As is the case when any new generation enters the “real world,” Gen Z has become the victim of many generalities over the last few years.
This generation, the first to grow up with smart devices, social media, and constantly evolving fintech, also experienced their fair share of historical events before officially reaching young adulthood: the Great Recession, COVID-19, and 9/11.
This makes them an incredibly nuanced generation. Understanding how to earn their loyalty as a financial institution can be a daunting task. All things considered, it’s important to rely on research, not stereotypes, when predicting Gen Z behavior.
So now the question is, how do we get Gen Z to buy in on banking?
Fiction: Gen Z prefers to do everything online when it comes to banking.
Fact: One third of Gen Zers prefer human interaction when it comes to their financial lives.
Research by Publicis Sapient and Tearsheet took an in-depth look at Gen Z’s banking preferences. While over 50% of Gen Z members prefer mobile banking to in-person, one third have a preferred account manager at their bank, and 60% want the option to contact customer support through the app. Not only that, but one third of this generation would rather handle important aspects of their lives in person according to 2018 Marketing Dive research, especially when dealing with topics which they may need guidance, and a Marqeta survey found almost 9 out of 10 Gen Zers currently banks with a traditional bank.
► Fiction: This generation prefers to use P2P, and technology needs to keep moving in that direction to appease their needs.
► Fact: Gen Z chooses proven, safe, and efficient ways to manage (and spend!) their money.
While Gen Z are the most likely generation to use P2P transfer apps like Zelle, CashApp and Venmo, the growth rate of these apps has slowed tremendously with this youngest generation. As revealed by the 2022 Logica Future of Money Study (Logica FOM), these apps have only seen 5% growth from Gen Z over the last year, while growing 23% and 20% with Millennials and Gen X, respectively. In fact, that same study found Gen Z is the most likely generation to use cash over P2P transfer apps and debit or credit cards.
► Fiction: Gen Z tends to be more irresponsible with their money, not thinking about long-term goals.
► Fact: 60% of Gen Z are actively saving — more than any other generation.
Many members of Gen Z have a specific goal in mind — a down payment on a home, or paying off student debt, for example — but as the Logica FOM study found last year, many of these smart savers are putting this money toward emergency funds, retirement, or are simply saving to save.
Gen Zers, otherwise known as Zoomers, are already thinking about their financial state 50 years from now. As reported by The Center for Generational Kinetics, seven out of 10 of these young adults consider saving for retirement to be a top financial priority, and more than 90% plan to buy their own home.
► Fiction: When it comes to finance, Zoomers want their bankers to be just that.
► Fact: Gen Z wants a bank with values and ethics that align with theirs.
Recent BAI research on our youngest adults show they value social responsibility, especially in large organizations; 58% of Gen Z revealed they would switch financial institutions based on their commitment to diversity, equity, and inclusion.
Where social and governance issues are concerned, 56% of Gen Z would prefer their primary bank to be committed to making a social impact. As this generation has witnessed multiple social movements during influential periods of their lives, their loyalties are to their own conscience — even when it comes to banking.
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Generation Z continually proves to be a bit of a wild card, but they aren’t as difficult to please as you might think.
Research suggests Gen Z is primed for more financial literacy, deeper relationships, and meaningful experiences where banking is concerned. The truth is, Gen Z has already “bought in” to the idea that they need a bank they can trust as they prepare to navigate the rest of their financial lives. The research proves the best way to earn the loyalty of the next generation of spenders, borrowers, and savers.
Gen Z isn’t some code to be cracked, or puzzle to be solved. Simply ask the same question finance professionals have asked each generation before them: What do you need from us, and how can we help make it happen?
