GenZ has money on their minds, and the financial industry better be ready.
This generation, born between 1996 and 2012, is approaching finances and banking in a new way. We all know that this generation is made up of digital natives, but that’s not the only thing that matters. This generation is socially aware, well-informed and eager to do things differently — that is, avoid making (what they see as) mistakes made by previous generations.
This group currently makes up 40% of U.S. consumers. According to Credit Union Times, GenZ wields a purchasing power of more than $143 billion, which is projected to increase by more than 70% in the next five years.
So, what does this mean for the financial services industry? GenZ should be the group financial institutions want to please right now. Here’s what you should know about them, including their views on money and their non-negotiables, if you want their business.
What’s GenZ’s attitude toward money?
GenZ tends to be practical and frugal.
The older members of the generation may have watched their parents struggle during the Great Recession in 2008. They are all living through the challenges that COVID-19 has wrought on finances — some entered the job market during the pandemic, and others witnessed the effects of layoffs on their parents. These early experiences have left a notable impact on how GenZ views money.
This generation is also very socially aware due to their use of social media, particularly TikTok. They are skeptical that big institutions have their best interests at heart and are more likely than other generations to want an activist government. It’s important for financial brands to recognize the distrust GenZ has and to position themselves as trustworthy organizations that want to help their customers more than themselves.
How can financial institutions attract GenZ customers?
- Be digital-first. This shouldn’t surprise anyone. Without an app, a financial brand simply doesn’t exist to GenZ. Period. Furthermore, GenZ doesn’t have the patience for bad UX, so if there is anything lacking on your website or app, fix it before it’s too late. However, don’t feel like you need to be digital only — a YouGov report found that 88% of GenZ respondents prefer brands to use a combination of digital and physical channels.
- Remove any non-digital red tape. Companies should not require GenZ to print anything out, visit locations in person or use checks. According to Lightico, 75% of GenZ dislike going to a brick-and-mortar bank branch, and 73% dislike the amount of paperwork required to bank. Most members of this generation don’t own a printer or have checkbooks, and they want to do their business exclusively from their phones or computers.
- Prioritize customer service. In addition to expecting digital service, GenZ expects top-notch customer service. Whether they are reaching out via social media, online chat, telephone or in-person, speedy and helpful responses are sure to win this generation over. In fact, 51% of GenZ respondents to a Lightico survey considered switching banks because of a bad customer service experience. And beware — GenZ is known for publicly calling out companies who don’t live up to their standards.
- The app should be a one-stop shop. Avoid sending GenZ to other websites or apps. It’s ideal if everything the customer needs is right there. Whether users want to reach out to customer service, read blog articles on a certain topic or manage their account, they should be able to do all those things in the app.
- Take advantage of hyper-personalization. GenZ really values hyper-personalization, like the kind of suggestive AI that recommends shows or products on Netflix and Amazon. For financial companies, this could include resources that deal with each individual’s specific needs. GenZ doesn’t want a one-size-fits-all answer, so it’s important to find ways to make the product feel unique and personalized.
- Provide educational resources for users. Because GenZ has seen so much financial upheaval throughout their lives, they are very interested in being financially savvy. Companies should have educational resources available for customers to learn about investing, saving money and even filing taxes for the first time. It’s even better if companies incentivize taking advantage of the resources, like Plinqit’s model of paying users who improve their financial literacy.
Attracting customers in GenZ requires a lot of effort and strategic thinking on the part of financial institutions. However, with more of the 67 million GenZ members turning 18 every day, those efforts are likely to pay off.