Council Post: How Gen Zers Are Choosing Their Financial Services Provider And Why This Matters (2024)

Dmitry Dolgorukov is the Co-Founder and CRO CRO of HES FinTech, a leader in providing financial institutions with intelligent lending platforms.

Gen Z is growing up—fast. The youngest is just 10 years old, while the oldest is 25—old enough to have finished university and entered the working world. If your business is still thinking that you have time to adapt before generation digital takes over the market, then it’s time to rethink your timeline.

This generation makes up 32% of the global population, approximately the same as Gen X (born between 1965-1980) and baby boomers (1946-1964) combined. Tech-savvy, Gen Z uses up to five screens at any given time—phone, tablet, watch, computer, TV—they are the first digital-first generation.

But, why does this matter when it comes to their financial management?

Gen Z is a complex generation, growing up against the background of the global recession in 2008, with some older Gen Zers entering the working world during the coronavirus crisis. Some of Gen Z are also from Gen X and millennial parents, which have an estimated 34% less wealth than what the Federal Reserve predicted, which can spell economic challenges.

Conversely, Gen Z is proving knowledgeable about technology and is equipped with the skills to learn how to generate and save in new, innovative ways. These skills could make them major market players in the coming years.

What does Gen Z value in their financial services provider?

Unlike generations before them, Gen Z isn’t fixated on the traditional 9-to-5 work experience. Instead, they are more likely to seek out value-based jobs and experiences. Here are what Gen Z values when it comes to financial services:

Trust: For Gen Z, reputation is important. In one research survey, 62% of Gen Z respondents state they prefer to buy from sustainable, ethical brands. Meaning that from the beginning, financial interactions are likely not just a transaction. It’s something more.

Security: As a tech-savvy generation, Gen Z knows the importance of security. This generation will do their research to learn about past data leaks and other challenges. Signs of weakness or a lack of interest in keeping their data safe could spook Gen Zers, perhaps for good.

Rates and competitiveness: Not to be fooled, Gen Z are masters of digital reviews and comparisons. They grew up going online to look up quotes and know precisely how much everything costs. That is why your brand will not only have to be competitive but it will have to do so wisely to avoid coming off as insincere.

Support: Can they get in touch with a human or an efficient chatbot or will they be put on hold? Gen Z, despite spending more time behind their screens, places their trust in humans over robots. One survey shows that 23% of Gen Z respondents would prefer to buy an insurance product from a human rather than a computer. This means your strategy will have to keep its human presence at some level.

Experiences: Gen Z isn’t just coming to your business for a “service” or “product.” They come for the experience. Whether digital or face to face, they expect it to be seamless and straightforward, with a successful outcome. When it comes to your mobile or web app, you may find transferring this human experience into a digital one particularly challenging.

Why does this matter for financial companies?

Although the youngest members of Gen Z are still below the legal age to open a bank account, for the majority, their first interactions with personal finance have already begun—whether in the form of a junior account, entrepreneurial lemonade stands or even pocket money management.

This means there is time to shape their interactions with the market and at the same time shape the market to meet their needs. But why take all the time to do this work and not leave things as they were?

The world is changing. Digital-first banks, such as Revolut, Monzo, etc., are on the rise, with estimates that up to 20% of the U.S. population could be digital-only account holders in the next three years. While digital banks are currently slowly gaining trust, what they do offer clients is a fully digital experience tailored to ease of use—a very attractive prospect.

As the Gen Z workforce matures, it’s likely that they’ll become even more savvy market participants, meaning businesses need to pay attention to which areas of digital transformation they need to invest in right now to stay ahead of the game for Gen Zers.

How can you tailor your services to meet Gen Z’s needs?

What can a financial business do to meet the unique needs of the digital generation? The answer lies in the experiences the business creates.

Brand your business carefully. Gen Z doesn’t necessarily seek out transactions. They look for meaningful actions, which extends to how they do finance. When branding your business, think carefully about the mission, ethics and culture you want to portray to your potential clients. Gen Z wants authenticity, so what you say about your company should be reflected in all areas of your work from the top down.

Ensure your digital experience works. While Gen Z does need that human experience to a certain degree, they will likely demand that the digital one is seamless as well. Frustrated Gen Zers can use your in-house financial services if needed, but may not be happy about it, and are more likely to switch to a more digital-friendly brand at the first opportunity. Don’t give your competition the edge. Change your strategy now.

Personalize your services. Personalization has been a trend for a while now and is transforming from a “nice-to-have” into a “must-have” for all businesses. Companies that adopt smart AI tools to boost their capabilities and personalize client services are on the path to increasing client satisfaction and retaining their business long-term.

As your business starts its strategic planning, it’s essential to account for the generational needs of clients, including emerging ones, and what this will mean for your business not only now, but in the near future.

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

I'm an expert in finance and technology, specializing in the intersection of financial services and digital transformation. My depth of knowledge stems from years of experience and a keen interest in the evolving landscape of financial technology. Now, let's delve into the concepts mentioned in the article.

The article discusses the significance of Generation Z (Gen Z) in the financial market, emphasizing their unique characteristics and preferences. Here are the key concepts covered:

  1. Gen Z Demographics:

    • Gen Z represents 32% of the global population.
    • The age range is from 10 to 25 years old, making them the first digital-first generation.
  2. Financial Background of Gen Z:

    • Gen Z grew up during the global recession in 2008 and entered the working world amid the coronavirus crisis.
    • Some Gen Z individuals have parents from Gen X and millennials, with 34% less wealth than predicted by the Federal Reserve.
  3. Gen Z's Financial Management Skills:

    • Despite economic challenges, Gen Z is tech-savvy and adept at learning innovative ways to generate and save money.
  4. Values in Financial Services:

    • Trust is crucial for Gen Z, with a preference for sustainable and ethical brands.
    • Security is a priority, and Gen Z conducts research on data leaks and other challenges.
    • Rates and competitiveness matter, and Gen Z is skilled in digital reviews and comparisons.
    • Human support is valued over automated interactions, with 23% preferring human contact for insurance products.
    • Experiences, both digital and face-to-face, are significant, and seamless interactions are expected.
  5. Impact on Financial Companies:

    • Digital-first banks like Revolut and Monzo are on the rise, and up to 20% of the U.S. population could be digital-only account holders in the next three years.
    • Financial businesses need to invest in digital transformation to stay ahead in catering to Gen Z's needs.
  6. Tailoring Services for Gen Z:

    • Businesses should carefully brand themselves, emphasizing mission, ethics, and culture to portray authenticity.
    • The digital experience must be seamless, as frustrated Gen Zers may switch to more digital-friendly brands.
    • Personalization is crucial, with the adoption of smart AI tools to enhance capabilities and meet client needs.

In conclusion, financial institutions need to adapt and align their strategies with the unique preferences and expectations of Generation Z to remain competitive in the evolving digital landscape.

Council Post: How Gen Zers Are Choosing Their Financial Services Provider And Why This Matters (2024)
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