Generation Z: How They Will Challenge Banking

Although teenagers are not usually a profitable population segment, they are easily dismissed by financial institutions. Banks did not invest enough resources in targeting Millennials, but as this demographic is gradually becoming profitable they are most likely banking with a competitor.

The lesson from this is that banks should invest time in building relationships with younger generations or they risk missing out on developing brand preference in prospective clientele.

Now, millennials are at the focal point as they are recent college graduates seeking employment, and are in the process of paying off their student debts. However, banks are also shifting their attention to a new demographic: Generation Z.

To be clear, Generation Z is attributed to individuals who were born in the mid 1990s until the early 2000s and are now entering adulthood. These kids have been raised with a proliferation of information technologies and are as tech-savvy as it gets. 

Findings suggest that individuals classified under the Gen Z umbrella, differ considerably from Millennials and older generations.

Young adults who fall into this category place considerable emphasis on saving. They want to avoid the implications of amassing burdensome student loans. Additionally, they are avid social media users and are more likely to embrace financial solutions offered by tech companies, such as Google, Apple, and Samsung.

However, this is not a uniform trend across the entirety of this population segment, as a large majority actually prefers doing their banking in branches.

So, how can banks approach this interesting audience? More importantly, how will Gen Z affect the ways banks provide their services and interact with their customers?

Firstly, financial institutions will need to improve their internet and mobile banking solutions,
as future generations will become increasingly reliant on technology for their financial needs. However, they will also need to maintain a physical branch or live interaction with tellers in order to build trust with this generation.

Placing emphasis on budgeting tools and automatic saving options is another option for banks that wish to target young adults. By investing in a strong social media presence with the emphasis on building brand loyalty, is also a great way to ‘speak their language.’

Technology is driving the future of both the public and private sectors, and the interaction between Generation Z and financial institutions. Banks should take initiative to gain the trust of future generations if they are to withstand the test of technology.