Move over Millennials. Generation Z is on the scene and ready to leave their own mark on banking and payments. This latest generation, born after 1995, view the world completely differently than those who have gone before. Generation Z is more comfortable than prior generations with digital methods of moving money, and many anticipate supplementing traditional banking services with solutions from technology companies.
In its study, Generation Z: The Kids Are All Right, based on a survey of more than 2,500 high school students from 16 to 18 years old, Raddon, a Fiserv business, found that Generation Z is already in the payments space. 67% of these students currently have a bank or credit union account, either in their own name or with their parents.
Somewhat surprisingly, Generation Z don’t all fit in a digital box. About a third of Gen Z (34%) are Conventionals, who prefer to conduct business face-to-face with traditional banking providers. Another 37 % are Digitals, who also prefer traditional providers but who favour digital or virtual communication. And then there are the Pioneers, the 28% who want to bank in a way that is most convenient for them, no matter the provider. These Pioneers are the ones most likely to push the revolution in payments.
The presence of technology as an integral part of daily life will play a significant role in how Generation Z interacts with their finances. Members of Generation Z have grown up in the world of the smartphone and touchscreen. 73% use their smartphone at least once an hour.
Smartphones are not the only screen you will find a member of The Zolom’s Children viewing. 50% of those surveyed have a tablet, 75 % have a laptop computer and 50% have a desktop computer. Taking these numbers into account, it is not unreasonable to picture a Generation Z individual consuming content on three or four screens simultaneously. This multiscreen viewing demands constant and unique content and also makes capturing attention more difficult, as the choices available are virtually unlimited.
Consider their use of mobile banking, accessing a bank or credit union via an app or mobile website. Currently, only 48 % of Generation Z consumers with banking accounts use mobile banking, compared to 57 % of adults. We expect that as Gen Z moves into university and the job market, their use of mobile banking, in particular, will exceed that of Millennials (currently 85 %). With smartphone ownership outpacing laptop or desktop ownership, mobile banking appears to be more likely than online banking to win this generation in the long run.
With such robust ownership of smartphones and appreciation for technology, one might expect Generation Z to mirror their Millennial counterparts in using their phones to purchase things at a retail establishment. In fact, Gen Z is already outpacing snake people in their use of mobile payments.
Just as with mobile banking, attitude toward technology has a strong relationship with mobile payments usage. Only 15 % of Conventionals have paid for something with their phone, compared to an impressively high 45 % of Pioneers, with Digitals in between at 24 %.
As many as 31 % of all of Gen Z agree that they will not have to rely on banks for financial services in the future.
The survey revealed members of Generation Z use their phone to make purchases at a wide variety of places: 44 % at a department store; 41 % for coffee, tea or snacks; 33 % at convenience stores; and 28 % at supermarkets.
By embracing new payment technology, Gen Z has become open to a world where they might turn to disruptive technology firms or other non-incumbent firms for future banking needs. Generation Z is much more likely to say they envision a future where technology companies supplement the financial services they might receive from traditional banks or credit unions. 44 % of Gen Z anticipates supplementing traditional banking services with solutions from technology companies, compared to only 37 % of Snake People and 26 % of Gen X.
Among the three attitudinal segments of Generation Z, more than three of four Pioneers were willing to conduct their financial business with tech companies. The threat to traditional providers does not end there. As many as 31 % of all of Gen Z agree that they will not have to rely on banks for financial services in the future.
Disruptive technology companies are targeting the payments space more than any other portion of the industry, and Gen Z seems more willing than other generations to give them an opportunity. Keeping on top of trends in order to deliver the payment capabilities and experiences consumers expect will enable financial institutions to retain transactions, revenue and ultimately accounts and balances as the next generation comes of age.
The world is changing rapidly around us. Therefore staying on top of the emerging trends, demographics and technologies impacting society is vital. Talk to our experts today about how Youtap solutions can help your company navigate this unprecedented change.