For Baby Boomers, TV changed everything. For Generation X, it was personal computers. And for Millennials, it was the rise of the Internet. People in Generation Z – defined as individuals born from 1997 to 2012 – have never known a world without all of those innovations. They are the ultimate “digital natives.” And their numbers are massive, with Gen Z poised to overtake Millennials as the country’s largest cohort by 2034.
No one yet knows the full impact of growing and developing amid a constant stream of digital technologies. But every financial services institution needs to understand that Gen Z customers will mean the difference between success or struggle in the not-so-distant future.
Here are some highlights of what banks and credit unions need to know.
Gen Z is willing to trade privacy for personalization
When it comes to planning for Gen Z, should banks focus on digital? That’s a given! Consider an in-depth Morgan Stanley study that found 60% of Gen Z respondents had started using a smartphone before age 14. In another study, 55% of Gen Z-ers reported spending more than five hours a DAY on those devices.
That same study found that this generation will happily trade greater privacy for greater personalization. While 46% of Gen X is very concerned or concerned that companies might use consumers’ personal data against them, just 37% of Gen Z share that worry. What’s more, nearly one-third of Gen Z (32%) is not at all concerned or not concerned about nefarious uses of their personal online data!
Gen Z consumers are up for grabs; just don’t assume they want traditional banking
Two-thirds of Gen Z-ers have a bank account, but most don’t yet have debit cards – and many are still too young for credit cards or loans. As they go off to college, get their first job or otherwise take greater control of their spending, financial institutions should be poised to engage early and often.
The catch is, compared to other generations, Gen Z is more likely to use digital payments. In fact, the Banking and Payments for Gen Z research report by Business Insider Intelligence notes that more than half of these consumers already use digital wallets monthly; even more use other digital payment apps or peer-to-peer apps (think: Venmo and Zelle) with the same frequency.
Beyond digital payment and P2P apps, they’re also open to cryptocurrency and the use of other cutting-edge technologies. Even in a digital-first world, there will always be situations where financial services customers will benefit from face-to-face interactions. But do those interactions need to occur in person in a branch? What if their bank offered augmented reality (AR) – giving them a convenient and personalized way to meet their needs without requiring an in-person branch visit? AR, virtual reality and other emerging technologies are poised to reshape the way banks interact with consumers, and Gen Z is primed to adopt these industry-shifting approaches.
Great news: No huge gap between Millennials and Gen Z
There’s been no shortage of chatter about generation gaps between Boomers, Gen X and Millennials and how those gaps affect workforce dynamics and economic trends, including consumer preferences. When it comes to Millennials and Gen Z, the Morgan Stanley study found real synergies between these generations.
Together, Millennials and Gen Z will create what Morgan Stanley calls a “youth jolt” beginning in the mid-2020s. They will “power higher consumption, wages and housing demand, all pillars of GDP growth,” according to the report. And they seem to share mostly similar views when it comes to education and values. In other words, it should be a pretty smooth transition when Millennials pass the torch to Gen Z – whether in the workplace or as financial services customers.
So as financial institutions shore up their value props for Millennials, that work can lay a strong foundation for the customers coming soon after. Give both of these “youth jolt” generations digital-first experiences. Speak to their values. Make experiences social. Above all, prepare to keep changing as their needs evolve over time.
Mobiquity is here to help financial institutions as you continue digitally transforming to balance the needs of ALL customers. Contact us to discuss innovative ways to shape and execute your digital strategy.
Give us your information below to start the conversation.