73% of Gen Z believes that banks should provide more financial advice—no cap.
So as a marketer and business leader in the financial space, how can you increase Gen Z’s financial literacy and how will it positively impact your organization?
Understanding Gen Z in the Economic Landscape
- Gen Z gets financial advice primarily from social media
Gen Z, those born between 1997 and 2012, have a deep desire to learn about personal finances and are consuming information differently than those before them. For starters, Gen Z uses social media as their main search platform for most types of information, specifically TikTok. According to WallStreetZen, 76% of Gen Z use social media platforms to seek financial education, with TikTok again making the top of the list. This is likely because TikTok only features videos, which is the primary way this generation wants to learn. While Gen Z consistently uses social media as their main source for information, 82% of those that consume financial information on these platforms report they are aware this advice tends to be oversimplified and omits important details needed to make wise financial decisions. So why do they keep consuming this content if they know it’s not fully accurate? Gen Z wants to quickly understand the current economic climate, how it impacts them, and what they can do now to prepare for a better future. While social media may not be the most reliable source, it is the easiest way for Gen Z to get financial advice in a format they enjoy and routinely consume. - While Gen Z still has a lot to learn, they are investing earlier than other generations
World Economic Forum shared that almost half of Gen Z is already involved in the stock market, which is much earlier than previous generations. They are also diversifying their portfolios and are interested in digital assets. While Gen Z is eager to get involved, that doesn’t mean they are automatically confident in their strategies. According to a US Bank news release, three out of four Gen Z and Millennial investors mention social media made investing look easy, influencing them to get started, but now they realize it’s not as easy as it seems, leading to feelings of being overwhelmed. - Gen Z’s day-to-day purchases are being made in an unconventional way
For retail purchases, this generation is using the trending service, Buy Now Pay Later (BNPL). While other demographics are using BNPL, Gen Z and Millennials are drivers of this trend with Gen Z making up 35% of these users, according to Morning Consult’s 2024 Financial Services Trends: BNPL regulation, AI and ‘Finfluencers’. It’s important to note that a majority of BNPL users are underbanked, meaning they don’t use all the traditional banking services offered. Gen Z is included in this stat as over half of this generation does not have a traditional bank account, based on a survey by MX Technologies.
There are potential implications of relying on BNPL, and NerdWallet says it best, “If you pay less for your purchase today, you may be tempted to buy more,” especially when it’s as easy as a click of a button at checkout. While this risk isn’t too different from using a credit card, BNPL providers typically don’t report payment history, so using this method will likely not build credit. Gen Zers are at a time in their lives where it is crucial to start building credit for their future. Failing to use traditional services like credit cards and loans may negatively impact their ability to do so.
This all leads to the big question: What should we do as marketers and business leaders in the financial industry to build financial literacy amongst Gen Z?
Banks, credit unions, financial advisors, and other financial institutions should meet Gen Z where they want to be met and appeal to their social media consumption habits. To capture their attention, organizations will need to provide accurate financial education in a fast-paced, interesting, and visual way. Your strategy may include creating a social series educating users on personal finance topics, such as sharing weekly budgeting tips, videos on the best financial decisions to make in your twenties, or a live Q&A with a local banker.
While Gen Z is moving away from traditional financial services, there is clearly still a need for services like financial advising, loan applications, and savings accounts. Your organization will need to ensure your offerings align with their unique wants and needs, and that you communicate these products and services in a way Gen Z cares about.
Implementing a few of these strategies will make a vast impact on the lives of Gen Zers by helping them make well-informed financial decisions, thus improving their current situation, and setting them up for future success.
And this leads to another important question: How will investing in financial literacy positively impact your organization?
If Gen Z trusts your organization as an informational source, they’ll be more likely to trust you with their money, and we stan fiscally responsible youth. Insider Intelligence tells us that 52% of Gen Z would automatically use a trusted banking service instead of shopping around. Proving that if you invest in Gen Z’s financial education, you will gain loyal customers whose buying power is only expected to grow.
And while it may be nearly impossible to keep up with trending fashion or Gen Z slang, what we do know is their purchasing and banking trends, so go ahead and contact us!