You must have heard the terms ‘Millennials and Gen Z’ over
and over recently. Well, if you have no idea what these terms mean, they're
tags given to people belonging from different generations. This segmentation
helps marketers and industries better define their target audiences and
identify people belonging to a particular age to have certain common
characteristics, which helps them cater to the majority of that generation
better. Before we move on to understanding how Fintech Organizations build a
relationship with GenZ and Millennials, let us break down these terminologies
better –
Baby Boomers – Born between 1946 to 1964 | Current Age – 57
to 75
Generation X (Gen X) – Born between1965 to 1980 | Current
Age – 41 to 56
Generation Y (Millennials) – Born between 1981 to 1996 |
Current Age – 25 to 40
Gen Z – Born between 1997 to 2015 | Current Age – 6 to 24
Why does Fintech care about Gen Z and Millennials?
Millennials and Gen Z are a crucial part of Fintech's core
market. Given their current ages, 6 to 24 (Gen Z) and 25 to 40 (Millennials),
it also makes sense as to why Fintech Organizations are giving them such
importance. They are at the prime age where finance plays a big and active role
in their life. Hence, Fintech needs to understand and engage millennials and
Gen Z to survive the competition and be profitable.
The challenge and scope of building relationships with
Gen Z and Millennials
Now we are dealing with the youngest age groups with
millennials and Gen Z. However, both these age groups also have a significant
age difference. Hence, what is preferred by one of the two might not be the
preference of the other. However, there are some middle grounds where Gen Z and
Millennials can think alike. These similarities can act as efficient guide
points for Fintech Organizations to better engage with the two groups.
The influence of technology amongst Gen Z and Millennials
Gen Z and Millennials are both heavily invested in
technology. Millennials and Gen Z's only difference in terms of technology is
that Millennials adopted technology as they grew up. It wasn't always there as
a part of their lives. They have witnessed mobile phones that weren't deemed as
'smartphones' and had physical keypads, and dial-up internet was the latest
innovation to be excited about. Millennials have constantly adapted to technology
changes and made use of it to ease their lives.
In contrast, Gen Z has never seen a world without the
internet or a smartphone. They were born in the era of technology, and
technology acts more like any other routine feature in their lives rather than
something they had to adapt to and get used to.
How do Gen Z and Millennials approach finance and
banking?
Any generation’s attitude and perception towards finance and
banking is mostly shaped by the economic situations they witness and experience
growing up. The same is the case for millennials and Gen Z. Let us examine what
these groups look for or expect with their finance and banking requirements.
What do Millennials expect?
Millennials are constantly ditching brick-and-mortar banks
for newer banking options. One distinctive feature about millennials that all
the previous generations didn't have is their comfort of shifting banks if they
feel unhappy or dissatisfied with their present bank. As per research conducted
by Gallup Poll, millennials are 2.5 times more likely than Baby Boomers and 1.5
times more likely than Gen X to switch banks. Here are some of the basic
features or services millennial looks for with their finances and banking –
1. Convenience and Perks
When it comes to millennials, they want their banking
activities to be hassle-free. They rely on technology to help them with their
banking needs too. A study conducted by
Jumio in 2018 noted that Gen X/millennials had the fastest mobile banking
adoption rate at 47%. Millennials use their mobile banking feature for –
Transferring funds between accounts
Schedule person-to-person money transfer
Check their transaction history
The same study empathized on millennials' fickleness to
leave their current mobile banking service for the slightest of inconvenience.
These are the top reasons millennials abandon mobile banking –
Another study conducted by Kasasa Survey mentioned 83% of
millennials admitted they’d willingly switch banks for getting a little more
value for their buck by getting perks like higher interest rates on deposit
accounts, cash-back on purchases and more such added benefits.
2. Neobanks and Credit Unions
Neobanks/Fintech companies sit well with Millennials for
their banking and financial needs. This is because these newer generation banks
and financing systems focus more on a tech-based banking and finance approach.
Neobanks have the capabilities to offer any traditional bank services such as
saving or checking accounts, but they can also provide additional products and
services like –
Investing and saving apps
Bill Payment and Expense Tracking Apps
Online personal or business loan providers
Money Transfer and Payment
Neobanks generally don't have branches, and many plan to
compete with the full-fledged brick-and-mortar banks. However, some neobanks
are also an extension of a traditional bank, credit unions and financial
institutions. Neobanks have a streamlined and tech-centered approach to
banking, and they have the capabilities to provide faster loan approval and
funding than traditional banks. They don't charge banking fees, have a broader
ATM network and many other features that interest them.
