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Gen Z, born between 1997 and 2012, are internet adept and more financially savvy at a younger age than previous generations. They’re expected to make up a third of the global workforce by 2030. This makes them an exciting consumer proposition, and an important one.
Some facts:
- An Australian study shows that Gen Z is the generation most likely to be pro-actively engaged in managing and understanding their finances.
- In the US, Gen Z are the biggest fintech users; around 25% of them have more than one account, and 72% turn to social media platforms and the internet for financial advice.
- Research suggests Gen Z women are more likely to invest in financial markets than their older counterparts.
- For the fourth consecutive year, Deloitte’s global survey found that the cost of living is Gen Z’s main worry - beating environmental and political concerns.
- The World Economic Forum’s Global Retail Investor Outlook 2024 found that Gen Z reflected a “generational transformation in financial habits”.
So what does this mean for incumbent banks?
Gen Z has options – and they know it.
Lower home ownership rates mean fewer mortgage commitments and less gravitational pull to a single bank. A growing focus on smoothing customer due diligence processes (both in regulatory approaches and in development of practical solutions) has reduced drag even further.
Gen Z are used to applying a lens of free choice and constant, easy shifting to their financial decisions. Growing online investment platforms such as Sharesies allow low cost transacting and facilitate active investing with even small amounts of capital. User bases typically skew younger – when American firm Robinhood went public in 2021, it noted approximately 70% of its user base by assets were Gen Z and Millennials aged 18 to 40.
The rise of open banking, expansion of the consumer data right (CDR) and availability of fintech front ends (as we discuss later in this report) will further cater to this “shop around” mentality, by making it easier for savers to switch custom away from providers who don’t meet their (increasingly loud and divergent) expectations.
As a result, competition among banking and financial services is likely to become increasingly fierce as they strive to maintain and grow their market share among the Gen Z demographic.
World Economic Forum’s Global Investor Retail Outlook:
- 30% of Gen Z start investing in early adulthood, compared to 9% of Gen X and 6% of Baby Boomers
- 86% of Gen Z have learned about personal investing by the time they enter the workforce
This article is an excerpt from our report The banking industry: A look ahead. Download the full report at the link below.
