To attract the post-millennial generation, financial institutions need to understand this new cohort’s preferences and expectations.
Growing up surrounded by technological tools has left a mark on the personalities and expectations of the so-called Generation Z, or post-millennials.
Those born between 1995 and 2010 already have clear preferences. This is a generation whose very education has been centered around technology. Now, ready for the labor market, they are seeking professional, social and financial experiences in keeping with their digitally-native upbringing.
For post-millennials, technology is simply a means to an end when it comes to their finances. While previous generations thought that seeing their bank balance from their phone could be considered an ‘innovative experience’, to today’s youngest ones, it is simply standard.
While there may be some years left before the generational shift is complete, meaning that the youngest ones will have reached adulthood, the financial industry needs to be fully aware of what their new audience is, what their needs are, and what banks can do to conquer the heart of disruption.
Generation Z users are eager to access banking services through digital channels, which is leading financial institutions to reconceptualize their access, especially retail banking, according to an Insider Intelligence report.
The first point of contact is the cell phone, Gen Z’s favorite channel for accessing financial information. Some 80% of respondents in the II report said that mobile banking is their primary way of making payments, deposits and transfers. This, together with young people’s increase in financial needs in the context of the pandemic, opens an attractive gateway to institutions.
Another of the young generation’s priorities is accessing customer service and sales - such as insurance - in a personalized way, through a human agent that can advise them, according to a study by Tech Mahindra.
And when it comes to security, according to that same study’s estimates, more than 60% of this population takes their data protection into consideration when deciding whether to stay with or leave a financial institution.
Moreover, 26% of respondents thought they would change their financial provider if their bank had a security breach, which is an indication of how much young people value the integrity of their personal finances.
Keep in mind that this generation grew up during the 2008 recession and is living through the current one, which makes them risk-averse. It is key for providers to offer a friendly hand so that these consumers start navigating the world of finance.
Given that post-millennials have around 20 e-commerce apps on their phones, the competition when it comes to catching consumers’ attention is fierce. So here are the main functions that the Gen Z audience values from their financial institution.
The first is contactless payments, such as through a QR code. We know that young people don’t have the same need for cash as previous generations, so their preferred way of making payments is through their mobile devices due to their agility and ease of use.
With the pandemic pushing people to make mobile payments, it is expected that wallets will gain prominence, with key functions including payments, instant transfers and, an important and valuable plus for young people, savings and even investment options. This last one could be offered together with personal goals, for instance, to make it more attractive.
Regarding security, banks should prioritize user identification and authentication through facial or fingerprint biometrics. Banks -and their new competitors - are increasingly adopting these tools, which offer an easy, fast and secure solution.
As for continuous attention, the use of chatbots or voice assistants is also valued by young people, especially those that offer transactional functions. The entities that have got behind this solution and have wanted to add extra innovation to it have also incorporated artificial intelligence (AI).
Even though young people have an innate ability to adopt technology in their day-to-day, as they are better able to use it and spend a great amount of time submerged in it, they are also aware that their lives need to reach a balance between the digital parallel, and reality.
For that reason, every product or service that comes with education is a valuable for them. We should understand that, while this may be the generation with the most access to information in history, it may not be the best informed one, especially when it comes to financial matters.
To drive their economic independence, advisory and education are important differentiators. Financial gamification, rewards programs and personalized assistance can be incorporated to this end.
The most interesting thing about financial education is that it offers the opportunity to add automated functions, such as saving. An app that provides personalized experiences based on data can reduce the amount of effort a client has to make when making decisions, which will contribute to more controlled economic consumption habits.
Offering these tools for planning, both short-term and long-term, will not only clarify and help Gen Z solve their problems, it will also allow for a great connection to banking providers. In turn, that ensures a privileged opportunity to help this generation with its personal finance management.
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