program meaningful versus just transactional? And then how do you measure an effective ROI?
Stacy Armijo
So the way we think about it is you can reward behavior or you can avoid penalty. And so most institutions can't afford to do both. And so we made the bet three years ago. On 2/2/22 is the day that Amplify went fee-free. So it is impossible for any depositor with any balance or any behavior to incur any kind of fee ever at Amplify. And we say it that way because no one believes us, because our industry has talked about free checking for a really long time, and it's only free checking if you satisfy the four hundred and seven asterisks after that word. And so we made the bet that if we can actually be fee-free for everybody all the time with all the same services, that's going to be a motivating factor. And that turned out to be true. And that's now table stakes, right. That's been true for three years now. And, I mean, I think people have come to know us for that. And that's that is a reason people are excited. But is it enough is the question. And so do you now have to supplement with some other version of rewards?
I would say we don't have rewards today and that is on purpose. We've thought about it, we've contemplated it. And what we think about is what is the behavior that we can afford to reward. And that's as a community financial institution, that's a really different decision than a global financial institution. A global has a whole lot of other options about how they can manage those things. As a community financial institution, our choices are more limited. So what we've thought about and what we've considered that we haven't rolled out yet is how could we tie it to our brand? Is there one iconic Austin business that we could say if we did rewards just for this, and then we make it a thing, and then we're going to go find people who were really about that iconic Austin business. That's something that we could quantify the value of. We could follow through on it and commit to it, and it's going to earn us something. But are we able to give travel rewards and cash back and all the things that you can get everywhere else? We couldn't possibly compete with the globals on the value of what those rewards are.
So one of our philosophies is we don't play games we can't win. So that's a game we can't win. If we could figure out a reward game that we think we could win, we'd be open to it. We don't have one today.
Stuart Featherston
OK, Stacy great insights. Thank you. I think I'd like to end on a high energy note. Maybe let's do a quick fire round. Yeah. So maybe I'll ask some questions if you guys will just share the first thing that comes to mind, right. Stacy, let's start with you. Gen Alpha, important to your strategy?
Stacy Armijo
Absolutely. And ironically, Gen Alpha has higher average balance than Gen Z in our organization. Now let's remember that probably means they're a youth account, right? So they're probably not the ones earning money to go into their account. But yes. Absolutely.
Stuart Featherston
OK. P2P payments, yes or no?
Stacy Armijo
Interestingly, yes, now. So we were not going to do P2P payments previously because we said we're just going to go straight to real time. We're going to real-time payments, we're going to … And Venmo has won the game, right. Like Venmo has won the game. Zelle has won the game. I won't bore you with the details for why integrating Zelle as a community financial institution has a lot of challenges, and we said we're just going to go straight to real-time payments.
Well, now we've learned a lot about how real-time payments works, and we want our members to be able to receive them, which they will be able to do in a matter of a couple of weeks, which we're very excited about. But as it relates to send, like those examples that you guys just described about, is it Venmo? Is it Zelle? Are you going to use real-time payments for that? I don't know, and you talk about like a big boy platform. Real-time payments is the biggest of big boy platforms as it relates to how many people need to be on the same platform to make that happen. So we are just now relooking at should we have a peer-to-peer solution?
Stuart Featherston
Yeah, and I think we've touched on this a little bit, but does Gen Z use branches?
Stacy Armijo
Absolutely. Yeah. Four to one. They want to walk into our branch.
Stuart Featherston
Yep. Awesome. Thank you Stacy. All right. So Cynthia let's start with you. Top three social platforms.
Cynthia Bryant
Ooh I would say Instagram, LinkedIn … and. I don't know does Spotify count?
Stuart Featherston
Sure.
Stacy Armijo
Absolutely. We advertise on Spotify!
Stuart Featherston
Drew?
Drew Norman
Spotify, Instagram, Snapchat.
Stuart Featherston
Katie?
Katie Myers
Instagram, Belly, and Spotify.
Stacy Armijo
Belly?
Katie Myers
It's a new food restaurant rating app.
Stacy Armijo
OK, I'm gonna go check it out as soon as we're done with this.
Drew Norman
It’s kind of like food Yelp. I can get a better one if I recommend it.
Katie Myers
I'll send you my reward.
Stuart Featherston
Cynthia, debit or credit card?
Cynthia Bryant
I have both.
Stuart Featherston
Which one do you use most?
Cynthia Bryant
I guess my debit card.
Stuart Featherston
OK. Interesting.
Drew Norman
Uh, credit.
Katie Myers
Recently more credit.
Stuart Featherston
OK. Cynthia. True or false? Most Gen Zs you know have a side hustle.
Cynthia Bryant
True.
Stuart Featherston
OK. Do you worry about online banking fraud?
Cynthia Bryant
Of course.
Drew Norman
Yes.
Katie Myers
Yes.
Stuart Featherston
OK. Do you worry about your bank or credit union using a or a fintech app using your personal data?
Cynthia Bryant
Yes, absolutely.
Drew Norman
Um, yes and no.
Katie Myers
Yeah. I'm more on the fence.
Stuart Featherston
Yeah. OK. Favorite fintech app?
Cynthia Bryant
Probably Venmo.
Drew Norman
Acorns.
Katie Myers
I've recently started using Betterment.
Stuart Featherston
OK. So. Well, group, that was fun. That was all fun. And a big thank you for your candor and your energy. And Stacy, Cynthia, Drew and Katie, thank you for sharing your perspectives today.
Cheryl Brown
And that's it for this episode. Be sure to take our short survey at Q2.com/podsurvey and give us your input about the topics you'd like to hear. Subscribe to the show wherever you listen to podcasts, including YouTube, Apple, and Spotify, and visit our resource center at hub.q2.com/podcasts to see our archive of podcasts and other helpful content. Until next time, this is Cheryl Brown and you've been listening to The Purposeful Banker.