The Digital Generation: Gen Z is Not Just ‘Millennials 2.0’

Assuming that what worked for Millennials will also work for Gen Z is a mistake banks and credit unions can’t afford to make. Here's why the banking industry will need a new strategy to reach this generation.

How different can Gen Z be? On the surface, they may seem similar to Millennials. After all, both generations were shaped by technology and have mostly lived life in a mobile-first world. But when it comes to money and financial behaviors, Gen Z is eager to distance itself from Millennials’ financial choices.

In its second annual State of Gen Z 2017 Study, The Center for Generational Kinectics has dubbed Gen Z a “throwback generation” — one that wants to work, save money, and not get stuck or trapped by credit.

The study, which defines Gen Z as those aged 14-21 years old (also known as “The Digital Generation”), examined the views young consumers have towards money and spending.

One common, underlying fear expressed among those surveyed: “We don’t want to end up like Millennials.”

48% of Gen Z has a money or payment app on their phone right now.
— Center for Generational Kinectics

Members of the Digital Generation say they are determined to break the cycle of debt and be financially independent. Already (gasp!) they are already thinking about retirement, with many surveyed saying they plan to start building their nest eggs in their 20s. This is a marked shift from the Millennial mindset that “college debt is a part of life”, with over one in five Gen Z respondents saying that personal debt should be avoided at all costs.

Researchers theorize that Gen Z’s parents — primarily Generation Xers — have been the driving force encouraging them to make better money decisions. The study found 56% of Gen Z respondents had discussed finances with their parents within the past six months. In addition, 21% said they had a savings account before the age of 10, and a surprising 12% claimed they have already started saving for retirement.

This echoes results from a study fielded by American Express, which found Gen Z is already actively managing their finances.

Read More: Preparing for Gen Z: 3 Lessons Learned from Overlooking Millennials

“Gen Z is two steps ahead when it comes to interest in payments solutions and technology and their expectations of brands,” said Luke Gebb, SVP/Enterprise Digital at American Express.

In the AmEx study, 77% said they already keep track of their finances, while 72% already have a checking/savings account. An astonishing 33% have used a device specific mobile wallet (i.e. Apple Pay, Samsung Pay or Android Pay) in the last three months, and 43% have used a card branded express checkout solution.

According to Jason Dorsey, president of The Center for Generational Kinetics, Gen Z could potentially surpass Millennials in influence on the banking industry in a short period of time.

“Gen Z’s practical and fiscally conservative behavior is already making them part of businesses and our economy, despite their young age,” says Dorsey.

With a sense of fiscal responsibility that seems to surpass the previous two generations, Gen Z is already out making money to supplement their allowance — doing everything from freelancing (16%) to launching online businesses (22%).

That fidget spinner craze? The founders are two 17 year olds, Allan Maman and Cooper Weiss, who used a 3-D printer at their high school to make the first spinner, then subsequently launched

Fifteen year-old Moziah Bridges, CEO of Mo’s Bows, began designing bow-ties in his kitchen at the age of nine. He recently inked a licensing partnership deal with the NBA.

Gen Z Communications Strategies

Study findings reveal Gen Z is more ad-adverse. Despite their skepticism toward advertising, Gen Z is actually more willing than other generations to engage with brands.

With 74% spending more than an hour a day on their mobile device, Gen Z doesn’t find brand texts, notifications or mobile offers invasive. In fact, Gen Z consumers ranked using text/SMS messaging, searching online resources and talking over the phone with an automated system as their top three preferred customer service channels to solve a problem.

When you’re ready to start crafting your Gen Z marketing strategy, a report from Kantar Millward Brown offers the following rules of engagement:

Don’t ignore traditional media. Despite their digitally dominated media consumption, Gen Z can still be impressed by traditional media. Gen Z is actually receptive and more positive about ad formats such as outdoor, print ads and cinema, TV and radio ads than standard digital alternatives.

Respect their online space. Since they don’t respond well to being a captive audience, keep spots under 10 seconds, drop the pop-ups and non-skippable pre-rolls if you want them to pay attention.

Creative approach makes a difference. Music and humor all make Gen Z more receptive to advertising. They are also attracted to ads that allow them to co-create or see what happens when they make a decision. They are more positive towards brands that let them vote for something to happen (31%); choose an option (28%) or take decisions (27%).

Design matters. An extremely design-conscious consumer, Gen Z will take note of an ad’s aesthetic qualities and appreciate the use of new immersive formats like augmented reality, virtual reality etc. Formats like native ads, sponsored lenses and sponsored filters all attract much stronger approval with Gen Z than other age groups.

Building on these suggestions, Jason Dorsey says that Gen Z responds to online communication that fits their expectations. Here are a few of his strategic recommendations:

Keep it real. Offer one-on-one interactions with brands for questions, requests for more information, and general friendliness. As it is across all generations, a one-size-fits all approach is a real turn off.

Foster peer-to-peer conversations across social media platforms. This gives Gen Z customers and fans a chance to build a deeper connection with the brand by connecting with others who like the brand, too.

Designate a strategy leader. Have someone on your team focused on trying out new Gen Z engagement platforms. Even if they are not a fit for your brand, testing new social media platforms is a great way to stay ahead of the curve.

Transparency matters. Opt for “genuine” vs. “slick”. Gen Z appreciates authentic stories and realistic imagery. On social channels, they follow and trust lesser known, down-to-earth stars like YouTube influencers, Instagram personalities and talent on lip-syncing app It’s something to keep in mind if/when seeking out brand ambassadors and social media influencers.

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