Conventional banking is facing a major challenge from the rising influence and expectations of Generation Z. This article reveals how banks can attract and retain young customers by combining their physical presence with an exceptional digital offering that appeals to their values, needs, and preferences.
Read on to discover the insights and strategies that will help you speak to Gen Z and grow your market share in this fast-changing segment.
Table of Contents
- Genres
- Review
- Recommendation
- Take-Aways
- Summary
- Generation Z’s rising financial stature has implications for conventional banking.
- Digital financial tools are a core component of gen Z’s approach to financial management.
- Gen Z individuals are active investors who spread their funds among equity, credit and digital asset markets.
- About the Authors
Genres
Business, Finance, Marketing, Technology, Innovation, Consumer Behavior, Generation Z, Banking, Digital Transformation, Sustainability
The article, based on the Oliver Wyman Forum’s Global Consumer Sentiment survey, explores the attitudes and behaviors of Generation Z, defined as those born between 1997 and 2012, toward money and finances. The authors argue that Gen Zers have grown up in a digital world, but they still trust and value traditional banks more than big tech.
However, to capture their attention and loyalty, banks need to offer a competitive, exciting, and personalized digital experience that meets their demands for convenience, choice, value, sustainability, and fun. The article also suggests that banks should leverage their physical branches to provide peace of mind, education, and community to Gen Zers, as well as tap into their investing savvy and interest in alternative assets such as cryptocurrencies and NFTs.
Review
The article is well-written, informative, and engaging. It provides a clear and comprehensive overview of the characteristics and preferences of Generation Z, as well as the opportunities and challenges that banks face in serving this segment. The article uses relevant data and examples to support its arguments and recommendations, and it also addresses some of the potential pitfalls and risks that banks need to avoid or mitigate.
The article is useful and relevant for anyone who wants to understand and reach out to Gen Z customers, especially in the banking and finance industry. The article could be improved by providing more details on how banks can implement and measure the effectiveness of their phygital banking solutions, as well as how they can balance the needs and expectations of different generations of customers. Overall, the article is a valuable and timely resource for anyone interested in the future of banking and finance.
Recommendation
Generation Z – those born between 1997 and 2012 – is a burgeoning cohort of young consumers disrupting the financial services industry. Though this group relies on digital offerings, a good portion of Gen Z believes brick-and-mortar banks offer a sense of security. Bob Wigley, chair of UK Finance for the World Economic Forum, and Rupal Kantaria, partner at Oliver Wyman, delve into the gen Z mindset – their spending, saving and investing habits – and explain how financial services companies should strategically approach this population. Investors and banking executives will find valuable intelligence in this informative report.
Take-Aways
- Generation Z’s rising financial stature has implications for conventional banking.
- Digital financial tools are a core component of gen Z’s approach to financial management.
- Gen Z individuals are active investors who spread their funds among equity, credit and digital asset markets.
Summary
Generation Z’s rising financial stature has implications for conventional banking.
Generation Z is the next prominent demographic that will profoundly affect the economy. The traditional financial services sector is playing catch-up to the growing monetary influence of this group. Gen Z depends heavily on digital services, and their finances rely on fintech offerings. Some 72% of gen Z use a “neobank” through which to conduct transactions and plan their finances. To garner market share, the conventional banking sector must embrace technology solutions through a digital lens, because banks face stiff competition from the fintech platforms to which gen Z already connects.
“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.”
Conventional banking is not at a complete strategic disadvantage, however. Despite gen Z’s alignment with fintech, 43% of the cohort believe brick-and-mortar retail banking provides a superior level of safety, particularly regarding data security.
Digital financial tools are a core component of gen Z’s approach to financial management.
Conventional banking must merge the industry’s legacy of security with compelling technology. This blueprint proves tactically difficult to execute, given gen Z’s voracious appetite for effective and valuable fintech tools. For example, gen Z favors digital solutions that feature dashboards and “gamified features.”
“Banks must also provide services that satisfy Gen Z’s demand for convenience, choice, value, sustainability and hyper-personalization.”
To successfully compete for gen Z business, the traditional banking sector should incorporate these elements into their offerings.
Gen Z individuals are active investors who spread their funds among equity, credit and digital asset markets.
Gen Z is thriving is the investment arena. Compared to previous demographic groups, gen Zers deploy capital – approximately 15% of their earnings – far earlier in their lives than their predecessors did. Compared to Millennials, Gen X and baby boomers, gen Zers are more likely to have begun investing by age 21.
“Almost half of Gen Zers invest in the stock market.”
And these investments are not reserved exclusively for the equity and bond markets. Gen Z also operates in the digital asset and cryptocurrency space. More than 40% of Gen Zers have placed funds into cryptocurrencies.
“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.”
Gen Z shares financial behavior characteristics with its predecessor demographic groups, while carving out its own unique set of financial habits. The conventional banking industry must appeal to their priorities to capitalize on the growth of this generation’s economic importance.
About the Authors
Bob Wigley is chair of UK Finance for the World Economic Forum. Rupal Kantaria is a partner at Oliver Wyman and a World Economic Forum member.