Commentators have been harping about the Millennials for a decade now.
Since this demographic bulge of Baby Boomer offspring emerged into adulthood in the mid-2000s, researchers have been closely monitoring their impact on the workplace, spending habits, housing choices, and consumer tastes.
But Millennials' younger cousins – known as Generation Z – are now entering their 20s and adulthood themselves, and apparently look nothing like the free-spending, debt-laden peers that preceded them.
"Generations Y [millennials] and Z have notably different views on what constitutes financial security, with Ys concentrating on the present and Zs focusing on the future, which ultimately impacts their respective saving and spending habits. Growing up amid an economic downturn has made Zs more fiscally cautious than their older counterparts. They're more inclined to identify as savers rather than spenders, and many are already investing in stocks."
Generation Z is coming of age in an era where it has never been easier to save and invest, as witnessed by the meteoric growth in robo-advisor platforms. While older millennials might recall some semblance of analog life, this younger cohort practically grew up with smartphones in their hands.
Having come of age during the Great Recession, Gen Zs saw their parents get laid off and fight foreclosure, making them more distrustful of legacy financial institutions. These companies have in turn had a more difficult time recruiting young people to work for them.
So what might financial services firms do to ensure Generation Z sticks with them?
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Offer Crypto Investing
While Cassandra's Saunders calls Gen Zs "fiscally cautious" that has not prevented them from jumping into the biggest investing mania since the 1990s dot-com boom: cryptocurrencies. She states further in the Telegraph article: "Cryptocurrency trading is already fashionable among older Zs starting to enter adulthood because they like the decentralized nature of blockchain."
It is still unclear if cryptocurrencies will last for the long term. But by using their smartphones to invest habitually at a young age – whether in Bitcoin or Apple stock – this generation is letting the power of compounding work its magic early.
Make Your Service Super Easy to Use
Gen Z does not know of a time when goods or services could not be purchased on a smartphone. Unlike their parents' and grandparents' generations, brand loyalty is anathema to Gen Zs. Switching costs are much lower now, and mobile user experience is paramount.
While legacy financial institutions steeped in analog ways still have a few decades left to service to their wealthier boomer customers, they will not retain their children as clients if their services are not all available on an app.
Keep Investing in Content
We touch our phones over 150 times a day. Our brains have been rewired to continually seek out new information, not only on social media feeds, but also on financial apps.
Last week, I wrote that asset managers had become some of the most prolific publishers. Just as asset managers continue to solidify relationships with their clients via content, consumer-facing financial services firms of the future will have to do so with Gen Z to ensure their loyalty each and every day.