Are You Ready For Gen Z?
Millennials’ time in the spotlight is coming to a close as a new generation gains spending power and fiscal prominence. Gen Z, which includes individuals born between 1995 and 2012, is positioned to become the largest demographic of consumers by 2020 with an expected $29 to $143 billion in direct spending power, according to FutureCast. This represents a massive opportunity for banks and credit unions to engage with a new generation now and help them manage their wealth for years to come.
So, what should financial institutions consider when establishing relationships with Gen Z?
First and foremost, do not assume that Gen Zers are the same as Millennials. While there are many similarities between the two generations, they have distinct differences. Gen Z is the first generation of true digital natives. Most Millennials still remember a time of dial-up internet connections and mobile phones without apps. Conversely, Gen Z has always had access to Wi-Fi, smartphone apps and multiple social media channels. This group’s familiarity with digital technology has resulted in higher expectations for most services, including banking, impacting how financial institutions engage with Gen Z.
According to a recent survey from Mediakix, a majority of Gen Z is connected online for at least one hour per day and nearly half are connected online for up to ten hours per day. The same survey also revealed that social media is a powerful way to reach Gen Z. More than 85 percent of Gen Z will learn about new products through social media and 69 percent will visit a retail store or website based on the business’s social media presence.
While previous generations have primarily used social media for maintaining their social networks, Gen Z appreciates receiving relevant information about an institution’s products and services via social channels. When it comes to content for social media platforms, do not discount the importance of video. Gen Z regularly uses YouTube and 50 percent reportedly “can’t live without” it, according to AdWeek. As Gen Z begins to navigate their financial futures, institutions would be wise to offer quick educational videos on various topics like financial management, commonly used financial terms and what they mean, or even how current industry events, such as an interest rate hike, may impact their finances.
Raising the Bar for Digital
With nearly half of Gen Z connected online for up to ten hours per day, the bar has been raised for digital experience. It is not enough to simply offer services via mobile and online channels. Instead, financial institutions must offer digital experiences that are intuitive, visually-engaging and feature-rich. Venmo is a great example of this, as the platform allows users to send payment to a friend with an emoji and requires minimal clicks. For community banks and credit unions, offering a streamlined mobile or online account opening option is a great way to cater to Gen Z. Be sure the service minimizes data entry for the customer or member and leverages advancements in smartphone technology so supporting documents can be submitted without a trip to the branch. Likewise, allowing customers and members to electronically sign documents ensures your financial institution delivers a top-notch digital experience.
Prioritize Authenticity and Transparency
Lastly, financial institutions should prioritize transparency in their communications. Gen Z, more so than previous generations, values authenticity and transparency from the brands they engage with. This group expects institutions to interact with them on a personal level to help address their unique financial challenges and will not tolerate feeling like just another number to their bank or credit union.
To ensure Gen Zers feel like a partner, using data to gain a complete view of an individual’s finances and then make relevant, targeted offers is necessary. This also ensures your financial institution is providing the most meaningful and helpful educational content possible.
Additionally, it is important that Gen Zers are able to easily and quickly obtain answers to their questions and concerns. For instance, if a customer applied for a student loan through your bank and has a question about the status of the loan, do not burden them with tracking down that information. Instead, identify ways to streamline that process and increase connectivity with customers. One way to accomplish this is through an online portal or similar touch point that facilitates 24/7 engagement between a customer and their financial institution.
Baby Boomers, as well as Generations X and Y are still highly relevant demographics for banks and credit unions to target, but it is crucial that institutions begin mobilizing for Gen Z. Do not underestimate this group’s expectations and future buying power. The financial institutions that take action now and embrace this digitally-savvy generation will gain a significant competitive edge compared to the institutions that are struggling to catch up.
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Posted on Friday, September 20, 2019 at 11:00 AM
by Baker Hill