Generation Z, defined as consumers born between 1996 and 2010, hold up to $143 billion in spending power, but haven’t yet developed brand loyalties that dictate where they will ‘permanently’ store and spend that money.
For banking and payments providers, attracting these customers while they’re young could lead to lucrative relationships throughout their lives, with value increasing as they age, earn more money, and expand the number of financial products they engage with.
Many Gen Z’s haven’t started using financial products beyond a bank account, which makes them a ripe opportunity for players in the space. As a result, many firms target millennials and Gen Z’s together in a push to attract younger customers, but this could be limiting their ability to effectively capture the interest of tweens, teens, and young adults, because Gen Z differs from their older counterparts.
As a group, they’re more responsive to influence from friends and peers than they are to traditional advertising, less likely to remember life before the internet, and more open to a wider variety of financial service providers than other consumers.
Understanding what makes Gen Z’s tick is critical for marketers, strategists, and developers looking to cater to these younger customers and build out a suite of products, tools, and services that they’ll want to adopt. The core attributes Gen Z vales in a product and hence the framework for serving them are:
Attracting:
Social: Offer multiple touchpoints to connect
Targets parents, gen Z’s and peer networks
Establish trust thru key figures in Gen Z’s lives
Authentic: Don’t pander to current trends
Demonstrate straightforwardness, ethics and genuine care for
the customer Exhibit honesty about mission
Listen to GenZ’s and implement their feedback
Engaging:
Digital native: Provide clean and simple user experience
Mobile first but also mobile-native
Highly navigable and easy to understand
Grabs users attention quickly
Educational: Provides opportunities to teach financial skills
Offers services or goals that can be unlocked over time
Emphasizes experiences over tasks
Allows users to develop habits through it’s offerings
Retaining:
Offers value: Transactional Gives back to the customer thru offerings and services Uses customer data and insights to offer personalized suggestions and recommendations
Evolutionary; Offers an ecosystem of products
Brands itself coherently across the full product suite
Provided features that can be unlocked Connections to other services and tools customers may use
Each of these attributes can be applied to banking and payments products, and used to develop actionable recommendations, strategies, and examples for how to implement them to grab younger customers ahead of the competition.
Gen Z’s lack of financial services product adoption offers providers a long runway for growth. While two-thirds of Gen Z’s have a bank account, many don’t yet use debit cards, haven’t aged into credit cards or loans, and aren’t responsible for the bulk of their own spending. As they navigate life transitions, like going to college or getting a first job, there’s ripe opportunity for providers to engage these customers. Gen Z is more interested in digital payments products and services than any other generation. While adoption of mobile wallets has been tepid among the general population and P2P apps, like Venmo and Zelle, are just now gaining traction among older users, Gen Z’s are diving in head first: Over half use digital wallets monthly, and over three-quarters use other digital payment apps or P2P apps in the same time frame.
To attract, engage, and retain Gen Z’s, financial services firms must develop products that are social, authentic, digital-native, and educational, offer value, and evolve over time. This combination, which emphasizes key attributes that Gen Z’s value, serve as a roadmap for developing offerings with features that appeal to these users in both the short and long run.
My digital wallet is like an onionWhen I do finally open it. It makes me cry