Millennials may have dominated the headlines over the last 20 years, but there’s a new generation on the rise. Meet Gen Z. Born between 1995 and 2012, these digital natives already account for $143 billion and they’re changing the way we bank, pay and shop.
A Generation Defined
While millennials saw the birth of Google and Facebook, many were in their 20s when smartphones hit in 2008. Millennials may be the internet generation, but Gen Z is the smartphone generation. And unlike their millennial peers, Gen Z has never known a world without Google, Apple, Facebook or Amazon.
Gen Z also grew up living on less. They watched as their parents struggled during the Great Recession and their millennial peers faced student debt and a difficult job market. Because of these experiences, Gen Zers have a lot in common with those who came of age during the Great Depression. They are defined as much by their thrift as they are by their smartphones.
Where They are Shopping
While Gen Z has an affinity for mobile and they prefer to do their research online, 98% shop in physical stores – and they prefer to spend their money on groceries, entertainment, hobbies, studies and mobile devices. And even though they live their lives on mobile, 20% of Gen Z consumers visit their bank branch weekly — compared to just 16% of Baby Boomers. To satisfy their demand for connectedness, banks, retailers and payment providers are starting to create digitally connected experiences — like interactive store displays — that work on and offline.
Gen Z is also twice as likely to shop online, and when they do, these discerning customers expect top-of-the-line experiences on all platforms — especially their smartphones. Retailers have less than eight seconds to capture their attention, meaning that banks and mobile wallet apps should load quickly and be easy to navigate. And transactions and money transfers should be almost instantaneous. Since Gen Z already accounts for $600 billion in family spending, every second saved means big business for banks and retailers.
Value-minded consumers looking for a good deal, Gen Z expects targeted rewards, offers and discounts. To win Gen Z’s loyalty, traditional banks will have to do more — moving beyond traditional mobile payment apps to create engaging customer experiences. Expect more alliances between companies and brands as payment providers work hard to capture Gen Z’s attention.
How They are Paying
This thrifty generation is more likely to use their credit cards for building a credit score than for buying things they can’t afford – and they’re already saving money and investing for retirement. Gen Z is also the generation most likely to use cash for in-store purchases. Nearly 28% say they prefer cash, compared to just 18% of millennials. And while they love the vintage appeal of cash, they’re just as likely to split a pizza with friends via Venmo. Gen Zers demand immediate gratification, and when it comes to their money, they expect nothing less. 70% of Gen Zers use banking apps daily, and 68% want instant P2P payments.
Digital wallets are taking over the banking world, and Gen Z is leading the way. Almost 2.1 billion consumers worldwide will use mobile wallets next year — a 30% increase from last year.
In four years, experts expect that half of all payments will be made through major digital wallet players like PayPal, Apple Pay, Visa Checkout and W3. In the fourth quarter of 2018, mobile wallet spending rose by 114%, while transactions increased 38%.
Attracting and Retaining the Gen Z Dollar
Getting Gen Z’s attention will be a challenge. They are precocious, research-driven and more focused on deals than brand loyalty. These early adopters will overlook a business if they don’t make on-the-go convenience a priority.
Gen Z also values transparency, brand authenticity and personal connections over brand names and privacy concerns. They are drawn to companies who make their lives easier — delivering faster, better, more seamless services.
So how can businesses attract this new generation? Technology, technology, technology. Artificial intelligence, chatbots, robotic bank tellers and other emerging technology can provide a more personal touch to those looking to win Gen Z’s loyalty.
Payment providers who integrate speed, value and personalization into their social, shopping and payment experiences will be able to evolve alongside these young consumers, whose needs are constantly changing.
Regardless of what the future holds for Gen Z and banking technology, security will always be a top priority. Bluefin offers P2PE and tokenization services that ensure sensitive data is encrypted the moment it enters your system. To learn more about how you can protect your customers’ data, contact a Bluefin representative today.