Each generation has long been analyzed to learn more about everything from their spending habits, to what they eat, cook, watch, and read, their goals, their job choices and much more. The newest generation, Gen Z is no exception.
According to Pew Research Center, Generation Z (or Gen Z) is defined as people born after 1996. Generation Z is not a small portion of the population. As Business Insider puts it, “Generation Z, is the youngest, most ethnically-diverse, and largest generation in American history, comprising 27% of the US population…Gen Z grew up with technology, the internet, and social media, which sometimes causes them to be stereotyped as tech-addicted, anti-social, or “social justice warriors.”
In a 2017 Business Insider Intelligence report, by 2026 Gen Z’s Estimated Consumer Population will be 82 million, which is even larger than the Millennial generation, coming in at 80 million.
So, what does Generation Z have to do with the Banking Industry? Well, it turns out, a lot. In June 2020, Manole Capital Management published the results of their 3rd Annual Financial Services Survey, which looked at the banking and financial preferences of Generation Z members. Using a sample group of around 300 college students (aged 18-25) with established banking habits and relationships, survey responses showed that 8 out of 10 respondents banked with a major national bank while the rest had accounts at a community bank or credit union.
Manole Capital Management’s survey concluded that, “While Gen-Z has embraced traditional banking accounts, they are clearly using banks in different ways than their parents. National banking brands currently own 80% of our Gen-Z population, but we believe this is trending lower. Banks with a large national footprint are simply not as important as the past.”
The survey results reported that, “Over half, 55% of our Gen-Z survey, would open a bank account with a financial institution with no physical branches. For us, this has to be eye-opening for banks and the teams that build-out their physical locations.”
Bank or Big Tech?
Survey takers were also asked if they prefer to stick with traditional financial institutions or if they would trust big technology companies, such as Facebook or Google to handle their banking needs. Gen Z, it turns out, remains traditional, at least in this one sense. The survey report states that, “Nearly 2/3rd’s of our survey, 64%, would rather get banking services from a bank, as opposed to Facebook, Google, Microsoft, Amazon and Apple. 36% would be willing to use a tech company for these services.”
The report went further to state, “We then asked our Gen-Z respondents which tech company they would be willing to do banking services with. When we asked with tech firms actually were trustworthy enough to handle banking services, the answer was mixed. The largest response was quite clear, that 44% of our Gen-Z simply would not use a tech company for banking services. So right away, our Gen-Z demographic would not use tech companies for banking services. Of specific tech company responses, Apple received the highest ranking at 33%, followed by Google at 16% and Amazon at 6%. Only 0.4% chose Facebook. Clearly, Facebook is still dealing with trust issues following their Cambridge Analytica scandal in early 2018.”
It is clear that Generation Z has a mind of its own. New technology is readily used, but traditions do carry weight. It is assured, however, that as Generation Z gets older, since they are such a large portion of the population, their influence over the banking industry is likely to grow exponentially.