A world without smartphones and internet access is a foreign concept to the Gen Z generation. Coupled with a very short attention span relative to other generations, a desire for instantaneous results, and the need for apps that bring about efficiencies is crucial. Given the drastic reformation of the digital revolution, this generation represents the dichotomy between previous generations, providing a sneak peek into the future of humankind’s psychology. Banks need to grapple with a highly educated and technologically savvy group in society since this generation is the new clientele for banking.
Attitudes Of Gen Z Driving Dynamic Changes To Consumer Behavior
The different attitudes of Generation Z are driving dynamic changes to workplace norms, changes in consumer behavior, and technology implementation. Compared to other generations, Gen Z is 25% more likely to release their personal information for a personalized digital experience. They are riding the wave of the banking evolution into digitalization, as over 50% own a digital wallet, and 80% are using mobile banking platforms. With $140 billion buying power, Gen Z’s unique values and mind drive a willingness to act upon them, redefining the digital banking landscape in the process.
Generation Z is progressive in nature, uprooting the traditional structures for more efficiency, more digitalization, more advancements. Generation Z is the first generation to truly be brought up within a technologically advanced world. Given the psychological plasticity of the developmental brain, as children, they were surrounded by computer technology, and each childhood milestone could correspond to a new iPhone model release. Furthermore, Gen Z has faced financial turmoil and uncertainties, with major currency volatilities in the past two decades.
The Great Recession and COVID-19 have shown the vulnerable nature of money, how it succumbs to bigger forces outside of the realm of finance. These experiences are expected to create a financially anxious generation, one that cares about responsible handling of money. A study showed that one in four Gen Z members believe “their cohort is fiscally irresponsible”, hence displaying an underlying desire to understand money.
The Rekindling Of Traditional Banking Among Gen Z
Although there is a shift to online commerce, Gen Z still desires the notion of the individual, not wanting to be seen as just another anonymous customer, rekindling the roots of traditional customer-orientated commerce. Studies show that 60% of Gen Z think that it is important for brands to value their beliefs and opinions, and 35% think that their favorite brand understands them as an individual.
Gen Z desires create pressure for banks to adopt technology to create personalized experiences for the users, ushering in the ‘semi-autonomous banking’ era. Understanding consumer preferences, using AI to create an algorithm that anticipates the future needs of the user. Savings goals for upcoming holidays, incentives for predicted patterns of expenses, in which the application would suggest monetary movements, and the user can merely accept or decline the action. This provides efficiency, built on a generation that trusts machine decisions.
If you enjoy this article, you may also like:
Banking With Emotional Connection?
Furthermore, Gen Z requires an emotional connection. A major bank introduced a credit card, trying to elicit deep emotional connection, and increased their usage by a significant 70%. The Tesla Bonet Dance is a pure example, an unexpected feature, a novelty that shows a care for the consumer. Some banks have provided environmentally conscientious payment incentives since 93% of Gen Z believe that brands have an obligation towards environmental issues. Being heard is important, and brought up in an era of ‘fake news’, Gen Z has a sense of skepticism and a search for authenticity, valuing honesty and transparency. 90% of Gen Z and Millennials personally care for honesty about product information, providing strain on the financial provider to cater for this need.
Generation Z shows a greater tendency to become more financially minded. A study conducted by Experian showed that for students who had not taken a finance class, “43% said they want to learn to save, 38% want to learn to manage their expenses, and 36% want a class that teaches them how to file their taxes”.
What Banks Are Catching Gen Z’s Attention?
Some digital banks are attracting the keen eye of the Gen Z generation. ImaginBank is a prime example, a Spanish digital bank focusing on the consumer community, stimulating a social element of banking. They incorporate peer-to-peer payments through social media, and a tool which enables event booking such as Yoga classes and concerts. Of its million customers, the average age is 23, within the bracket of Gen Z.
Liv is another digital bank designed around the young generation, offering instant convenient split bills, and a loyalty program which gives users a chance to win an island]. Ingo Kiper and Philipp Demirok from Horváth & Partners, said “The values and needs of Generation Z are very different from those of older generations. Gen Z’s are highly influenced by friends and peers, well-informed, and open to a variety of financial service providers. Banks need to redefine their value propositions in order to attract them as future banking customers”.
By 2023 Gen Z will be the largest segment in society, and given that the older generations are out the door, the next generations are more likely to exemplify the direction that Gen Z has taken, revitalizing the landscape of the consumer market for finance.
If you are interested in banking, take a look at: