Gen Z, born between 1997 and 2012, has already lived through a host of global challenges. From the pandemic and economic uncertainty, to climate change and political upheaval, all of these experiences have influenced and helped shape their values, behaviors, and attitudes; and has had a knock-on-effect on how they approach their finances.
In this exclusive guest article for Global Fintech Series, Ben Cousens, Chief Strategy Officer at ZBD, explores how this tech-savvy, information-hungry, and surprisingly risk-averse group is poised to reshape the future of finance and payments.
A Tech-Savvy Generation
According to Mintel research, nearly 98% of Gen Z use social media, with many turning to platforms like TikTok to research products before making purchases. This generation’s high level of engagement with digital platforms means they are generally more informed and discerning than ever before when it comes to spending their money.
Not only are they more likely to use online and mobile wallets than the average consumer, but they also demand a more streamlined, frictionless payment experience. An EY survey revealed Gen Z’s preference for cashless and digital payments, as well as acceptance of cryptocurrencies, is a clear indicator that they are helping to drive the shift towards seamless, frictionless payments.
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The Future of Payments: Embedded Finance, Real-Time Payments, and Wearables
The payments landscape is constantly evolving, driven by innovations like bitcoin, embedded finance, and real-time payment solutions.
Moreover, the rise of wearables and other instant payment methods is likely to become increasingly important. Gen Z is already accustomed to instant payments and personalised financial experiences, and as such, payment providers must cater to these demands.
Financial Education is Key
Whilst Gen Z is embracing the transition from traditional to digital payments, they want to make sure they firmly understand their finances. A recent survey conducted by ZBD, revealed 99% of Gen Z feel financial education is crucial for making informed choices about money*.
Recognizing this demand, the UK government has already pledged to “ensure that, by 2030, two million more children and young people in the UK are receiving a meaningful financial education.”
While Gen Z’s spending power is still growing, their influence on the fintech industry is already apparent. They want to make their money work harder, prioritizing financial independence and making additional income with side hustles. We only have to look at any social media platform to see a flood of tips on how to build wealth, invest smartly, and leverage digital platforms for financial gain. But this generation is also cautious—they want to ensure their hard-earned money is spent wisely, with businesses rewarding their loyalty.
Trust, Security, and Regulation
As fintech solutions become more integrated into everyday life, trust and security will remain paramount. Gen Z’s preference for transparency and accountability means payment providers must ensure that their systems are secure and reliable.
Regulation will play a crucial role in establishing trust with consumers, ensuring that their financial data is safe and that payments are processed efficiently.
Despite their digital preferences, Gen Z’s trust is actually rooted in robust, safe and secure traditional banks rather than the newer fintech alternatives. This is an opportunity for traditional banks to continue to invest heavily in digital innovation and seamlessly integrate fintech solutions to future-proof themselves against impending change
Traditional banks and financial institutions have an opportunity to nurture their trust and grow with them on their wealth journey – now more than ever banks need to speed up digital transformation.
With increasing levels of fraud, highlighted in a recent BBC Panorama investigation of Monzo, fintechs will need to work hard to prove to this group that their money is safe, and whilst trust levels must grow, they are able to adapt seamlessly and super quickly to Gen Z’s needs, which will give them the advantage when it comes to choosing digital payments providers.
A New Era of Financial Services
Already proving to be financially savvy, Gen Z’s expectations for personalised, rewarding payment experiences will continue to shape the future of fintech and payments. Whether it’s cashback, crypto, or seamless payment experiences, their expectations are high and only those businesses that meet and service their demands, offering a diverse, multichannel proposition that rewards their time and money, will grow up alongside them in the digital world.
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