Fast payments, prepaid cards, debt counseling: What Gen Z wants from banks
Payments are one of the many systems that banks need to move faster to re-engineer to meet the demands of the up-and-coming Generation Z.
That was one of several recommendations made by Bill Handel, the vice president of research at the advisory firm Raddon, at the BAI Beacon conference in Orlando, Fla., this week. His comments stemmed partly from a survey late last year that asked 2,500 16- to 18-years-olds for their opinions on financial and other matters.
Banks must make the mobile phone the central hub for the delivery of services and products to this group, he said. Gen Z expects and will demand fast, real-time payments. Banks must also provide robust advisory services and financial education in order to differentiate themselves from any looming threat from big tech giants like Amazon that may seek to become banklike.
Financial services institutions need to take a second look at their existing processes and products and overhaul them if they are not up to meeting the demands of this younger generation. These young consumers prefer prepaid cards and favor no-overdraft checking much more than other generations.
Other key recommendations: Use big data in a larger, more intensive way to customize interactions for Gen Z clients; use social media to test whether products or services are working; and market to the parents of this generation. Gen Zers look to their parents and families for financial advice more than social media, classes, seminars or online research.
Overall, characteristics that define Gen Z is pragmatism, risk aversion, skepticism about traditional institutions like colleges and the heavy debt attached, and the use of YouTube over other Snapchat and other social media platforms.
“Gen Z was heavily influenced by the financial crisis,” Handel said. “They are more realistic about things compared to millennials.”
Bankers have to make sure they really understand how this generation thinks, Handel said, because it is expected to slightly outnumber millennials worldwide by next year. Gen Z is forecast to make up 32% of the estimated global population of 7.7 billion, and millennials are forecast to be 31.5%.
“Gen Z is larger than millennials — their impact will be very huge,” he said.