GenZ: The future of financial services?
Born after 1995, Generation Z, or GenZ, has quickly come to dominate the digital sphere with a large presence on TikTok, Instagram, Youtube, Snapchat, Facebook and WhatsApp, which have a combined total of over 4 billion active users a month. As opposed to millenials, who largely grew up before the mainstream use of mobile phones and internet culture, GenZ’s main drive for personal development stems from constantly seeking reach, interaction and validation and the creation of a digital identity. GenZ is a generation of truly digital natives navigating the internet like no generation before.
This is where the paradox of this generation becomes apparent: They have all the information and knowledge at their disposal, yet do not act in a self fulfilling way, resulting in procrastination and the delay of critical decisions.
What does this behavior mean for the financial world and players in the financial industry? What does it mean for the creation of (new) financial products for the GenZ? How can the industry design appealing offers to this target group that nudge them towards making better financial decisions? How can these products be sold with the least amount of friction possible?
In our “GenZ Report: the financial future is now”, we investigated these questions, present the mental model of the target group and inspire a discussion.
Although financial services are omnipresent in everyday life, they aren’t anchored or embedded in the consciousness of this target group. Their consciousness is rather focused on the search for self-realization or recognition in the here and now. GenZ’s surveyed for this report stating that savings are made for short-term (emotional) satisfaction and less for long-term (rational) goals. Hence why it is not surprising that the most popular financial product is the savings account. While money is saved, the desire for flexibility and the ability to access the money at any time outweighs the benefits of long term saving.
Furthermore, the complexity of finances is the biggest barrier when dealing with one’s own financial future. The relevant information is available, but the abundance leads to a weakness in decision-making: “I’d rather do nothing at all to manage my finances than do something wrong given my limited understanding”.
Once this apparent fear of the topic has been overcome, it becomes a matter of understanding the complex world of financial services. If it hasn’t already happened, the low level of financial education promotes capitulation to the topic. To solve this problem by simply focusing on playful elements is myopic: The ease of swiping suddenly meets reality – the loss of assets. Despite generally not having as much knowledge about financial services, GenZ is well aware of the risks connected to investments.
In order to understand this generation, we summarised these findings in five mental models that guide the financial decision making processes of GenZ:
1) a Short-Term Focus,
2) living in the Here and Now,
3) missing the last push to Take the Leap,
4) overwhelmed by the Choices and Consequences, and
5) looking for the power of Knowledge and Comprehension
While we see promising solutions on the market, we are looking forward to discussing new business models attracting and winning the financial consumers of the future – as their financial future is now.
Download the full report here.
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