Millennials were the first generation to adopt the world of fintech on a grand scale. Generation Z will be the first generation born into the world of fintech. Features Editor Sophie Camp looks at the upcoming generation and what we have already learnt about their financial behaviour.
Generation Z is…
Generation Z like ethical, socially conscious companies with authenticity. Their financial services will not be exempt from these requirements. This McKinsey report on Generation Z revealed 70% of their respondents said that they would ‘try to purchase products from companies they consider ethical.’
Look at the vanguard of the climate change protests. They are young, often school age children, those who already understand how big an impact the world of today will have on their future, and that of their children.
Ethical investment will be hugely popular but also intensely scrutinised. Generation Z will want to know exactly where their money goes, and they will have their own personal set of ethics to apply their finances to. Whilst not everyone can be catered to, being aware of this intense focus on ethics can help fintechs appeal to their Generation Z customers.
These days fintechs have to be aware of technological literacy to get their products into their audience’s hands. Sometimes their users will need help and guidance to understand the difference between new offerings and their traditional banks. This will become largely a thing of the past with Generation Z.
They are already technologically savvy enough to dive straight not TikTok and Snapchat without missing a beat. Their parents send them pocket money via online gift cards for gaming sites or through the digital apps and wallets that many fintech firms already offer. It’s already common for young children to be paying their way on Saturday afternoons with friends via their own bank cards. Many a child in big cities are aware that when they go in an Uber from one after school club or play date to another, there’s no cash or payment card needed – a transaction is happening without need for prompt.
For older generations, debit cards were not something accessed until they were independent adults. This technical literacy will shift fintech’s focus from education on benefits and safety to other things more relevant to this new, tech savvy generation.
The older end of Generation Z have the benefit of seeing how millennials struggled during various financial crises. They are conscious about safety nets and rainy day funds. Many studies show that Generation Z are catching or even more likely to be saving for retirement than millennials. Considering the youngest in Gen Z are five years old, that’s quite impressive.
Fintechs should be aware of a more thrifty generation coming through, and one that has talked about their financial situation with their friends, family and peers. There’s no more embarrassment or intense privacy when discussing salaries, savings and pensions. Which means that they will want to be talking to their banks about them as well. Which leads us to the next part of Generation Z.
Generation Z is social. They want open dialogue between themselves and corporations they engage with. And that’s not just the obvious need to be aware that social media channels on which they spend their time. This is a generation who has grown up on social media, but that seems to have made them even more conscious of face-to-face communication than millennials.
Another key point here is two-way communication. A recent Vox Burner survey of Gen Z students in the UK showed 68% of them expected brands to listen to them, and to cater to their requests. Listening to and adapting from the suggestions from your Generation Z customers will be essential when they begin to use your products.
…not the youngest generation.
Remember that the world’s population does not end with Generation Z. Ever heard of Generation Alpha? They are the children between 1 and 7 years old who make up the beginnings of the next cohort of customers. Yes, it’ll be a while before their fintech usage begins, but not that long.
This generation will grow up with Generation Z older siblings, and millennial and Generation Z parents. If their parents are currently getting their pocket money via digital wallets and having Uber take payments from an account without a thought, that is the way in which they will bring up their generation, and will pass on the same behaviours. Understanding Generation Z will go a long way to understanding what comes next.