If you were to believe hype and news coverages, the only thing that matters to younger Millennials and Generation Z (e.g., anyone under 30) when it comes to digital banking is Venmo and Cash App.
You might not be wrong to assume that given the popularity of digital payment apps. However, new research shows that younger banking customers are much more anxious and discerning when it comes to their finances. And this creates a great opportunity for established traditional banks.
The younger generations worry a lot (and rightly so)
Gen Z is believed to be more conservative than Millennials about money, due to growing up during the financial crisis and times of austerity, and has a stronger interest in savings and financial management.
According to a study by Northwestern Mutual Group, one in four (28%) in the Gen Z age group say their cohort is fiscally irresponsible. Multiple studies report that Gen Z also has a deep desire to understand money management better, though how they want to learn about it may differ significantly from previous generations.
A 2018 digital banking report by Raddon and The Financial Brand found that 56% of Gen Z has spoken with their parents about savings. But that trails behind their primary sources for financial information: social media.
Last year, Porter Novelli/Cone’s Gen Z Purpose Study found that 64% of young consumers turn to YouTube to learn about money, followed closely by Instagram at 63%.
Brand affinity matters
As both Facebook and Google (YouTube’s owner) introduce digital banking and financial products—inevitably to be surfaced alongside educational content—would consumers trust their financial data and well-being to Big Tech?
In short, maybe. A recent global digital banking survey from Oracle found that 56% of those under 30 set they would be willing to switch to digital banking solutions offered by Google or Apple if/when they are brought to market.
Why? Because they trust brands that they know. The same Oracle survey found that “trust” was far and away from the priority when looking for a long-term financial partner (4.16 out of 5 rating), followed in a distant second by “competitive rates” (2.82). And that’s an area where traditional banks have a competitive edge.
Top factors when choosing a bank account:
Interestingly, according to the Raddon/Financial Brand study, Gen Z prefers to do their banking face-to-face and (before the COVID-19 pandemic) regularly visited physical bank branches. This trait stems from more than just their financial anxiousness but also how Gen Z wants to be intimately familiar with a brand.
Oracle found that consumers under 30 are most interested in personalized advice and help when choosing a banking provider—and the more human contact, the better. The study also found that this desire and priority extended across lending and investment products as well.
Interestingly, all that social media research on finances goes out the window when choosing the first mortgage. Of those under 30 who have sought a mortgage, one in four automatically went to their primary bank and did no outside research.
For more information, please visit:
Oracle Global Retail Banking Consumer Report: Read the report
Digital Banking Thinkathon Webcast Series: Review the regional sessions
Oracle Financial Services: oracle.com/financial-services
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