Millennials From Y to Z
Having grown up as the third child of four, I was frequently accused of being the “favored” one because, unlike the others, I never got into trouble. Little did my siblings know, my “favored” status was a direct result observing their actions and subsequent repercussions. I would take note of their mistakes and avoid the same pitfalls they had experienced. It served me well. One interesting characteristic regarding Generation Z (Gen Z) is they want to avoid the mistakes of Millennials in amassing debt. Apparently, they are a generation of observers and learned from the previous generation’s mistakes. Being a Baby Boomer, I must have been born way ahead of my time.
Millennials indicated a trend towards automated processes that are easier-to-use, more transparent, and data driven. They want content that provides solutions and advice that is relevant. They want information that can be directly applied to their specific financial situations and they are looking for it within their social networks. They change tasks quickly enough to appear to ‘multi-task’, switching attention between media platforms 27 times per hour (text, insta, tweets, snap, etc.). They are primed to correspond in 280 characters or less. Furthermore, Millennials are trained to expect that there will be a 'next version' regardless of the application or process.
The battle for Millennial customers will expand to Gen Z, an entirely new young customer. Gen Z differs in a number of ways from Millennials, particularly in how they communicate information. It is second nature for Gen Z to use instant messaging platforms and they are completely comfortable using them as their primary mode of communication.
An article in American Banker stated that fintechs are leading the way in developing apps and services for the fast emerging Gen Z customer. CommonBond’s recent acquisition of NextGenVest, a college loan advice platform, gave it access to 65,000 Gen Z users already on the platform; there are competing platforms in the same space already. Apps for Gen Z consumer debt management, such as Current, are in the market, too. Some fintechs are developing apps that use games to encourage savings among younger members of Gen Z.
As more of this information becomes readily available, regulatory agencies across the board are under more pressure to protect consumers, particularly as massive data breaches continue to plague financial companies and retailers. Such scrutiny is expected to intensify in 2019 as politicians have vowed to monitor the banking industry closely once the newly elected majority is seated in January.
Preparing and planning for Gen Z must become a fluid process which allows for adaptation and flexibility. Financial institutions will need to able to react in a manner that matches this generations expectations, perhaps by creating alliances with a fintech partner. A ray of hope for this generation is a result of what they have learned by observing and are attempting to not make the mistakes of previous generations. I wonder what letter the next generation after Z will be and whether they will leverage what the observers have learned to their benefit.
Posted on Thursday, February 7, 2019 at 1:15 AM
by John Robertson
John Robertson is part of the Advisory Services team at Baker Hill, specializing in pricing and profitability. With 26 years of experience in the banking industry, Robertson assists banks in developing and implementing technology for commercial lending that improves the efficiency of the lending process and the productivity of the lending officers. As a Senior Business Process Architect for Baker Hill’s Advisory Services, Robertson provides guidance to Baker Hill’s clients on profitability, specifically with strategies involving risk-based pricing and relationship profitability.
Prior to joining Baker Hill, Robertson served in various roles related to cash management, treasury, and asset/liability management. Previously, he served as assistant treasurer for three banks and was a member of various asset and liability committees. Additionally, Robertson has developed and implemented several programs during his banking tenure including a pricing and profitability system, a secondary marketing department and a treasury management group.
Robertson received his bachelor’s degree in business administration and accounting from the University of Houston.