How Banks can Effectively Engage Gen Z
Gen Z's buying power and cultural influence is becoming dominant across many industries — banking and finance are no exception. This group wants to engage with their financial institutions differently than generations before. Now is the ideal time for banks and FIs to understand how this generation behaves and plan accordingly. The financial institutions that prioritize meeting Gen Z where it is, with the tools and resources it wants, will lead the way in forging relationships and will benefit from the shifts this group is driving.
Understanding Gen Z’s unique position
Projected by Bank of America to be the “most disruptive generation ever”, Generation Z (born between 1996-2016) currently wields a purchasing power above $143 billion, and that is expected to increase by 70% over the next 5 years (Financial Brand, 2021). However, Gen Z is unlike any cohort we’ve seen before, and engaging with them effectively will be key for financial institutions moving forward into the digital age.
In the midst of meme stock manias and endless financial advice on social media, it's no wonder that "money freaks Gen Z out" — as The Financial Brand puts it:
- 4 of 5 Gen Z consumers ages 18-21 say money matters are a leading source of stress (American Psychological Association).
- Half of Gen Z survey respondents have less than $250 saved — on average, they’ve saved $1,628. At the same time, half of the young people surveyed have some type of debt, with the average amount outstanding coming to $8,000. (EverFi)
- 70% of Gen Z acknowledge that educating themselves about money is important to achieving their goals — and that’s where financial institutions can (and perhaps arguably should) step in.
Digital tools have become table stakes
While Gen Z has high standards for their bank’s digital user experience, financial institutions have the opportunity to partner with younger consumers and become a trusted partner. In fact, 87% of Gen Z consumers still prefer traditional banking providers to the growing competitive neobanks and fintechs (Financial Brand, 2021). Even more so: 54% want their bank to offer more incentives to guide the customer experience (Financial Brand, 2021). Financial institutions have an opportunity to authentically engage with their young customers by incentivizing users to educate and inform (not just spend or swipe), all while empowering their financial well-being and cultivating a life-long relationship.
Leveraging a reward that matters
With so many feeling hesitant about their money management skills, financial institutions have a unique opportunity to merge Gen Z's enthusiasm digital services, financial education, and long-term financial thinking with a reward that excites and empowers them as stock-owners — oftentimes for the first time.
Bumped partners with financial institutions to offer their users stock rewards as a reward mechanism for debit and credit cards as well as non-card related activities. Stock rewards are an innovative means to engage consumers, provide access to America's largest wealth builder — the stock market — and also directly address many cross-cutting generational concerns for Gen Z consumers. With so many young adults interested in investing, yet feeling lost in the meme stock frenzy, financial institutions can leverage this opportunity into a differentiating moment. Stock rewards provide durable results and help financial institutions develop stronger customer loyalty by giving their users a reward that can both educate them and grow in time.
Bumped built the first B2B technology platform with an underlying brokerage focused on ownership and not trading to enable institutions to use our prebuilt set of technology tools specifically designed to reward in fractional shares of stock. Our "Graham" Suite of APIs is specifically designed to give financial institutions the ability to leverage our technology and services to reward their customers with fractional shares of stock.
Let’s take Gen Z engagement to the next level with stock rewards. Reach out to our team at firstname.lastname@example.org to learn more.