23/07/2024
The high expectations of Gen Z for a seamless online experience make them not only the ideal consumers of fintech, but also its greatest innovators.
Who are Gen Z and what are their values?
Gen Z—those born between the late 1990s and around 2010—is the first generation to have grown up with the internet and mobile phones from a young age. They’re commonly referred to as “digital natives,” reflecting their innate familiarity with modern technology.
They are a large—although not uniformly—cohort: The oldest are already active in the workplace, while the youngest are still at school. So, the full impact of this generation is yet to be seen. Developed countries with declining birthrates have a smaller Gen Z population. In contrast, it’s estimated that Gen Z will make up a quarter of the population of the Asia–Pacific region by 2025, outnumbering millennials.
Gen Z has lived through several significant world events, including a global recession and the COVID-19 pandemic. Some commentators speculate that this has made them pragmatic and cautious. Indeed, financial instability is the norm for many: Property ownership is a pipe dream for many, and the traditional career path leading to a comfortable retirement has given way to the “gig economy.”
There’s evidence to suggest that this instability has even impacted Gen Z’s mental health.
However, a recent McKinsey study has revealed that Gen Z also shows a higher level of social awareness, with racial justice and climate change cited as two of their main concerns. And as digital natives, they naturally share their views on these issues via social media. Social connections, too, take place for Gen Z primarily in the digital realm, where they share experiences and build a sense of community—but they also value face-to-face connection, particularly following the restrictions of lockdown. As such, hybrid events are favored by this generation.
Gen Z and fintech: What’s the connection?
Quite simply, Gen Z expects services to be provided digitally by default. Queuing at a bank counter is foreign to them, and many rarely carry cash: Contactless smartphone apps such as Google Pay or Apple Pay are their preferred payment methods. A survey carried out by EY showed that Gen Z is up to three times more likely to use alternative payment methods, including Buy Now Pay Later and in-game currencies.
This generation is also more willing to trade data security and privacy for convenience, and prefers debit cards to credit cards. They’re more likely to hold accounts with digital-only banks, sometimes in addition to an account with a traditional bank. A study from the UK found that 30% of bank app users have accounts with more than one bank. And they’re early adopters of cryptocurrency investment, with 34% reporting that they’d prefer to invest in cryptocurrencies than a pension.
What does Gen Z want from digital banking?
Gen Z’s expectations of financial services are different from those of older generations—but how exactly? There are several features they expect from their financial providers:
• Instant payments and notifications: Payment apps such as Venmo are popular with Gen Z, as they offer real-time transfers and instant notifications.
• Personalized financial advice: Apps that track spending and offer tips on budgeting and saving allow Gen Z to manage their personal financial goals from a mobile device.
• Environmental, social and governance (ESG) factors: In line with their increased social and political awareness, Gen Z considers ethical issues when choosing a payment provider. 64% say they would switch banks if their current account holder didn’t uphold standards for ethics and environmental sustainability.
• A seamless experience: Gen Z expects banking solutions to integrate with other lifestyle apps, such as those offering food delivery, online shopping, special offers and cashback.
Opportunities for Gen Z in fintech
Gen Z’s combination of tech-savviness with an innovative and entrepreneurial spirit naturally draws them to careers in forward-thinking fields such as fintech. Their digital-first outlook and non-traditional career expectations make them ideally suited to remote or hybrid working, a feature of many companies in the fintech sector.
This generation’s interest in technologies such as AI and blockchain, including a concern for their ethical uses, makes it a good fit for the fintech world.
Potential roles for Gen Z in fintech include UI/UX designer, project manager and creative director, as well as the more traditional financial services roles. Their familiarity with digital and hybrid solutions gives them invaluable insights into customer needs and expectations: They can tap into the mindset of younger consumers and anticipate future trends. And their knowledge of app design and functionality means they’re ideally suited to product design and customer relationship management roles.
Gen Z and the future of fintech
Gen Z can be expected to play a significant part in developing technologies such as peer-to-peer payment systems and non-traditional banking solutions. We’re also likely to see a move towards fintech initiatives aimed at promoting financial inclusion and sustainability, as well as a continuation of the trend towards decentralized finance solutions based on blockchain technology.
However, Gen Z has high expectations of employers, especially regarding transparency, sustainability and ethical practices. They view a flexible working environment as essential, placing strong importance on their work-life balance. While Gen Z’s worldview may challenge more conventional institutions, forward-thinking companies will see these employees as assets.
