Financial institutions and payment companies are still trying to understand the best way to serve millennials, and are now faced with also carefully considering how to reach Generation Z.
Gen Z typically refers to those born between 1997 and 2012. This next generation has a complex relationship with finances, largely because members of Gen Z grew up in the financial collapse of 2008.
One of the unique aspects about Gen Z is this group’s exposure to technology. More than any other generation, Gen Z grew up influenced by rapidly changing digital technology. In this generation’s childhood, computers were a necessary household item and the iPhone made its debut. While older generations appreciate slick technology solutions from their FIs, Gen Z expects those experiences of having technology simplify their lives at every turn.
For financial institutions, this presents the perfect opportunity to allow technology to assist in their quest to build meaningful Gen Z relationships. Since technology is so ingrained into Gen Z’s everyday lives, when it comes to digital experiences like payments financial institutions can focus on strategies that prioritize technology and mobile channels in order to reach this target audience in a natural way.
Having modern payments technologies that work proactively and make personalized recommendations can also help to put Gen Z’s mind at ease. At the same time, research indicates that Gen Z will also value the personal touch of a branch for financial guidance.
Gen Z is a generation that watched their parents and their country as a whole struggle to gain financial stability. Being exposed to the reality of financial downturn certainly has had an effect on Gen Z’s attitude toward money and credit, as well as how they view financial services.
According to the American Psychological Association, four out of five Gen Z adults aged 18-21 say money matters are a leading source of stress. Part of this problem is related to financial education: Many members of Gen Z grew up without much financial education, if any at all. This generation seems to fear the unknown, particularly when it comes to financial matters and financial institutions. This presents a real opportunity for financial institutions to play a valuable role in their lives.
Instead of letting this generation continue to develop a sense of fear and uncertainty, financial institutions and payment companies should seize the opportunity to educate Gen Z about finance in general. As for all generations, institutions can be there to help teach this younger generation about credit, budgets and saving. When Gen Z is able to feel comfortable and confident with their money and how they are using it, they will value their relationships with the trusted financial institutions that cared enough to provide this education.
Understanding the general challenges Gen Z faces, as well as understanding this generation’s relationship with money and technology, will be invaluable in making sure FIs will be relevant to this new generation and gain them as customers or members. Gen Z represents a golden opportunity for financial institutions to step up and take the lead in welcoming this generation into a healthy relationship with their finances.
