The tech-savvy, hypercognitive members of Gen Z have become a potent influence on the way the world consumes and relates to brands. Although they might still find comfort in brick-and-mortar establishments, they are also accustomed to a world of instant gratification. This generation does not have the patience to stand in queues to handle paperwork or collect paper bills and receipts. As a growing majority of the market that will turn into FinTech’s core audience, it is important to cater to this generational cohort’s needs.
Understanding Generation Z
Born between the years 1997-2015, Gen Z succeeds Millenials and precedes Generation Alpha. They are currently between 6 and 24 years old, which means the oldest of them have only recently begun joining the workforce. Having grown up in a hyper-connected world, their brains have developed to consume content much faster. On average, their attention span is 08 seconds and research suggests that Gen Z spend over 10.6 hours engaging with online content every single day.
Gen Z and their banking habits
They are no stranger to major financial uncertainties unfolding during their lifetimes. Therefore, with the Great Recession and now Covid-19, Gen Z is destined to adopt a fiscally conservative approach. They will likely invest in educating themselves on personal finance and open savings accounts at ages younger than previous generations. The recent crisis has taught them the benefits of self-sufficiency with a majority of them venturing into entrepreneurship during the pandemic lockdowns. As digital natives, they also seem to have an aversion to cash since most of the brands they consume exist online and would require digital banking. They seek new ways of convenience and safer alternatives for their data and this has triggered an increase in the normalization of AI and Machine Learning tools that aid in fraud detection, credit scoring, process optimization, and even customer service.
Their purchasing power
Most of Gen Z are currently underbanked and are not supported by traditional banks as they are under the age of 18. However, this generational cohort represents a lucrative target market for financial services institutions.
According to Bank of America strategists, Generation Z’s economic power is the fastest-growing around the world. Gen Z’s earnings are set to hit $33 trillion by 2030 and account for more than a quarter of all global income. Roughly 45% of US teens are “almost constantly” online, according to a Bank of America survey and more than a quarter of Gen Z said their top payment choice is their phone, while credit cards didn’t breach the top three.
Acquisition and Retention of Gen Z
A BAI Banking Outlook: Trends In 2020 report considers new customer acquisition to be a top challenge in the financial services industry, and therefore winning the battle for Gen Z market share will be critical to driving long-term growth.
Research shows that Gen Z is purposeful about the content they engage with, and great customer service is a table-stake feature. They identify with causes and support organizations that embrace them. Therefore, Gen Z acquisition hinges on creating and delivering a highly personalized banking experience. Building and nurturing relationships with them is critical to retaining this customer base.
Covid-19 and its consequences
Gen Z is no stranger to financial disruption and while the aftermath of Covid-19 is out of knowledge’s reach, it is evident that more people regardless of their age group will rely solely on contactless means of banking. Even the most conservative customers have embraced the digital approach to meet their banking needs due to strict social distancing measures around the world. Banks have adapted to the ongoing technological shifts but they need to prepare for the future by offering financial solutions with seamless connectivity and a customer-centric support approach.
The future with BPC
The ability to retain the attention and loyalty of Gen Z banks on the ability of a financial institution to ensure a smooth customer experience.
The introduction of various forms of payment and the increasing prevalence of mobile wallets and wearables add complexity to the payment ecosystem. BPC Digital banking solutions simplify the entire process of working with various ecosystem participants with its one-stop omnichannel payment processing end-to-end platform. Mediating between the customers, merchants, card association, and the issuing bank, Radar Payments ensures smooth payment transactions that allow financial institutions to be able to deliver a quick and enjoyable shopping experience.
Financial providers that can engage GenZ to tend to find them optimistic and a valuable customer base. As they continue to integrate and communicate with connected devices in unprecedented numbers, the FinTech industry needs to move forward with developments in the connected-device domain, adjust to customer demands and create a frictionless experience for the newest generation of bankers and shoppers.