As technology has advanced rapidly over the past two decades, it has impacted consumer behavior in various ways, including how they interact with their financial institutions. The youngest generation of adults in the U.S., nicknamed Gen Z, have new approaches to their money and financial services compared to older generational cohorts. While the group is still a small portion of the adult population (age 24 and under), we gained some insights into their banking behaviors from the National Technology Readiness Survey conducted annually by Rockbridge.
Members of Gen Z are just starting to develop banking/financial institution relationships and are most likely to only use a single financial institution at this stage in their lives. Car purchases and home purchases are two life events that can lead to new banking relationships, but fewer young adults are purchasing cars than in the past, and the median age of first-time home buyers hit a record high of 33 in 2019.
The features and services from financial institutions desired more by Gen Z than older generations are mainly focused on convenience and security. The most important banking features for Gen Z include the ability to quickly access and manage their finances through online bill pay and to secure their accounts by turning on/off card access. They place significantly higher importance than older generations on these two features, along with mobile banking apps for smart phones, personal financial management tools, and branches with loan officers. While they want the flexibility to access their accounts at their convenience, more than three-quarters (77%) of Gen Z also recognize the value of being able to talk face to face with bank officers for more complex financial issues like home ownership as they plan for the future.
Gen Z is also more willing to have these conversations in non-traditional locations, compared to older generations. These consumers are more open to banks operating in unique locations such as coffee shops, big-box retailers, gyms, grocery stores, and department stores. It will be important for financial institutions to employ creativity in establishing and deepening face to face relationships with customers, especially since this younger generation is most likely to use mobile banking (54% of Gen Z use mobile payment compared to 39% of older generations) and fintech—digital wallets and peer to peer payment services—instead of going to branches.
Growing up in a historically long economic expansion and technological revolution, Gen Z is willing to adopt a wider variety of products, tools, and services to manage their finances compared to previous generations. It will be crucial for banks to pay attention to their preferences, behaviors, and financial literacy to make connections with them and secure their loyalty as customers.