Payment trend: Gen Z sets to work

What it means for payments and banking

As Gen Zers emerge from financial adolescence and into financial maturity, financial institutions should be in tune with their payment and banking preferences. They have shown they currently prefer debit to credit.⁵ In addition, their financial interactions must be digital and mobile-first. This is evidenced by a high level of comfort using Fintechs for their payment and banking needs as opposed to traditional banks.⁶ They also have an increased willingness to engage in new payment methods such as Buy Now Pay Later (BNPL),⁷ are highly engaged in crypto relative to the general population, and view the option of sustainable credit cards as an attractive reason to switch banks.⁸

Part of attracting any customer to a brand or product is meeting them where they are. This begs the question, “Where and how can businesses reach Gen Z?”. The “Where?” piece of this answer, perhaps unsurprisingly, is predominantly through social media. Gen Zers spend roughly 50% of their waking hours looking at a screen,¹¹ and 54% of them indicate they spend more than four hours per day on social media.¹² Social media giants have tapped into this behavior and allow consumers to make purchases directly from their apps. This functionality allows brands, large and small, to sell directly to this segment in their native environment.

The “How?” piece is a bit trickier. Given Gen Z’s emphasis on personal fulfillment, businesses should look to craft messages or develop products and features that speak to the desire of Gen Zers for brands to be better, more socially conscious organizations. In the world of consumer goods, businesses are tapping into this desire in many ways. For example, a personal cosmetics brand may introduce a humane, animal testing-free line. Or a clothing retailer, may launch a Shop Sustainable proposition, through which used clothing is sold back to the retailer, repaired, and then resold at a discount.

The banking industry may have been slower to develop equivalent propositions, but there is considerable scope to do so, and some interesting and innovative approaches are arriving fast.