It’s no surprise that Gen Z spends a disproportionate amount of time on TikTok. In a few short years, the social media app has become an enormous influence on music, dance and fashion among younger people.
The allure of tips from friends and influencers, however, becomes more fraught when the hot topic is money. Already, the influence of TikTok is puts heavy pressure on young Americans to spend.
“I think the world has significantly changed from the standpoint of naturally needing to have more money to do things,” says Drew Glover, general partner at Fiat Ventures. “Social media makes them feel, in some cases, they need more things quicker and at a younger age.”
Moreover, social media offers Gen Z tales — true or not — of people their own age who’ve created great wealth, often using the very same channels. But much of this financial “success” may not be what it appears to the naked eye. In recent years, for example, world-class celebrities such as Kim Kardashian have been sanctioned for promoting cryptocurrencies in social media channels without disclosing that they’ve been handsomely paid to do so.
Younger Americans, perhaps because they spend so much time on TikTok and other social media channels, seem to understand to some degree that they are especially vulnerable to online rip-offs. A recent survey on cybersecurity found that 43% of Gen Z and 36% of Millennials reported being victims of cybercrime, a significantly higher proportion than older generations.
But outright rip-offs are easier to spot than scams passed along through friends or familiar TikTok influencers. “There’s no filter,” Glover argues. Influencers, Glover says, are “doing whatever it takes to get the clicks they need to be as relevant as possible.”
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How Gen Z Is Getting its Financial Advice
Raddon, a market strategy firm owned by Fiserv, has researched the topic at great depth. Marcus Rothaar, manager of Data Analytics Development & Delivery at the firm, says research indicates nearly seven out of 10 Gen Z’ers take product advice from social media users.
But financial advice is a different story; while some Gen Z consumers report being comfortable with social-media financial advice, nearly a third (31%) of “Gen Z are not confident with receiving financial advice from a social media platform,” he says.
An Unlikely Source:
The number of Gen Z'ers that say they take product advice from other social media users:Seven out of 10
This presents both a challenge and an opportunity for banks and other financial institutions to find ways to earn this generation’s trust. Glover’s firm has invested in Copper, a fintech that offers banking services for teenagers. Instead of marketing exclusively on social media, Copper tries to market to teens via schools, “but not through the classroom.” Instead, Copper reaches out through extracurricular activities: Through the drama class or through the football team, or through the basketball team, or to the different clubs.
Some more established financial institutions also say they have found successful ways to engage Gen Z on TikTok itself. Raddon cites a case study on Royal Credit Union in Eau Claire, Wis. Wanting to reach younger customers, Royal launched a TikTok channel in October 2021. The amount spent is minimal: the budget is about $500 a month.
According to Royal’s marketing manager Andrea Finn, the credit union found far more engagement on TikTok than earlier efforts on YouTube or other social media channels. While TikTok’s algorithm remains something of a mystery, videos often go viral on TikTok even when they are created by accounts with few followers.
“I think the world has significantly changed from the standpoint of naturally needing to have more money to do things. Social media makes them feel, in some cases, they need more things quicker and at a younger age.”
— Drew Glover, Fiat Ventures
After six months, Royal was producing five videos a month with an average viewership of almost 300,000, compared to an average in the low three figures on other platforms.
“The cost per impression for TikTok is much more effective than other social media campaigns and traditional media,” Finn said.
Regardless, whether the marketing goal is to engage TikTok directly or work outside of it, experts recommend keeping the following in mind:
Younger Americans have unique financial needs and expectations. On average, student loan debt weighs substantially heavier on today’s younger Americans than it did for their parents or grandparents.
“Coupled with high inflation and rising home prices, it’s more challenging for Gen Z to save for a down payment for that first home purchase,” says Rothaar. “Gen Z is seeking financial guidance and assistance on how to navigate these challenges.”
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Gen Z has its own entry points into the financial world. Members of the digital native generation are likely to have interacted with money through recent innovations, such as gamification — think Robinhood — or BNPL services. That doesn’t necessarily mean, however, that they reject traditional banking.
In fact, Rothaar says that his company’s research shows a trend of Gen Z and younger millennials embracing large national banks.
“The perception that large national banks have the best and latest technology is a significant driver of this trend,” he says. “This is in part influenced by effective marketing and focusing on the experience and technology rather than just product features.”
Build financial literacy into your content. Building trust depends in part on providing reliable information and useful resources. This can help a bank or credit union differentiate itself from financial clickbait. But this also means meeting younger consumers where they are, engaging with what they see on TikTok.
Glover argues that some traditional banks, for example, might shy away from cryptocurrency. Instead, he says, the stance should be: “Let’s get some money in there. Let’s get some money in the market. Let’s see how it performs for you.”
Keep it simple. A financial institution posting videos to TikTok doesn’t need to produce a seminar on the miracle of compound interest. The most effective videos are short, casual, and authentic.
Consider influencers. Although the social media landscape may be filled with scam artists, there are plenty of sources of useful money advice on TikTok. Some is very basic: How to set a monthly budget, how to write a business plan, etc.
Partnering with legitimate influencers can be a great way to reach younger Americans who are seeking trustworthy financial advice.
Glover even suggests that banks and credit unions should consider outright buying some of the more influential social media voices. “How can we identify the different personas of the next generation that we want to really build a relationship with, purchase some of those content creators and publishers, really start folding in the information we believe the next generation needs to know, but letting these folks that we purchase actually guide that conversation?”