In September 2015, brand strategy firm C Space invited a group of Gen Z consumers ages 13 to 20 to participate in a day long interactive session to explore the future of money. The goals for the day were to explore how this generation spends, manages, and saves their money, and to get their ideas on how to make spending and saving easier, faster, and more relevant to their lives.
During the unique trend-spotting focus group session, Gen Z participants postulated what the future of banking looks like, as well as co-created some potential solutions for better money management. Gen Z participants in the session were surprisingly specific and articulate — equal parts skepticism and optimism. Their predictions underscored the need for banking brands to fit seamlessly — and often creatively — into their lives, to integrate technology in human ways, and to create both experiences and products that deliver immediate and relevant value. And, of course, Gen Z expects this to happen all on their terms.
Who is Gen Z Anyway?
Born 1995 or later, Gen Z is just starting to figure it all out. They’re two billion strong worldwide, comprising about 26% of the U.S. population, and are the most ethnically and racially diverse generation in U.S. history. Whether they’re still in grade school or just starting college, Gen Z sees the world in a fundamentally different way than any generation before them. They are a youthful powerhouse
of fragmented complexity and social shrewdness, compounded by the technological ubiquity. They already represent a staggering $44 billion in purchasing power, a figure that will only grow as they do.
Advancing technology and major world events play a strong role in sculpting the principles, values, and behaviors of any generation. But technology in particular has made Gen Z the most adaptable and knowledgeable generation ever, taking advantage of all they can self-teach.
For the older Gen Z consumers, their first significant historical memory is 9/11. And, some of their formative years coincided with the Global Recession of 2008 – witnessing their parents lose jobs, downsize homes, recalibrate household budgets, and perhaps seeing their older Millennial siblings move home after college were all realities. They know change can happen in an instant.
“If brands don’t evolve along with their customers, they will become irrelevant.”
— Amanda Fraga, C Space
Gen Z is growing up fast, with or without you. They are finding new ways to do old things. They’re demanding better — from themselves, from each other, and from the brands they do business with. They don’t care about brands that much … unless they fit seamlessly into their lives and connect them to the things they care about most. Those banks and credit unions that align themselves with this Gen Z mindset will succeed, while those that don’t will become irrelevant.
Insightful & Savvy
This generation’s knowledge goes beyond smart. They didn’t grow up in the insulated world that Gen X did, where information and “world knowledge” was vastly more difficult to obtain. They know what they know, and they know what they don’t know. They are curious information-seekers, with the world at their fingertips — literally. As Becky M., 15, puts it, her life motto is “Google It.” Gen Z can find out anything they want to know with the push of a button. They don’t need to wait for an older sibling or mom and dad to hopefully explain it to them.
In all facets of their life, big or small, they want to make good decisions and have access to information and resources to help them do so. This generation doesn’t have helicopter parents; they’ve largely taken charge of their independence, and want to be treated with respect accordingly. This includes how companies treat them, too. Gen Z understands the concept of profitability, but can see through traditional marketing and disingenuous motives. Gen Z wants companies to serve all their customers — not just them — in a transparent and socially responsible way.
This generation is driven, hard-working, and generally responsible. If Millennials are entrepreneurial and visionary, Gen Z is clever and industrious — eager to put in the hard work to fulfill their dreams. Despite the tumultuous world events that happened in their lifetime, they remain optimistic for the future, but are nevertheless realistic about what it’s going to take to get there. When asked whether the American Dream still exists, they agree that it does, but they but realize it’s just a bit different than it used to be; it’s going to take hard work to get there, and they believe technology can be their catalyst.
Gen Z seeks financial independence from their parents at an early age, although they still have lots of respect for — and heed advice from — their parents. Participants in the C Space session seemed to generally understand the concept of making money work for them, both immediately today and down the road tomorrow.
Much like their Millennial predecessors, they have a collective sense of responsibility and social consciousness. They want to make socially responsible choices — whether that is a vision of working in sustainable energy, or owning a small business — and want to help create jobs and contribute to a thriving, balanced global economy.
Risk-Averse & Adaptable
“The world around us is constantly changing — businesses need to be more malleable. What I like now I probably won’t even like tomorrow. Who knows?”
— Sarah L., age 19
This generation knows that everything can change in a minute. This translates into a sense of extreme pragmatism, where Gen Z consumers more cautiously weigh the practicality of their material purchases. Many have a savings-conscious mindset, and critically consider the value equation of any purchase.
They acknowledge that when you have more information, decisions can be even harder to make. Yet at the same time, they see technology advancing day by day, and know that something that exists today could be improved tomorrow. Permanence isn’t necessarily a desirable quality, but adaptability certainly is.
“Technology doesn’t accurately substitute human contact and I think we’re lacking a lot of that.”
— Katherine K., age 20
With access to computers and smart phones at a very early age, you might be surprised to hear that Gen Z doesn’t consider themselves to be the “Digital Natives” that other generations might rush to label them. They see babies and toddlers today flying around iPads and iPhones more deserving of this title. While technology is a tool and the reality of the times, they still crave and value human contact. They don’t see themselves as different from other generations that use technology; they just have the adaptability to learn faster, and have a self-starter mentality that empowers them to figure things out on their own. They feel strongly that technology doesn’t — and shouldn’t aspire to — replace human contact. In fact, they actively seek ways to disengage from using technology.
Relationship to Money
As Gen Z anticipates entering the “real world” and getting it all figured out, they
have a contradictory relationship with money. On one hand, money is a tool that enables them and gives them freedom and independence. On the other hand, money represents the fear of being reckless, stresses them out, and can be intimidating. Regardless of the positives and negatives, they approach money from a very thoughtful and conscientious place.
“I think to most people my age, money is an intimidating topic,” said Hamza B., a 20-year old participant in the focus group session. “My fear is that I will be imprisoned by money. Just understanding money and how I can make money work for me, as opposed to working for money, will help me overcome that fear.”
The Future of Banking
“Whenever I think of money, I think of it as a tool. A lot of times it’s just that transient thing that goes through your wallet.”
— Joel M., age 19
In a world of electronic payments, Gen Z consumers are infrequently touching and feeling cash. To them money feels like an abstraction — making it harder for them to take control and actively manage it. They welcome ways to make money feel tangible, regardless of how they store, save, and pay.
“If you use a credit card, you’re more apt to spend,” observed Zack A., a particularly savvy 15-year old. “You’re going to spend 12% to 18% more money on a credit card versus cash. The physical motion of getting rid of a dollar bill is harder than just swiping a credit card.”
Gen Z wants to own and manage their financial future, but they openly admit that they’re not sure how. As such, they are looking for companies to provide the tools and education — on their terms, and in their language — that can help them demystify banking. Furthermore, they want win-win solutions. The companies that reward them for learning about future financial milestones will gladly earn their trust, business, and loyalty.
Knowing this generation is pragmatic and uncertain about the future, you’d think they’d be making long-term plans with their current funds. However, knowing how fast the world changes, short-term savings are key. They realize they need to accumulate enough money in the near future to open doors for new opportunities and experiences. But retirement isn’t on the horizon… their first job is! It’s a major
life milestone that will set the stage for an evolving perspective on saving, banking, and financial planning.