What does Gen Z want from their bank?

Generation Z, born between 1997 and 2012, is stepping into the spotlight with a financial influence that’s impossible to ignore. Growing up in a digital world, they’re changing how we think about money. With 69 million of them in the US alone, their impact is just beginning.

This cohort is the first to grow up in a fully digital world, having been introduced to mobile phones and apps from a young age. The iPhone, for instance, was launched when the oldest Gen Zers were in the fourth grade, embedding digital technology deeply into their daily lives.

By 2030, Gen Z will make up a third of the workforce, with projected skyrocketing disposable income. This surge in financial power is further amplified by the anticipated $90 trillion wealth transfer from their parents and grandparents.

Gen Z’s financial habits are distinct from those of previous generations. They demand exceptional digital services, value convenience, and prioritise sustainability and personalisation in their financial interactions. As they begin to dominate the market, the banking sector must adapt to meet their needs, ensuring that decisions made today resonate with this influential group for decades to come.

 

Who are Gen Zers?

Gen Zers are the first true digital natives. They are characterised by their unique financial habits and digital sophistication. They’ve never known a world without smartphones and apps, making them incredibly tech-savvy. They’re multi-earners, juggling various income streams from gig jobs, freelance work, and entrepreneurial ventures.

They’re also socially responsible, valuing companies that prioritise sustainability and ethical practices. With an average attention span of just eight seconds, they demand quick, efficient, and engaging financial services.

Understanding these characteristics is essential for financial institutions aiming to capture the loyalty and business of this influential generation.

Emerging trends in Gen Z banking

As Gen Zers begin to dominate the financial landscape, several emerging trends in banking are becoming apparent. These trends reflect the generation’s unique preferences and behaviours, shaped by their digital upbringing and distinct values.

1. Digital payments

Gen Zers have a strong preference for digital payments over traditional methods. They are more likely to use mobile wallets, peer-to-peer payment apps, and contactless payment options. This shift is driven by their demand for convenience and speed in financial transactions. Banks must prioritise the development and enhancement of digital payment solutions to meet these expectations.

2. AI and personalisation

Artificial Intelligence is playing a significant role in shaping the banking experiences of Gen Z. AI-driven tools and services offer personalised financial advice, budgeting assistance, and investment recommendations. Gen Zers appreciate the tailored experiences that AI can provide, making it a crucial component of modern banking services.

3. Peer-to-peer lending

Peer-to-peer (P2P) lending platforms are gaining popularity among Gen Zers. These platforms offer an alternative to traditional banking by connecting borrowers directly with lenders, often resulting in more favourable terms for both parties. The transparency and community-driven nature of P2P lending appeal to Gen Z’s values of trust and social responsibility.

4. Gamification

Gamification is another trend that resonates with Gen Z. Incorporating game-like elements into banking apps, such as rewards, leaderboards, and challenges, can make financial management more engaging and enjoyable. This approach not only captures the attention of Gen Zers but also encourages better financial habits.

5. Crypto and digital assets

Gen Z’s curiosity about digital assets and cryptocurrencies is driving a significant trend in the financial sector. This generation is more open to investing in and using cryptocurrencies compared to older generations. Financial institutions need to provide secure and user-friendly platforms for trading and managing digital assets to cater to this interest.

Additionally, offering educational resources on cryptocurrencies can help build trust and confidence among Gen Z investors.

How banks can attract Gen Zers?

To capture the attention and loyalty of Gen Zers, banks must adapt their strategies to align with the needs of this digitally native generation. Here are several key approaches:

1. Get phygital

Despite their digital-first lifestyle, Gen Zers still value the presence of physical bank branches. According to the Oliver Wyman Forum’s Global Consumer Sentiment survey, 43% of Gen Zers find physical branches important for the peace of mind they provide. However, banks must blend this physical presence with exceptional digital offerings.

This “phygital” approach ensures that Gen Zers can enjoy the convenience of digital banking while having access to in-person services when needed. Banks should invest in creating seamless, integrated experiences that combine the best of both worlds.

2. Make the digital part exceptional

Gen Zers have grown up with smartphones and expect their banking experiences to be just as intuitive and engaging as their favourite apps. A staggering 73% of Gen Zers say that customer experience plays a critical role in determining their favourite brand. Banks must prioritise the development of user-friendly, visually appealing digital platforms that offer a seamless user experience. Features such as gamified financial tools, engaging graphics, and community-driven elements can make digital banking more attractive to this generation.

3. Personalise the banking and payment experience

Personalisation is key to winning over Gen Zers. They are accustomed to tailored experiences in other aspects of their lives and expect the same from their financial institutions. Banks can leverage data and AI to offer personalised financial advice, product recommendations, and customised services.

4. Commitment to sustainability

Gen Zers are highly socially responsible and prioritise sustainability in their financial decisions. Banks that demonstrate a genuine commitment to environmental and social causes are more likely to attract this generation. This can include offering green financial products, investing in sustainable initiatives, and maintaining transparent practices.

5. Embrace social media trends

Social media is a powerful tool for reaching Gen Zers. Platforms like TikTok, Instagram, and YouTube are not only sources of entertainment but also valuable channels for financial education and brand engagement. Banks should create content that resonates with Gen Z, such as financial tips, success stories, and interactive challenges. Collaborating with influencers and “finfluencers” can also help banks connect with this audience on a more personal level.

Gen Z and the next generation of banking

Gen Z represents a transformative force in the financial sector, with their digital-first mindset, demand for personalisation, and commitment to social responsibility. Banks that adapt to these preferences by offering exceptional digital experiences, personalised services, and sustainable practices will be well-positioned to attract and retain this influential generation.

By understanding and embracing the unique characteristics of Gen Z, financial institutions can build lasting relationships and secure their place in the future of banking. The time to act is now, as the decisions made today will shape the financial landscape for decades to come.

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