Imagine you could change the world with a single act. A brief moment, a statement that changes the landscape for generations to come. And it’s not an act of desperation but rather convenience. It’s not a political statement but a consumer one. This is how Generation Z takes us to the world of cashless and instant-response society with a simple act of tapping the “Pay now” button. What do these people need and pay for, what are Generation Z’s spending habits?
What is Generation Z?
Gen Z’s buying habits are driven by their digital native nature. Researchers and media mark the mid-1990s as the start (birth) of this generation and the early 2010s as the closing margin. Children born within this period are concerned about their professional and financial situation and don’t engage with a risky life. They are focused on what matters, what’s edgy and “now”. Generation Z can be described as heavy users of electronic gadgets and light users of books. But above all else, they want to shop: the faster and easier, the better.
Generation Z in numbers
The PaySafe’s report states that:
- 40% of consumers in the Gen Z category have made at least one in-app payment, 15% make in-app payments on a regular basis.
- 34% of Gen Z consumers have used a mobile wallet, 14% use it regularly.
- 8 in 10 Generation Z’s members still use cash but at the same time, 53% of them prefer stores accepting contactless payments.
According to Business Insider, Generation Z has a purchasing power worth $143 billion. With that much firepower, they can buy whatever and whenever they like. And they do, with an almost complete mobile-only approach to life. Many consumers of this era have grown up in households with limited budgets. They still remember their families gathered around the dinner table, trying to figure out what to do and how much money there is to spend. Naturally, it’s all a reminiscence of the US economic crisis of 2008. But it’s not only the Americans who were affected, it’s the whole world.
Gen Z has A-class requirements
Because of that, these young people view the world as one big bubble of economic potential. Money is important, a good job leads to good money and a good education leads to a good job. That’s the logic they follow. Concerns for financial stability drive Generation Z’s shopping habits. Baby boomers, Millennials and other previous generations went through various turmoils but they didn’t have technological opportunities to deal with them. Generation Z is different.
Their spending power lies in a deep conviction of what they want and when. If they want a product, they buy it, and with the assistance of a processing power’s application. Why? Because high-street banks don’t offer them individual customer care and attention. And individual wealth is what this group values above all else.
That’s not all—this new demographic wants experiences but of a new kind. According to Snap Inc. and GlobalWebIndex, Gen Z values experiences even more than Millennials. There’s a catch, though—they have to be meaningful. A local art gallery? Sure. A break from social media? Definitely. An occasional travel? Yes, but as a vehicle to know more about themselves and the world, which brings us to the issue of spending habits.
Generation Z spending habits: navigating the waters
Gen Z favour products and services that help navigate pain points, leaving money for experiences and enjoying life. That’s why statistics about personal wallets and mobile banking are so true and make sense in the broader context.
Gen Z value brand credibility over colourful photos and statements. They want practical solutions and advice. Especially since over 50% of them don’t have basic knowledge about financial planning. What can FinTech companies do to help?
FinTech focus on Gen Z
FinTech product development for Gen Z is about the creation of an app that serves both as a personal wallet and a mobile advisory board. Most of Gen Z members don’t know how to efficiently spend and invest money. 83% of the Gen Z demographic want to buy their first house by the age of 30. However, under current economic conditions this can be challenging, even with a great education.
That’s why open banking for Gen Z can act as a personal banking and mentoring service. Mobile payments are very important but with over $4,000 in debt, these young adults will struggle to secure their dreams about a house. Traditional banking has already spotted this and created a solution that can win Gen Z clients over. HSBC has introduced Pepper the robot: a humanoid acting as a conversational banking representative. It can be programmed to deliver marketing content while engaging students on campuses. FinTech companies can use it as a powerful communication tool and transform it into a virtual financial assistant in their apps.
Gen Z is transforming digital banking
Fintech News has conducted a single-question survey to learn what Gen Zers are all about. Apparently, they appreciate a physical branch of a bank but mostly rely on digital banking. Their money management could use some help and many of them wish to develop healthy spending habits. The most interesting part applies to their FinTech banking expectations.
Members of Gen Z want:
- no bank fees (66%)
- 24/7 customer support (12%)
- connectivity to other payment apps (8%)
- built-in savings tools (almost 6%)
- automatic categorization of expenses (4%)
- voice-enabled banking service (around 4%)
What’s the bottom line? Although 500 respondents can’t be representative of the entire generation, the results heavily correspond with what we have been underlining in our previous posts. Consumers want personalized care. They look for FinTech services as part of a larger ecosystem (read more here: FinTech customer experience), with more benefits than the basic app can offer.
Money is a major concern for this generation. Entering the workforce is stressful, so anything that can help — counts. Curiously enough, 61% of Gen Z’s choose the same bank as their parents. That’s an additional reason why FinTech should work even harder to convince these young adults to save money with their app. Digital transformation of traditional banking institutions can be another factor and motivator.
How to win over Gen Z users?
Applications like Venmo or DANA capture the audience with practical features making shopping online is easy. Gen Z shoppers can also use digital products to pay for utilities and even split the bill among friends in a restaurant. Who in their 40s and beyond splits the bill? Some of them, but probably not a lot of them. For the young and pragmatic, it’s often a necessity.
Vouchers? Not a problem, DANA has them covered. With over 1000 collaborating merchants, the product is a hit among the youngsters. They can browse for best deals, buy things cheaper and pay an electric bill while they’re at it. Easy and simple, as all should be.
FinTech for Generation Z: the bottom line
Imagine you could change the world with a single act… If you can’t, don’t worry. Members of Gen Z have already done that. They give you what you need to make them happy. They won’t give up personal information that easily but they contribute to a digital society in ways many app developers have probably never imagined. Their digital mastery among generations drives further FinTech innovations.
FinTech mobile software development often focuses on what consumers need. Sometimes forgetting what they actually want and ask for. Slick UX / UI design should go hand-in-hand with the practicality of life improvements. Generation Z seems to be better prepared for adulthood than Millennials. Now it’s time for FinTech to follow.