According to a report by The World Economic Forum, as the financial landscape undergoes rapid transformation, Generation Z (Gen Z), born between 1997 and 2012, emerges as a force reshaping the future of money and finance. With attitudes towards traditional banking and financial practices that sometimes align and sometimes diverge from older generations, Gen Z’s adoption of Central Bank Digital Currencies (CBDC) becomes a critical lens through which to understand their evolving relationship with money.
Gen Z’s Financial Landscape:
Gen Z, constituting roughly 15% of the UK workforce, holds considerable sway over spending and investing power. The quirks and nuances of this generation often leave financial institutions mystified, but decoding their motivations is imperative for those seeking a share of this fast-growing market.
Traditional Trust Amidst Digital Dominance:
Contrary to assumptions about a complete rejection of traditional banking, research suggests that Gen Z places significant trust in traditional banks, particularly when it comes to safeguarding their data. The Oliver Wyman Forum’s Global Consumer Sentiment survey reveals that 43% of Gen Zers find physical bank branches important, providing them with a “peace of mind” that surpasses confidence in big tech.
Building Lasting Relationships in the Digital Age:
To capture Gen Z’s attention and growing financial clout, financial institutions need to blend physical presence with a compelling digital offering. The metaverse, where many Gen Zers spend their time, becomes a pivotal space for engagement. Banks must tailor services to meet Gen Z’s demands for convenience, choice, value, sustainability, and hyper-personalization.
The Exceptional Digital Experience:
Mere online competence is insufficient for a generation that grew up with smartphones in hand. An overwhelming 73% of Gen Zers emphasize the importance of customer experience in determining their favorite brands. Neobanks, with 72% of Gen Z using them as their primary budgeting tool, set the standard for exceptional digital experiences. Engaging graphics, gamified features, and a sense of community contribute to the appeal of these digital-first firms.
Investing Savvy Redefined:
Gen Z’s investment behavior challenges preconceived notions about young investors. This cohort invests earlier, diversifies across a broad range of asset classes, and is more diverse than previous generations. According to the Oliver Wyman Forum survey, almost half of Gen Zers invest in the stock market, making them 45% more likely to start investing by age 21 compared to Millennials. Recognizing and tailoring financial offerings to this unique investing behavior is crucial for financial executives looking to connect with this savvy generation.
CBDC and Gen Z:
Central Bank Digital Currencies (CBDC) present a transformative opportunity for financial institutions to engage Gen Z on their terms. As digital natives, Gen Z is well-positioned to embrace the convenience and innovation that CBDCs promise. Financial institutions that understand the motivations and values driving Gen Z’s financial decisions can leverage CBDC adoption as a bridge to establish deeper connections with this influential demographic.
In the ever-evolving financial landscape, Gen Z stands at the forefront, demanding a fusion of tradition and innovation. As they embrace digital experiences, neobanks, and redefine investing norms, financial institutions must be agile in adapting to these changing dynamics. The adoption of CBDCs presents a unique opportunity to appeal to Gen Z’s preferences, offering a glimpse into the future of finance where the convergence of traditional values and digital innovation defines the financial services landscape for the next generation.
https://www.weforum.org/agenda/2023/11/gen-z-banking-finance-money-trends/
