how are the next generation of consumers going to live with or without financial services?   by Barry Smith

Strategic Partnerships
October 2018

Kids today!
Generation unbanked – how will the next generation of consumers live with or without financial services?

First Millennials and now Generation Z (born 1995 - 2012) are often cited as disruptors in many sectors, from the way they consume media and the relevance of newspapers, their shift towards handset subscriptions rather than expensive network subscriptions and the way they shop retail stores versus online. It looks pretty likely that banking and finance is the next sector for a shake-up.

I recently met up with a group of these young people, seemingly the generation unbanked, to understand how they consume banking and financial services and what their views are on the institutions that provide it.

Gen Z – digital natives focussed on saving

Before we met, I tried to imagine what their views might be - I assumed they’d be saving little and spending a lot on credit with a fairly primitive understanding and consumption of banking. It turned out to be the complete opposite - all of these youngsters across multiple social and ethnic backgrounds had an app based challenger bank provider (in my mind usually the preserve of white middle class men) on their smartphone, an avoidance and sometimes aggressive dislike of credit but all saving in one way or another. Their view on credit was  interesting; some were actual users of credit but hadn’t made the connection. Subscription type services on credit, student loans and Pay Later weren’t viewed as credit. Maybe their aversion to borrowing is related to the recession that began in 2007, with many of them experiencing the stress of their parents through a difficult time.

This generation of consumers have grown up with mobile phones permanently in their hands; they’ve never lived in a world without the omnipresence of mobile devices. Most consumables and every aspect of their lives are accessed, controlled or interacted with using their devices and mobile led services and applications. An obvious place for any provider to start would be placing your debit or pre-load cards onto mobile wallets such as Apple Pay to reduce friction and be omnipresent in their wallets.

Create seamless, frictionless outcomes

Ultimately these guys are interested in frictionless outcomes not banking. They care about saving for a holiday, new shoes, or making sure they're managing their budget properly and not the process of making this happen. Think about providing frictionless deposits into savings accounts with the ability to direct funds into different modules or ‘buckets’ such as car, rainy day, clothes etc. With Gen Z's interest and desire to save why not add in budgeting tools too?

Gen Z are digital social natives always willing to get involved in discussions and debates online but also face to face with their friends, family and other social groups. Their ability to fluently and rapidly gather information and process it in real-time sometimes gives the impression of impatience or boredom; there's an expectation of everything delivered in real-time. It also means that they’ll access financial services and credit in completely different ways to those of previous generations.

Be transparent, build trust & community, and don’t sell to Gen Z

The nature of these future financial consumers seems to be off kilter with how traditional major banks are currently built to serve; how they capture and deliver value back to their consumers, as well as their business models. Gen Z is more likely to trust family and friends over financial institutions when it comes to financial advice. Focus on financial education to overcome this; topics such as budgeting, saving and how to manage credit. The group I met cited the helpful, educational piece as a strong reason why they were using these challenger banks.

Lenders of credit will need to be increasingly transparent and accountable. Remember, they’re engaging in activities and discussion amongst their peers to improve awareness and they demand simple ease of access and functionality.

Of course, some will prefer the face-to-face interaction they can get at a traditional bank, but largely it seems their preference is digital interaction. Gen Z is more accepting of technology companies as financial providers and more distrustful of banks and traditional lenders. Only using traditional when they have to!

How to connect with Gen Z, identified by Raddon research i.

  • Engaging on social media is a must, as long as it’s focussed on building the brand and not selling.
  • Targeted messages via mobile also work well.
  • Digital capabilities are essential. Think mobile banking, remote deposits and credit.

It’s not the finance lender per se but rather a rebranding or re-education along with a seamless experience that delivers.

This generation may never grow as comfortable with credit cards and debt as previous generations have so the winners will be organisations that do things differently combining simplicity and frictionless journeys that focus on outcomes not the financial product they are trying to sell them!




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  1. Joyce, L. ‘Generation Z: The Future of Banking’. The Financial Brand. Retrieved from