Generation Z (usually defined as people born between 1997 and 2012) is coming of age and having an impact on nearly every aspect of our lives. As the oldest of the group begins to collect their first steady paychecks, their influence is reaching into the financial industry.
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The Future of Finances: Gen Z & How They Relate to Money
While some people look at this young generation as impulsive, others see that we have a lot to learn from them. Gen Z has grown up in a world marked by instability. They aged into young adults during the height of COVID, economic uncertainty and skyrocketing inflation. The generation is also facing a looming climate crisis that is already affecting them and will undoubtedly affect their children.
The way they think and the way they bank is different from any other generation before them. They were born into the digital age, making them undeniably comfortable with constantly evolving technology. They look to their peers for not only self-assurance but also recommendations. And, they are surprisingly loyal to the brands they love. So, here are three things we can learn from Gen Z about banking now and in the future.
Think Outside the Box
Gen Zers generally see technology as an extension of themselves. They have been raised with smartphones and expect companies to keep up with their digital demands. According to a recent study by Morgan Stanley, “47% of 16- and 17-year-old smartphone users use mobile banking options.” Before this group even enters adulthood they are already banking online.
Some companies saw the writing on the wall. Enter neobanks or financial technology (fintech) firms that offer primarily mobile and online banking to consumers. Gone are the days of brick-and-mortar banks on every corner. While traditional financial institutions aren’t going away anytime soon, they should be taking note of how important mobile options will be now and in the future.
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Social Media Matters
It is perhaps unsurprising that the youngest adult generation takes their financial cues from TikTok influencers. After all, as reported by Barron’s, over one-third of Gen Zers report getting “financial advice from TikTok.” Less than a quarter said they work with more traditional professionals such as financial advisors or brokers.
While older generations may scoff at the idea of learning from a self-proclaimed financial guru on a social media platform, there is insight that can be gained. Banks can utilize this resource to reach Gen Zers and middle-aged adults can learn a thing or two without having to fork over half their paycheck.
Values Are Trending
What may be the most important thing we can learn from this generation is that values matter. Generation Z has already seen a lot in their first decade or two of life. They have watched the world come to a halt because of a global pandemic. They have seen violence and disaster in real-time, not just on the nightly news. They are faced with climate issues that most believe will impact their quality of life.
Gen Z does not want to be lied to and wants to use its purchasing power in different ways than the generations before them. They often seek companies that have values that align with their own. They crave authenticity from the brands they do business with and once they find them they are extremely loyal.
Bottom line: It is time to stop underestimating the youngest generations and start paying attention to how and why they operate the way they do.
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