It’s an exciting time for us to be alive. Humanity has survived wars and pandemics, the most recent one included. Humans are now reinventing themselves – their behaviors, interests, and habits. And we are together reimagining how payments and transactions fit into this puzzle. We are after all in an era where money management avenues are larger, more diverse, and fueled by Gen Z, the new driver of the world’s economy.
Gen Zs constitute over one-third of the world population, according to Deloitte . While still a small percentage compared to the larger cohort, Gen Z’s are influencing culture and consumption with their unique perspective on how to live a successful life. Organizations cannot avoid societal changes and must stay aware to shape their business for maximum returns.
Values, virtues, and way of life of Gen Zs
So, what do you need to know to best cater to this new working/earning class?
First, Gen Zs are radically different from the previous millennial generation. They are the unique generation that witnessed a dramatic evolution of technology and its uses. Their childhoods were starkly different – while one played more in parks, the other found play buddies through a smartphone or tablet. A survey by Global Web Index conducted in 2020 found that Gen Zs spent more than eight hours online on average in a day . It’s quite natural that they would embrace digital technologies better and be more social online than offline. So, the new ‘word-of-mouth’ comes from influencers on Youtube or Instagram, rather than from their neighbors or friends’ groups. And they are more comfortable visiting digital banks than the physical ones.
Another important aspect of the Gen Zs is that their values, beliefs, and characteristics were shaped in the aftermath of the Great Recession. Watching their parents financially struggle made them more practical and risk averse. This explains why 60% of Gen Zs prefer keeping their data private instead of exchanging them for free services. But, it’s not like Gen Zs completely disregard free things. During online shopping, 54% of them consider free delivery as a major incentive and 43% want coupons and discounts when completing a purchase. Ultimately, what truly matters is the speed and options of online transactions provided by the ecommerce application.
Additionally, Gen Z give more importance to work-life balance, demand bigger salaries, and flexibility in the workplace. Comfort and convenience are major deciding factors in their purchases. Accessibility is the next. A report by Thunes revealed that
- 7 out of 10 consumers had bought items they discovered on social media sites, such as Tik Tok and Facebook
- 62% of them did not have bank accounts and preferred mobile wallets
- 19% of their spending went into shopping for clothes and electronic goods, much more than essentials, health, and entertainment
Convenience determine choice
So, what’s in it for the financial industry?
A lot, actually! As the Thunes’ survey describe Gen Zs as the generation of shoppers, their expectation is naturally more from their money managers. They desire everything fast, flexible, and frictionless. This Gen Z trend opens opportunities for new payment innovations. With alternative payments – Buy Now Pay Later, loyalty points, digital money, and cryptocurrency – already changing the financial landscape, companies have the opportunities to develop new ways to attract Gen Zs and make them their loyal customer base. Here’s how:
- Social media is your new best friend – Let’s lead the pond to the horse and embed a payment option right where the zoomers look for purchasing ideas. As your consumers turn to social media for their purchasing decisions, embedding a payment option simplifies their buying experience.
- Single-click wins over ‘few step’ payments – Gen Zs want swift and secure payment channels, and if they get them, they tend to return to the same place again. The fast and frictionless buy-now-pay-later and digital payments have become more popular than credit cards that need four to five steps to complete the transaction. It is no wonder that the use of credit cards declining their pre-COVID levels.
- Offers equals loyalty – An advantage of taking calculated risks is being able to do complex calculations to get the best gains out of cashbacks and discounts. Gen Zs know that they can save when they pay right. Plus, gamified spinners added makes the Gen Zs engaged and interested in returning to the mobile app to try their luck again.
- Digital brand trumps brick-and-mortar – Millenials went to banks, Gen Zs prefer zero-touch transactions. Today, Gen Zs are more comfortable with digital banking, wallets, and cryptocurrency than dropping a check or applying for a loan at a physical branch.
Gone are the days when people believed that banks with a physical presence are more credible than those online. As finance and technology converge, Gen Zs will continue to grow and influence banking and payments models. It’s time firms sit up and take notes. The best way forward is to reimagine banking and payments that suit Gen Zs spending behaviors.
Comviva’s next-generation financial solutions help you explore and innovate payment journeys for your consumers.
