“Gen Zers have this notion of hating big banks — they don’t like what they stand for — but they like the technology and location convenience they offer” (American Banker).
Today, 22% of Gen Zers already earn money online (IBM) and a similar percentage have had a savings account since the age of 10 (Centre for Generational Kinetics). A far cry away from 50 years ago, when you needed parental supervision to get a checking account at 18. This shift provides a massive opportunity for banking institutions to capitalize on this young age group. However, there are several difficult hurdles to navigate if a bank wants to earn Gen Z’s trust.
Mistakes were made with Millennials, from sweeping generalizations that alienated the age group to complete misunderstandings of their interests. Consequently, there has been a great surge in small FinTech’s or large non-banking organizations developing technology that replaces some of the features that have been traditionally monopolized by larger banks. These companies have managed to capitalize on a hole in the industry; the distrust and distaste of banks that runs rampant amongst these generations has left banks vulnerable to innovative organizations. Banks need to act now to secure the next generation as lifelong clients. Let’s take a look at the differences between the two age groups and see how capital markets can keep their interest.
Most people already know what Millennials are, so we’ll keep it short. The general age group is somewhere between 35 and 23. Millennials rejected the suit and tie work ethic that came before them, which led some sources to label them as lazy, entitled and vain. This has been disputed recently by several researchers but the damage is sort of done, Millennials now know what corporate brands think of them.
Unlike Millennials, who were raised in the middle of innovation with a constantly changing technological world, Gen Z are firmly tech natives. Aged about 13-22, they are thought to be financially responsible, hardworking and very ethically driven. It’s important to evaluate why they are so motivated and financially sensible.
Our childhood experiences with money can define our financial motivations for life. Think about what was going on financially when you were 10, and consider how it may have affected you in later life. Gen Z grew up with the recession. They weren’t old enough to necessarily consider it intellectually, but they were old enough to feel it, to feel the tension and concern. So, at a young age, one of their defining experiences was how banks had failed, leaving a distrustful taste in their mouths.
Couple their distrust of banks with their passion for tech and it’s no surprise that some startups have achieved so much. One new British startup rose to 1 million customers between 2016 and 2018, an incredible customer base growth rate of 75% per week during 2018 with 15% of all new current account openings in Britain happening with them (The Fintech Times).
Other British banks have begun implementing technology features that this bank started. Huge marketing campaigns have spread across London from banks advertising their “new” features, including some adverts which have directly referenced this massively growing bank. This kind of copycat innovation feels disingenuous and is another deep misunderstanding of the intelligence and priorities of Millennials and Gen Z.
So, in 2 age groups rife with distrust and an environment filled with new companies ready to fill the gap, how do you win? Well there is good news on several fronts.
The first is these age groups are business minded and independent, with many looking for a side hustle such as working online and freelancing. There is a big wave in the rejection of traditional work environments. People are looking for flexible independent work, which is great for banks because it means as each person ages and gathers some more experience, the bank they choose could become the bank of their future business.
These age groups reject bad ethics, demonstrated by the huge rise in veganism and environmentalism, but they don’t reject marketing and advertising with the same aversion as previous generations. Having grown up with social media platforms, influencers and experiential branding these groups are used to marketing. Further, with content being poured out at an alarming rate, it is no wonder that these generations are interested in (and used to) education in topics such as saving, tech developments in banking, and managing their own financial safety.
Mix this interest in education with their motivation towards financial and business independence and it’s a no brainer that any good marketing team should be using educational content, both video and written to provide their potential future users with great financial advice on how to turn their side hustle into a fully-fledged business, or how to ensure their pensions are going somewhere ethical (especially since 12% of Gen Z are already saving for retirement – Centre for Generational Kinetics), or just how to manage their money in a responsible way utilizing the best in banking services.
Furthermore, using their preferred platforms such as Instagram to become their go to resource for financial and business education will solidify you as a trusted source of transparent treatment when they need somewhere to deposit their future business’ income.
The second positive is that “Gen Zers are similar to their millennial brethren in the sense of having a locked-in relationship with the largest banks: Bank of America, Chase and Wells Fargo. Those are the dominant institutions for every generation, but it’s really picked up with millennials and at the same rate with Gen Z” (The American Banker). Traditional banks are still in a great position to become the leading providers to younger generations; they are easier to navigate and access and their very visible branding makes it easy to build trust. That doesn’t mean some work isn’t needed, but it does mean that the work will likely get better results than the attempts of smaller, less evolved FinTech’s.
How do you build trust with the younger generations? Tap into what they’re interested in; technology, security and ethics. It’s important to be the first one on the scene. Talk about banking technology in a way they understand. A lot of Millennials and Gen Zers are curious about the technology that goes into making the systems they use work. Talk about how your bank is solidifying and securing its systems to ensure something like the recession doesn’t happen again.
Talk about how you’re innovating in controlled banking trading to keep their future mortgages and businesses safe . Talk about how AI is being leveraged to manage financial risk and ensure consistent returns in trading within your banking processes. Talk about what your bank is doing to ensure a more ethical future. Talk about all these things and more to help them understand and trust your bank and develop targeted interested in your use of technological innovation.
Don’t get left behind, these age groups are the future and they care about how their money is being spent and how you are going to take care of them. Contact us now to find out how using our platform implementation specialists, innovative AI technology and insightful understanding of trading and risk management can help you develop trust and transparency in your bank amongst the Gen Z/Millennial age group.