Have you talked to Gen Zers lately? If not, get ready because they’re coming to an office (or Zoom meeting) near you. And if experts, and post-Millennials themselves, are to be believed, they’re going to make waves. They shun Photoshop because they crave authenticity. So much so that they might even bring brick-and-mortar stores back. They’re so diverse they don’t even know what ‘diverse’ is. They think of their phones as a – gasp! – tool, not a toy. And if you still frown upon seeing emojis in business emails, get over it.
To my mind, however, the biggest difference between this generation and others has less to do with Gen Zers’ attitudes and more to do with the world that has shaped them. Especially when it comes to finances – and more importantly, banks.
Not only will Gen Zers have no memory of a world without smartphones or social media. They also won’t know one where banking can only be done through banks. My generation (shout-out to fellow Millennials) was probably the last one to think of financial institutions as actual institutions instead of apps. Or to accept the rigid workings of legacy banking. More and more services that banks have offered consumers for hundreds of years are now available to anyone, anytime, anywhere, thanks to a growing array of neobanks and fintechs. Let’s take personal loans as an example. In 2013, according to American consumer credit reporting agency TransUnion, fintech lenders were responsible for 5% of unsecured personal loan originations. Six years later, the same number was a whopping 38%, making up for a larger share in the market than banks (28%) or credit unions (21%), Forbes reports.
Is there a way for banks to step up to the challenge and beat challengers at their own game?
Not until they stick to the old rulebook. “I’ve been to my bank three times in total: first to sign a contract with them and twice because I forgot my password for online banking,” a Gen Zer colleague of mine told me when asked about her banking habits. She went on: “Everything’s digital now and we’re in the middle of a worldwide pandemic – why on earth do I have to visit a physical branch to reset a password?” As part of a generation that would take a root canal over talking to a banker any day, I couldn’t agree more. It’s also painfully obvious that the coronavirus has driven an even bigger wedge between tech leaders and laggards. But it has also opened up new opportunities for banks to win over a new generation of digital natives.
Everything’s digital now and we’re in the middle of a worldwide pandemic – why on earth do I have to visit a physical branch to reset a password?Georgina Nagy, Finance Trainee at W.UP
Unlike Millennials, who came of age during the Great Recession, Gen Z had every chance to inherit a strong economy with record-low unemployment, Pew analysts explain. Then along came COVID-19. According to a March 2020 Pew Research Center survey, half of the oldest Gen Zers reported that they or someone in their household had lost a job or taken a cut in pay because of the outbreak. Meaning that their future prospects are much less rosy now than six months ago – which might turn them into even more money-conscious adults. And that’s where banks can really shine.
Because trust and trustworthiness have always been at the core of their identity, banks could very well become this generation’s most powerful allies in building a brighter financial future. Using a banking personalisation platform like W.UP, they can easily analyse customers’ income, expenses and spending behaviour, detect high-risk customers and warn them before their funds run out. Or highlight saving opportunities, advise them on where to shave off costs, tell them about deals and discounts on their favourite brands or help them keep their budget under control using the need-want-save method. My colleague, for one, would very much welcome the idea. “I track my spending but only in my head. I’ve tried a couple of budgeting apps but stopped using them, because they were too much hassle. But I would definitely use one that’s connected to my current account and keeps me up-to-date on my spending.”