What does Gen Z expect?
As we discussed earlier, Gen Z is a generation of people
born in the technology era; they had never seen a time when there were no
smartphones or the internet. It is safe to call them the 'internet generation'
as well. Let us remember that this generation has seen 3 life-changing financial
crisis at the young age they're in already -
September 11 Terrorist Attacks, The Financial Crisis and now the
COVID-19 global pandemic. These events surely would have some impact on how
they go about their finances, amongst many others. Let us examine what Gen Z
look for or expect from their bank –
1. In-Branch Experiences
Surprisingly, Gen Z has more affinity towards in-branch
experiences than Millennials, who want everything online and at the ease of
their fingertip. The Financial Brand mentioned individuals with lower smaller
financial savings tend to gravitate more towards in-branch experiences. Most
Gen Z individuals prefer having café-style banking branches and get attracted
by free food provided in some of these branches.
2. Greater Long-Term Financial Awareness
Gen Z is surrounded by technology and the internet. They are
always one step ahead and know about the latest news regarding whatever catches
their interest. Also, this generation has more student debt than any prior
generations. These factors shape up a generation that is more aware of their
financial needs and the importance of handling their finances responsibly. Gen
Z has also witnessed millennials suffer and struggle with a home purchase or
rearranging their finances after the Financial Crisis of 2008. So they expect
their banks to provide them with banking services and educate them innovatively
about the important fundamental banking concepts.
3. High Digital and Mobile Expectations
Marketers have still millennials figured out to an extent.
Gen Z has taken tech-fluency expectations to a new level, probably because they
are the first all-digital generation. They consume more information and
entertainment on their mobile devices than any generations before. For this,
they want their mobile app experience to be seamless. Gen Z also looks for
emotional pulls from their online experiences. They want to have some meaning
with their brand relationships, consider social good and finding innovative
ways for gamifying their digital interactions. Naturally, Fintech organizations
also need to consider this for providing an immersive banking experience and
finances to Gen Z.
How can Fintech Organizations build a relationship with
Gen Z and Millennials?
So far, we have understood both Gen Z and Millennials and
the different factors that drive them about their financial needs and banking
preferences. Now we can better focus on steps and efforts Fintech Organizations
can take to better engage with Gen Z. Here are some of to build better
relationships with Gen Z and Millennials –
1. Create Streamlined Digital Experiences
Both Gen Z and Millennials (the younger generations) are
technology-dependent and technology-empowered. They are more open and accepting
to technology, playing a crucial role in their financial relations and
activities. Fintech organizations need to keep in mind to make the online
experience straightforward, easy to use and have a mobile-first approach.
Seamless customer journeys with responsive customer support is a must for
engaging with these generations.
Fintech organizations can’t even rely on the traditional
credit database check system as an eligibility barometer for these generations
to open their bank accounts. Those systems are slow and will often reject
younger generations with smaller credit histories. Hence Fintech Organizations
should take it on themselves to find an alternative way of helping companies
streamline their digital experiences.
2. Be transparent and honest about your products and
services
An interesting study conducted by Salesforce Research
pointed out that 71 percent of millennials trust companies than 63% of Gen Z.
Moreover, only 55 percent of millennials are comfortable with how companies
might use their personal information, in comparison to only 44 percent of Gen
Z. This study shows that there is a sense of distrust amongst the millennials
and Gen Z about how Fintech organizations or any other companies treat
consumers and their data.
Hence, Fintech Organizations need to consider transparency
and integrity when approaching the younger generations; only incentivizing the
offers is not enough to win their trust. Treating them right should be the top
priority.
3. Leverage technology to help customers achieve their
goals
Gen Z and Millennials are more financially aware than any
previous generations; they want practical solutions by leveraging technology to
help them achieve their goals – this could include saving, making investments
or attaining financial independence. Hence Fintech Organizations should bundle
their packages and design their services with latest Fintech trends in their
mind. There can be features that alert customers against making a decision that
can lead to serious debts. Investing can be made easy as a straightforward
in-app - feature in banking tools.
Wrapping it up!
We looked at different factors affecting and influencing the
financial and banking decisions of Gen Z and Millennials. There is a lot of
scope for improvisation in the financial sector to better match these
generations' needs, which would help everyone get access to better services and
ease of finance. Fintech organizations can look at this as a challenge or an
opportunity, but one thing they can’t do is ignore it. Best prepare yourself for
the future of finance!
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