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.

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As an expert with a deep understanding of financial technology and trends, let me delve into the key concepts covered in the article about Gen Z and financial management.

Dmitry Dolgorukov, the Co-Founder and CRO of HES FinTech, is introduced as a leader in providing financial institutions with intelligent lending platforms. Now, this lends credibility to the information provided, as it comes from someone actively involved in the financial technology sector. HES FinTech's role in delivering intelligent lending platforms positions Dolgorukov as an authority on the evolving landscape of financial services.

The article emphasizes the rapid growth of Generation Z, a demographic that makes up 32% of the global population. The evidence supporting this claim is the age range mentioned: the youngest being 10 years old and the oldest being 25. This information is crucial as it establishes the relevance and significance of Gen Z in the current market.

Gen Z is portrayed as the first digital-first generation, using up to five screens simultaneously. This is a noteworthy observation, backed by the fact that they grew up against the backdrop of the 2008 global recession and some entered the workforce during the coronavirus crisis. These experiences shape their financial perspectives and behaviors.

The economic challenges faced by Gen Z, with some having parents from Gen X and millennials with 34% less wealth than predicted by the Federal Reserve, are presented as potential hurdles. However, the article counterbalances this by highlighting Gen Z's tech-savvy nature and innovative financial skills, indicating their potential as major market players in the future.

The article then shifts focus to what Gen Z values in their financial services provider. Trust is highlighted as a key factor, supported by a survey stating that 62% of Gen Z prefers to buy from sustainable, ethical brands. Security is another crucial element for this tech-savvy generation, emphasizing the importance of financial institutions demonstrating a commitment to data safety.

Rates and competitiveness are discussed in the context of Gen Z's mastery of digital reviews and comparisons. The article underscores the need for brands to not only be competitive but also genuine to avoid appearing insincere. The preference for human interaction over robots is noted, with 23% of Gen Z respondents favoring buying an insurance product from a human.

The significance of experiences is emphasized, with Gen Z expecting seamless and straightforward interactions, whether digital or face-to-face. This insight is essential for financial companies looking to attract and retain Gen Z customers.

The article concludes by highlighting the importance for financial companies to adapt to the changing landscape, especially with the rise of digital-first banks. It provides actionable steps for businesses to tailor their services to meet Gen Z's needs, including careful branding, ensuring a seamless digital experience, and personalizing services through smart AI tools.

In summary, the article provides a comprehensive overview of the challenges and opportunities associated with serving Generation Z in the financial sector, offering insights and recommendations based on both anecdotal and survey-driven evidence.

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