So millennials, it’s time to step back – there’s a new kid on the block. Welcome Gen Z.
The Barkley Report estimates Gen Zers spending power at $153 Billion, far surpassing millennial spending power of $65 Billion. What’s more, they now look set to be the largest generational demographic. Every business needs to focus on how engage with this demanding digital native.
Get to know Gen Z
Gen Zers are an altogether different animal from their bright eyed, bushy tailed millennial predecessors. Pragmatic and realistic, Gen Z actually shares more common ground with their great grandparents, who grew up during a time of huge economic upheaval. With the turmoil and recession of 2008 etched into their minds, it’s only natural that these young consumers are demonstrating antipathy toward debt and a strong inclination to save. Again, it’s a sharp contrast to millennials.
Gen Z are hardworking and have little patience for traditional barriers. After all they’ve grown up with the convenience of the internet and mobile-first technology. However, and crucially, alongside a seamless, technology-driven buying journey; trust, authenticity and diversity in brands is paramount in Gen Z perception.
Young but banking!
According to the centre of Generation Kinetics 21% of Gen Z had a bank account by age 10. Furthermore, 48% of these have a money or payment app on their phone!
Now the first of Gen Z are leaving college, a handful of banks and Fintechs have adapted to meet their needs of these customers.
With 87% of Gen Z preferring a ‘do it yourself approach’ some proactive financial institutions are helping their young customers be less reliant on their parents. Notably, the Bank of America have launched ‘Erica’ – a mobile-friendly assistant that customers can interact with 24/7. Gearing up to help meet Gen Zers financial goals, organisations have realised the key is to offer them advanced digital tools that help Gen Z manage their money while integrating insights, recommendations, peer analysis and integration with brands for shopping.
Retailers are upstaging banks
Amazon has a strong focus on Gen Z and has already entered into talks with traditional banks to create their own brand of checking account (Amazon Cash) appealing to them at a young age by offering financial independence, opportunity, convenience and fewer barriers.
Most banks however appear to be conforming to tradition. They remain adamant that the models they abide by have and will always work. What’s more, with 47% of Gen Z banking with a major bank, financial institutions feel confident in their approach. However unlike their predecessors, Gen Z are not brand loyal and won’t blink before switching to an new institution that identifies with their needs and values. In fact, it’s reported that 88% will only invest in companies that share their values.
Now just think of the potential risk this poses. Your customer base is equipped with the technological capability to defect at any moment, and they’re motivated by shared values that the bank needs to reflect in their DNA.
A unique opportunity
There’s an opportunity to change banking forever right here. Rather than teaching this entrepreneurial demographic how to generically manage cash and spend with credit; financial institutions can leverage big data and machine learning to offer tailored support through advanced technology and social media.By doing this, Gen Zers will achieve their financial goals, and reward their enablers with loyalty.
Banks need to revise the loan models and appeal to Gen Zers need for independence. Gen Zers are more likely to self-educate than any other demographic, and they’ll choose brands they deem more efficient and less traditional.
Gen Zers are super multi-taskers, able to effectively switch between work and play and see play as a core part of learning. The future of banking needs to be cognisant of this and proactively intwine play, learning, self management and even support with banking.
In short, this is one discerning, highly driven consumer. The oness is on us to adapt our digital playbooks and keep Gen Z engaged.