Gen Z: Everything They Need Your Banking Platform to Deliver On
They’ve just voted in their first election and now Generation Z is assessing the candidates for their bank or credit union. Securing their business will take more than repackaging the products financial institutions offered to baby boomers and millennials before them. Characteristics of Gen Z include a heavy use of digital platforms, and they define themselves by their choices. That means banks and credit unions must deliver a platform that resonates with their lifestyles. Find out more about what Gen Z is looking for in their banking platform.
Who Is Generation Z?
Born between 1997 and 2012, Gen Z accounts for more than a quarter of the US population. While the younger members of the demographic are still some way off from financial maturity, the older members are entering banking age, starting to open accounts and establish credit. As the children of parents who bore the brunt of the financial crisis, Gen Z is imbued with a conservative approach to spending and investments. Unlike their parents, they entered the workforce during a strong economy with historically low unemployment and interest rates — until the pandemic, that is.
Gen Z vs Millennials
While Gen Z shares a lot in common with millennials, their priorities are different. Gen Z is not yet in the 25 to 40-year-old lending sweet spot that millennials currently occupy. Their focus is less on real estate and long-term investments and more focused on entering college and initial forays into the job market.
What Are the Main Challenges for Gen Z?
Those who entered adulthood before the COVID-19 pandemic were lucky to find themselves in a comparatively healthy economic landscape. Gen Z typically possesses the technical and digital skills that employers desperately need. Post-pandemic, however, Gen Z has seen employment options become severely limited and job instability rise. That has exacerbated an already precarious situation for many, given that the share of Gen Z living in poverty in the U.S. hit an alarming 23% in 2012.
Beyond financial health, Gen Z is notable as the first generation to openly wrestle with recurring negative mental health issues. Dubbed the “lonely generation,” Gen Z appears to be suffering an existential crisis brought on by navigating a world that is both real and virtual and where identity is more fluid. These factors all influence the strategy financial institutions should take to cater to Gen Z end-users.
Customized User Experiences
Gen Z is comfortable accessing a product or service without necessarily owning it. They see software as a service as a natural model and will remain loyal as long as there is the freedom to customize and personalize features. They will even pay a premium for those features where a service is supported by a strong purpose or valuable community. For financial institutions, authenticity is key. The Gen Z end-user balances multiple, fluid IDs across digital platforms and will rally around causes rather than demographic or educational categories. By offering an online community that is diverse and human — and rejecting a one-size-fits-all approach — banks and credit unions can appeal to Gen Z.
The Gen Z World Is Digital
If millennials were the digital pioneers, Gen Z is the digital natives. The internet, social media and mobile have always been a presence in their lives. Gen Z is a truly hypercognitive generation that is comfortable with assimilating information from online and offline sources. They also take the speed with which digital technology evolves in stride and, indeed, expect it to change fast. When it comes to their banking platform, they want an experience that imitates the apps they use in their daily lives. That calls for gamification and meaningful, human content — not announcements from the corporate mountain top.
The battle over digital is not entirely won, however. Although up to 80% of smartphone-carrying Gen Zers are already using mobile banking, according to research by Morgan Stanley, and 37.5% would only choose a digital bank, Gen Z still values brick and mortar. Their parents, after all, are still a relevant influence and also value the in-person experience.
Gen Z Seeks Financial Education
Having grown up in a digital landscape that allows them to compare prices, evaluate options and consult reviews for almost any purchase, Gen Zers are shrewd consumers by nature. They see their purchasing decisions as an integral part of their values and personal brand, and they readily assume a responsibility to share their choices and influence others. Any digital platform that provides them with abundant information will secure their interest, starting with financial education.
Some 43% want to learn to save and nurture their financial well-being. They are looking for built-in savings tools and calculators that they can customize to their circumstances. There is a kicker, however. Gen Z does not expect to pay fees. At best, they may agree to buy now, pay later, but, otherwise, the concept of paying fees for personalized service is not part of any contract Gen Z is accustomed to.
Always On, Everywhere
As with other products and services in their lives, Gen Zers expect 24/7 banking as standard. There is no waiting in line for the online generation, and they want to be able to communicate with their bank anywhere, at any time through chat, video or email. Extending opening hours is a key challenge brick and mortar banks and credit unions have to address to compete with digital-only banking. It may not even be enough. Gen Z wants a digital banking platform that integrates seamlessly with their other apps, Internet of Things devices and wearables. As the number of Gen Z reaching adulthood grows, we can expect frictionless banking to be the baseline all financial institutions must offer.
Our platform is founded on the principles of frictionless, personalized digital banking with powerful AI tools to inform decision-making and improve the user experience. We can help you create a digital banking platform that feels like a familiar home for any Gen Z user. Request a demo today.
Pew Research – What We Know About Gen Z So Far
McKinsey & Company – Generation Z and its Implications for Companies
The Annie E. Casey Foundation – What Are the Core Characteristics of Gen Z?
Fintech News – Gen Z Is Defining Digital Banking and Fintech is Listening
Morgan Stanley – Gen Z and the Youth Boom Economy