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Gen Z: the end of status quo banking?

WALO | Rim Charkani | Aug 31, 2021

WALO financial education - Gen Z: the end of status quo banking?Canadians are notoriously loyal to their financial institution (FI). Only 3% of them jump ship every year because switching costs act as a silent yet strong deterrent in banking. Imagine having to transfer all your recurring payments and deposits to a new chequing account. Fears of complications set in, and you resign yourself to the status quo.

While family and friends are still determining factors when choosing a lifelong financial service provider, relying on a history of apathy simply will not cut it nowadays. Establishing a meaningful relationship based on true added value is thus critical for FIs to capture and retain Generation Z's attention.

SAME SAME, BUT DIFFERENT

In some ways, Gen Z is no different than previous cohorts. They want their money to be safe and make better financial decisions. Surprisingly, they also value things like branch proximity and greater trust levels associated with well-established FIs.

Yet, Gen Z members are a different breed evolving in new technological times. Word of mouth defines brand adoption for products that need to be social, digital, educational, and offer value over time. If a relevant added value is not there, this tech-savvy, mobile-first generation will go somewhere else.

A GAP TO BE FILLED

Current technological shifts have created a void - some Gen Zers get cell phones before 10 years old and are active on social media by the time they are 12. Yet, a lot of them do not have payment cards or bank accounts until they are 18.

See:  Fintech Startup WALO Goes Live With A Gamified Financial Literacy App for Kids and Parents

That does not mean that teens will abstain from mobile banking during those years. It just means that, in an era where hard cash is no longer king and online shopping is a must, traditional banking methods have failed them.

CONNECT EARLY

Financial habits are set as early as seven years old, which often coincides when parents start giving an allowance. Remarkably, a lot of big banks have overlooked the impact Gen Z will have on their line of business. If FIs do not connect during this current window of opportunity, someone else will.

“As fintech and big tech players expand their payment functionality, banks will need to be invested in teen banking — or risk being left behind.” Morgan Stanley Research

In Canada, we can just look to Europe for a glimpse into the future. Open banking, neobanks, consumer-friendly legislation and services like the UK's Current Account Switch Service will eventually come to Canada.

And if there is one lesson to be learned, it is that embracing those changes is crucial. FIs who were adequately prepared are thriving in this new environment. By doing nothing, Canada is at risk of becoming a net importer of financial technology for teens.

BE RELEVANT

In the end, it all comes down to being relevant for tomorrow’s mass customers, Generation Z, right NOW.

Gen Z’s appetite for new payment products and experiences is a no-brainer. There are clear signs that their demands for alternative cashless, context-relevant and rewarding mobile experiences are unmet.

This technologically savvy cohort represents a massive opportunity for FIs willing to provide products tailored to their needs. Those FIs looking for ways to drive meaningful mobile engagement for Gen Z can rely on Fintechs such as WALO.

An early value-added relationship between the youth and FIs will pave the way for loyal and lucrative lifelong relationships.

 

Learn more about Rim and the WALO mission on NCFA's Fintech Fridays podcast:


NCFA Jan 2018 resize - Gen Z: the end of status quo banking? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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