According to estimates released by the Adobe Digital Economy Index report, eCommerce sales are expected to reach $1 trillion in 2021.
As we all wade through the challenges of the pandemic and adapt to the exponential adoption of digital tools to help thwart these obstacles, digital payments and, more specifically, digital banking has been thrust to the forefront.
Generation Z (Gen Z) is central to this conversation as they are the largest and most influential group of consumers that are beginning to contribute to this new economy and, showing their predecessors that financial technology and the economic ecosystem’s desire and need for financial education.
There are several important characteristics that set Gen apart from previous banking consumers: they are brand aficionados, highly digital-savvy, and expressly desire financial education as part of their banking services. Born between 1997 and 2015, what matters most to them is what will need to matter most to the banks who want to stay relevant and connected to the world’s future consumers.
I have spent countless hours connecting with this generation through interviews, social media, focus groups, casual conversations, reports and any channel I can have access to in order to learn about their wants, needs, behaviours and, most importantly, their relationship with money.
Additionally, we do not discount the familial relationship when it comes to financing so we have also had the pleasure of getting to know their parents. As I look back on my childhood it is reassuring that teens still look to their parents as mentors and guides as they make sense of this new financial world. In addition to the importance of parents/mentors in the child’s financial journey, we have learned a few things.
First, this generation looks at brands very differently. Branding is about more than marketing to Gen Z. Long gone are the days of messaging a few primary value propositions and some product shots. They look holistically and, in a greater sense, want to feel as though they have a relationship with the companies they actively use.
This is why we have seen an explosion of influencers successfully promoting products. They are connected and crave that connection every single day in an authentic way. Before committing to a product, Gen Zers examine the brand’s mission and service first, as well as product quality. They will pay attention to what others say about your brand, as well as the ethos and mission behind it. They require that a brand speaks to them in an authentic way and that it provides value external to their actual product or service.
Secondly, they are digital natives who have almost always known the world as it existed with smartphones. This means that they want a banking solution that is digital-first. They don’t want digital as an add-on to their banking experience – they want it as a core feature. When we talk about ‘digital’ with Generation Z, this inherently implies mobile-first.
Lastly, they openly state that they want to learn about money through their banking services. This could be because financial education is sorely lacking in schools.
While schools give teenagers mandatory classes on core education curriculum, what falls through the cracks are some of the necessary survival skills for life: how to spend, how to save, and how to spot the difference between good and bad credit. Teenagers want to learn how to stay out of debt, afford the things they want, and ultimately set themselves up for long term financial success.
Yet financial education is not happening at home either, as many parents expect that their children would learn financial education through a job.
Generation Z spends a lot of their time hanging out online – and this is where they want their financial education to take place as well, through a learn-through-doing approach. Yet the thing that has stopped them from engaging in financial worlds in the past is a predatory banking system where their lack of literacy makes them vulnerable.
The new digital banks are trying to change this for good – by creating a space where a teenager’s first banking relationship is a positive one. This is where teenagers can get smarter about money, and learn from Financial Literacy experts in a way that is engaging and memorable because it is real.
These are not theoretical concepts being outlined on a whiteboard or to an imaginary person. This is their real money, being spent in a real way, with the same financial instruments that they see their parents using. After all, while we know that parents want their teenagers to establish financial independence, we also know that this has to happen in a safe environment where there is both access and guidance.
Historically, we’ve seen that when you separate the two – and give education without access, or access without education – it hasn’t worked. It has a knock-on effect as the entire banking system then sets up to profit from a lack of financial literacy in the customer, and therefore have no incentive to prioritise better early financial outcomes.
The encouraging thing here is that teenagers and Generation Z are hyper-aware of finances and want to be participants in the market. But having access without education does not equal financial literacy. Learning plus access, from the very first time a teenager opens a bank account, makes a lifelong impact. From a young age, there is an understanding of how money works, how it flows, and what money means.
We also don’t have to wait until a teenager is 17 or 18 years old, and about to head off to college, to give them access to financial tools. The basics of financial education can happen much earlier. Piggy banks made sense when people relied primarily on cash. But as the world gets more and more digital, today’s teenagers are showing us what financial fluidity and a truly user-driven banking interface can look like.
Teenagers are a particularly important demographic because they are on their way to adulthood without being quite there yet. They are malleable and open to learning. They are keen to establish their own identity and independence, and teaching them financial skills is just as – if not more – important as teaching them all the other habits that will set them up for life beyond the nest.
