Congratulations are in order for the Class of 2018. Not only have they completed their undergrad degrees, but they also represent the first of Generation Z to leave college campuses with diplomas in hand. While the oldest members are just entering the job market, millions more are starting their undergraduate careers. Though they may be young, they’re already a generation known for their focus on their finances. They’re a generation using innovative data-driven FinTech to support their fiscally conservative behavior.
Gen Z gets a bad rap. Just like their older siblings, the Millennials, they’re often maligned by the media. The average Gen Z has their face glued to a screen and has an 8-second attention span. While it’s true they’re using their phones more than any other generation before them, they have surprisingly traditional values when it comes to money.
Financial stability rates high in Gen Z, and they place value on work, money, and assets more than Millennials. According to the latest Cassandra Report, 39 percent of Gen Z would rather save their money than spend it, and 60 percent align success with having “a lot of money”.
They aim to achieve these goals by learning how to use their money responsibly. Despite their relatively young age, 35 percent have enrolled in a financial class of some sort, surpassing Millennials (12 percent) and Baby Boomers (16 percent). They’re supplementing what they know with lessons from their parents. According to the Center’s White Paper The State of Gen Z 2017, 56 percent of this generation have talked about saving money with their parents.
Their experiences growing up while their parents faced financial difficulties during the recession changed their attitudes towards money. Likewise, the Millennials’ doomed experience with the job market and record-high student loans acted as a lesson to Gen Z following in their footsteps.
As a result, they’re a cautious generation who sees the market as an untrustworthy entity. While they have relatively conservative financial goals, Gen Z’s use of technology is more advanced than other generations. They’re using their phones to help navigate the world of money with care.
Remember, they’re the first true digital natives of the world. The Pew Research Center pins 1997 as the first year of Gen Z, coincidentally the year Google first launched. While the oldest can’t remember a time without the ubiquitous search engine, its youngest members are not much older than the first generation of iPhones, first released in 2007.
Their access to information has always been immediate and in the palms of their hands. They’ve always been connected to family, friends, and brands through mobile devices, and they expect the same 24/7 access to their finances. If a service is too slow to load, they’ll exit the window and move onto the next.
Steph Wissink, the managing director and consumer research analyst at Jefferies, says this intimate relationship with technology has created a generation of “info-nivores”. She says they rarely make uninformed or impulsive financial decisions because they’re able to leverage their mobile connection to find the answers they need. They’re connoisseurs of digital research, and they prefer simple, straightforward data over unnecessary complex or dense pages of text.
Gen Z wants fast access to straightforward information, which puts them at odds with legacy systems of retail banks and other conventional financial institutions. They’re known as legacy systems for a reason — they’re old-fashioned and time-intensive standards regulating how they process customer requests. First put into place to protect the bank and its customers, they’ve since become a knot of red tape that can complicate and delay their services.
If you need to do anything beyond simple online banking, customers have to go into a branch and speak with a bank representative — taking time off from school or work to accommodate the bank’s opening hours. They then may have to wait days, weeks, or even months for these institutions to respond.
FinTech presents an alternative free of these bureaucratic complexities. Though they offer similar products (like personal loans, lines of credit, and mortgages), they do it primarily online to remove many of the barriers traditionally stopping people from finding help.
FinTech’s mobile platform resonates with Gen Z because it’s convenient, simple, and available 24/7. It includes mobile banks like Chime that offer a digital way to transfer funds, set payment schedules, and even deposit a check instantly without ever going to a branch. Incidentally, Chime doesn’t even have a single branch, as they operate entirely online. This online platform is another reason why online lenders can offer fast, uncomplicated access to cash loans and other financial assistance. They can process requests quickly, and in the case of a company like MoneyKey, they can direct deposit the loan online within one business day.
FinTech offers solutions that are simple, automatic, and straightforward — three things the traditional banking system struggle to offer. This might cost them a large chunk of Generation Z. In its report, Generation Z: The Kids Are All Right, Raddon subdivides the generation according to their attitudes towards alternative FinTech services and their delivery channels. At 34 percent, Conventionals represent just over a third of Gen Z who prefer to complete their banking with a face-to-face bank or credit union. They’re outnumbered by the Pioneers and Digitals who, together, represent 65 percent. They prefer to navigate electronic channels to find solutions to their financial questions, including spending, saving, and borrowing money.
As the first true digital natives of the world, Generation Z’s behaviour is a refreshingly modern approach to relatively old-fashioned concerns. Despite their young age, they prioritize the responsible use of their money, and they’re using their abilities behind the screen to find mobile-first services to help them achieve their goals.