By: Anna Sherrod, Marketing Intern, PSCU
Members of Generation Z – the demographic born between 1995 and 2015 – are now beginning to more fully explore financial services for themselves. As they embrace the financial system, Gen Z, like generations before, will begin to evoke change in how financial institutions approach payments. As a part of this cohort myself, I can attest that we view payments, such as credit cards and cash, very differently than generations before. Our approach to preparing for our future and financial wellness is also different.
Technology has been an integral part of our entire lives, as we grew up learning on computers and mobile devices. Instagram, Facebook, LinkedIn, YouTube and TikTok are social media platforms that many members of Gen Z use on a daily basis. Some may even say that we are tied to our devices. According to Statista, 84% of the U.S. population used social media in 2021. This statistic is only going to increase as the youngest members of Generation Z continue to fully develop into society.
It is crucial for financial institutions to understand Gen Z’s financial priorities and embrace the changes inspired by our generation to stay relevant and meet our financial needs and expectations.
Embrace a Digital Payments World
Today’s society is increasingly cashless. A small sampling of my peers, aged 18-22, showed that 75% of respondents use cash only “once in a while,” and typically carry $0-$20 with them at any time. Our avoidance of cash can be for security reasons, as it’s often easier to cancel a stolen card or because cash carries so many germs. Personally, I rarely carry cash and, even while studying in Europe, only found difficulty without it a handful of times. Most of our transactions just aren’t happening via cash anymore.
As contactless payments are becoming the norm, different payment types are easier to obtain and more widely accepted. According to PSCU’s most recent Eye on Payments Study, 83% of Gen Z use a greater variety of payment methods compared to other generations, with 15% using contactless payments daily. Gen Z members are also more ready than previous generations to embrace new payments technologies. PSCU’s May Payments Index reported there was a 158% year-over-year increase in mobile wallet credit transactions and a 102% increase in mobile wallet debit transactions for Gen Z. Now that credit and debit cards can be easily uploaded into our mobile wallets and, with peer-to-peer payments services such as Venmo right at our fingertips, consumers no longer need to carry around a physical card.
The prominence of crypto as a payment amongst my generation is also growing, with 27% of Gen Z having already invested in cryptocurrency. While the value of crypto has dropped tremendously in the market in recent months, an informal peer survey reveals that Gen Z isn’t giving up on cryptocurrency yet, as the value can only fall for so long.
How to Reach Generation Z
Gen Zers live, learn and prepare for their future differently than previous generations. With employer-offered financial wellness benefits expected to reach close to $964 million by 2027, it is important to consider the needs of Gen Z when determining how this money and educational materials are allocated. So, what can financial institutions do to meet our financial needs?
Keep the following suggestions in mind when examining the payments opportunities and solutions your financial institution offers, as well as designing your marketing and financial wellness educational materials.
- Be open to new methods of payment services. In the future, will a physical card be necessary? Will a future cashless society turn into a crypto-dominated one? Is your financial institution prepared?
- Prepare for a digital future. Technology has brought the importance of providing digital tools to a new high. Accessing financial wellness platforms with ease is something that Gen Z expects, whether it is through how-to videos or educational materials offered through an app. Is your financial institution prepared for a digital takeover?
- Provide practical financial wellness education. While many members of Gen Z were required to take an economics and finance class during high school, much of what we were taught in those classes is not relevant today. One of the major lessons that I remember was about writing checks and balancing a checkbook. Yet I, and many of my peers, have never written in nor owned a personal checkbook. Has your educational information about financial wellness evolved to stay current with the times? Are you providing education about how to maintain a digital budget or encourage responsible use of mobile wallets or crypto?
- Keep videos short and sweet. Whether they are financial wellness education videos or positive testimonials, keep them to one minute or less. If presented with two videos on the same subject, Gen Z will almost always select the shorter version to watch. How long are your videos?
- Reexamine your financial institution’s core values. Gen Z places a high value on choosing organizations and companies that have values that align with their own personal beliefs. Sustainability and environmental impact are important for a lot of Gen Zers, but what else stands out? Do your financial institution’s values align with the values of this generation of consumers?
Generation Z will be the largest percentage of our global adult population in no time. Financial institutions must continue to evolve and innovate to keep meeting the expectations and needs of Gen Z. Change can be hard and keeping up with technology can be even harder. If that is too much to do on your own, consider partnering with a fintech or credit union service organization to help. Generation Z is going to transform how the financial services industry looks and works. I look forward to seeing how we accelerate the evolution of payments and financial wellness education – and fully participating in this evolution myself!
Anna Sherrod is interning this summer with PSCU’s Marketing department to gain a better understanding of how marketing impacts the financial system on an everyday basis. Anna is a rising senior at Virginia Tech pursuing her undergraduate degree in Marketing Management, with minors in International Business and Organizational Leadership.