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As Gen Z enters adulthood, their preferences for financial products and services are redefining the financial industry. Born between 1997 and 2012, Gen Z has grown up in a tech-driven world and faced economic challenges like the COVID-19 pandemic and rising inflation. These experiences shape their unique approach to banking, investing, and managing money. Financial institutions need to understand these preferences to effectively engage with this new generation of consumers. At Ground Works Analytics, we explore the trends influencing Gen Z’s financial behaviors and the products and services they value most.
Gen Z prefers digital banking services, seeking convenience and accessibility that traditional banks often struggle to provide. A survey by Business Insider Intelligence found that 97% of Gen Zers use mobile banking apps, underscoring the importance of seamless digital experiences.
Gen Z has embraced neobanks (online-only banks), such as Chime and Revolut, which offer features like fee-free accounts, early paycheck deposits, and real-time transaction tracking. These banks prioritize user experience and financial transparency, aligning with Gen Z’s desire for easy-to-use, accessible, and low-cost services.
Traditional banks must innovate to compete with the convenience offered by neobanks. Features like 24/7 customer support via chatbots, advanced mobile apps, and personalized financial insights are becoming necessary to capture the attention of this tech-savvy generation.
With the rise of digital wallets like Apple Pay and Google Pay, Gen Z prefers cashless payment options that offer security and convenience. They seek financial institutions that provide integrations with these platforms, enabling quick and secure transactions. In fact, research from GlobalWebIndex shows that 54% of Gen Zers use digital wallets, reflecting their preference for fast and efficient payment solutions.
Investing is another area where Gen Z’s preferences stand out. While previous generations relied on traditional brokers and financial advisors, Gen Z prefers digital investment platforms that offer more control and accessibility.
Gen Z is interested in investing but often lacks the capital to make significant investments. Platforms like Robinhood and Acorns cater to this need by offering micro-investing and no-fee trading, allowing young investors to start with as little as $5. Robo-advisors, such as Wealthfront and Betterment, use algorithms to manage portfolios and provide investment advice, making investing more accessible and affordable for Gen Z.
Gen Z values financial education and seeks platforms that provide resources for understanding investment strategies and financial management. This generation prefers apps that not only facilitate trading but also offer educational tools and insights. For example, platforms like Fidelity and E*TRADE have introduced educational content to help Gen Z users make informed decisions. By integrating financial literacy tools, these companies address Gen Z’s desire for transparency and education, making them more appealing to this demographic.
Gen Z is known for prioritizing sustainability and ethical values, and this extends to their choices in financial products and services. According to a study by Deloitte, 77% of Gen Zers want to work for companies that share their values, and this same mindset influences their financial decisions.
Gen Z is more likely to choose banks and financial institutions that align with their environmental values. Companies like Aspiration offer green banking services, such as carbon-neutral debit cards and opportunities to invest in sustainable funds. This generation prefers financial institutions that demonstrate commitment to social and environmental causes, rewarding brands that are transparent about their impact.
The rise of Environmental, Social, and Governance (ESG) investing also reflects Gen Z’s values. This generation is drawn to investment options that promote positive change, such as sustainable energy, ethical labor practices, and diversity in leadership. According to Morningstar, the number of sustainable investment funds has grown significantly, attracting young investors who want their portfolios to reflect their values. Financial institutions that provide easy access to SRI funds and ESG resources are more likely to engage with this value-driven generation.
The popularity of Buy Now, Pay Later (BNPL) services, such as Klarna, Afterpay, and Affirm, illustrates Gen Z’s preference for flexibility in managing their finances. BNPL options allow young consumers to make purchases and pay in installments without traditional credit cards.
Many Gen Zers are cautious about accumulating debt and prefer alternatives to traditional credit cards, which they associate with high-interest rates and fees. A survey by TransUnion shows that Gen Z has the lowest adoption rate of credit cards compared to other generations. Instead, they prefer BNPL services, which offer interest-free payments as long as users pay on time. For Gen Z, these services provide a way to build credit without the risk associated with traditional credit cards.
BNPL services are often integrated directly with e-commerce platforms, making them an attractive option for Gen Z, who frequently shop online. Financial institutions that partner with e-commerce platforms to offer installment options can tap into this growing market. However, educating young consumers about the potential risks of BNPL services—such as missed payments and credit score impact—is essential to prevent financial pitfalls.
Gen Z’s preferences for financial products and services are reshaping the financial landscape. They seek digital-first solutions that offer convenience, flexibility, and alignment with their values. From neobanks to ethical investing options and BNPL services, this generation prioritizes accessibility, transparency, and sustainability. Financial institutions that understand these trends and adapt their offerings to meet Gen Z’s needs will be better positioned to engage and retain this influential demographic.
At Ground Works Analytics, we recognize the importance of understanding Gen Z’s financial preferences to craft strategies that align with their values and habits. By providing data-driven insights, we help financial institutions innovate and connect with the next generation of consumers effectively.