Equity, Diversity and Inclusion

Speaking Gen Z: How banks can attract young customers

Gen Z has grown up in a digital world, but there's much about traditional banks they like.

Gen Z has grown up in a digital world, but there's much about traditional banks they like. Image: Unsplash/Julio Lopez

Bob Wigley
Chair, UK Finance
Rupal Kantaria
Forum Member, Oliver Wyman
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Financial and Monetary Systems

  • Gen Z attitudes toward money and finances are sometimes aligned with and sometimes starkly different from those of older generations.
  • Research suggests that Gen Z trusts traditional banks more to secure their data and needs digital services to be exceptional to retain their customers.
  • Financial institutions must understand their motivations and values to take a share of this fast-growing market.

Like most businesses, financial institutions are often mystified by the quirks and nuances of Generation Z.

Misunderstanding this sometimes confusing cohort of 20-somethings could prove costly. Gen Zers make up roughly 15% of the UK workforce – and their influence will only continue to increase, with commensurate jumps in spending and investing power, as more members reach working age and the group enters its prime earning years.

Have you read?

Gen Z attitudes toward money and finances are sometimes aligned with and sometimes starkly different from those of older generations. To capture Gen Zers’ attention and growing cash hoard, firms need to understand what makes them tick and meet them where they are – even when their opinions and desires seem unconventional.

Get ‘phygital’

Gen Zers, defined as those born between 1997 and 2012, have grown up in a digital world, but there’s much about traditional banks they like. The level of trust Gen Zers have that banks will safeguard their data, for example, is far greater than the confidence they place in big tech.

In all, 43% of Gen Zers say physical, bricks-and-mortar bank branches are important to them because they provide “peace of mind”, according to the Oliver Wyman Forum’s Global Consumer Sentiment (GCS) survey.

To build lasting relationships with Gen Zers, however, banks need to combine their physical presence with a competitive, exciting digital offering – including in the metaverse, where many members of this generation spend time. Banks must also provide services that satisfy Gen Z's demand for convenience, choice, value, sustainability and hyper-personalization.

Make the digital part exceptional

Virtually all financial institutions now offer their services online, but mere competence won’t cut it for Gen Zers, who have grown up with smartphones in their hands. An overwhelming 73% say customer experience plays a critical role in determining their favourite brand, according to the Oliver Wyman Forum survey. They want tools that help them manage their money, learn from peers and provide a sense of community and fun.

Gen Zers embrace digital innovators, with 72% saying they use a neobank (a direct, online-only bank) app as their primary budgeting tool, according to the GCS survey. The best of these digital-first firms provide a seamless user experience with engaging graphics and information about making transactions or choosing where to invest. Gamified features such as leaderboards of the most popular stocks have a particular appeal to a generation weaned on so-called play-to-earn videogames and the meme stock phenomenon.

Appeal to Gen Z’s investing savvy

If financial executives think today’s young investors are the same as back in the day, they’re selling Gen Z short. This crowd is investing earlier than previous generations and in a broader range of asset classes – both traditional and virtual. They’re also more diverse than their predecessors. Firms need to understand that behaviour, as well as the motivations that drive it, and tailor their offerings accordingly.

Almost half of Gen Zers invest in the stock market, according to the Oliver Wyman Forum survey. They are 45% more likely to start investing by age 21 than Millennials and two to four times more likely than Gen X and baby boomers. What’s more, they aren’t setting aside piddling sums: according to a recent Blackrock survey, members of this cohort save a hefty 14% of their incomes.

Gen Zers are 45% more likely to start investing by age 21 than Millennials were.
Gen Zers are 45% more likely to start investing by age 21 than Millennials were. Image: Oliver Wyman Forum’s Global Consumer Sentiment (GCS) survey

Not surprisingly, for the first generation to come of age since the creation of Bitcoin, Gen Z has a sizable risk appetite for cryptocurrencies and other virtual assets. Amongst Gen Z investors, 42% have put money into crypto, compared with 38% of millennials, 22% of Gen X and 7% of boomers, according to GCS data.

Gen Z women are 50% more likely to invest in digital assets than other generations. In the US and UK, 68% of Black and Asian Gen Zers invest in crypto – a share that’s nearly three times higher than Black and Asian respondents from older generations.

Yet, just as with banking, the attraction these young investors have for crypto does not imply any rejection of traditional sources of money. The GCS survey finds that Gen Zers are more open to the idea of a digital pound and other central bank digital currencies than older generations. They would consider digital tokenization of real financial assets like stocks and bonds to enable them to be traded on blockchain technology, as well overdue.

Not so different

Once you cast aside the misperceptions, it’s easier to see Gen Zers for who they really are: pragmatists keenly focused on securing their financial future.

They are determined to take control of their money while hungry for information and advice; eager to take risks in crypto and other virtual assets even as they allocate savings to stocks, bonds, and other traditional assets; and unwilling to settle for anything less than top-notch service and round-the-clock digital connectivity.

Gen Z’s growing numbers and financial clout means these attitudes and preferences will rule the market before long. Financial institutions that want to appeal to this cohort need to understand and embrace their values.

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Equity, Diversity and InclusionYouth PerspectivesFinancial and Monetary Systems
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