Lindsey Downing, Senior Vice President and Head of TransUnion Consumer Interactive.
A decade ago, Millennials were in their early 20s and feeling the pains of the Great Recession. Today, Gen Z is experiencing similar financial strains, this time from the fallout of a pandemic-shaken economy.
That said, Gen Z has a different way of dealing: They’re turning to credit.
New data from TransUnion shows Zoomers are using credit cards to make ends meet more than their Millennial counterparts did at the same stage of life. What’s more, Gen Z consumers carry more debt and fall into delinquency more often when compared to Millennials at the same age.
For financial institutions, this signals a massive opportunity to design financial wellness programs and tools specifically for the Gen Z customer journey to help them establish better foundations.
Gen Z actively seeks financial advice.
Eager to move away from the doldrums of inflation toward a sunnier future, Zoomers are receptive to financial wellness guidance. Many of them are looking for this type of support in nontraditional places, namely online.
Indeed, Gen Z’s demand for money advice has given rise to a community of so-called “finfluencers.” Research finds that 57% of people 18 to 29 years old seek advice about investing online, and 62% say they feel empowered by access to that advice.
The problem with advice from finfluencers, of course, is that it can be unclear, misleading and, at times, completely fake. For the smoothest path to financial freedom, Gen Z needs relevant financial guidance from trustworthy sources.
Personalization is the key to engagement.
To increase the uptake of financial wellness offerings, however, banks and credit unions will need to take a bespoke approach. Canned, generic financial advice is not compelling for a generation of consumers who have only known customized experiences throughout their lives—from their very first personalized storybooks to the “for you” feeds on their socials.
Zoomer preference for tailored experiences can be seen across a variety of modalities. They curate their wardrobes with subscription-style boxes. They’re drawn to gaming platforms that enable character customization. They rely on buy now, pay later and other point-of-sale options to pay on their terms.
Financial institutions can take a page from Zoomers’ favorite brands by embedding hyper-personalized financial wellness tools and features into the digital banking experiences Gen Z consumers already know.
Here are 3 use cases for personalized financial wellness.
Thanks to the democratization of big data analytics and the proliferation of API connectively, even small financial institutions can integrate innately personalized experiences. These include:
1. Credit Score Simulators
Similar to loan repayment calculators, these interactive tools help consumers better understand how their choices influence the financial opportunities presented to them. Knowing that Gen Z and Millennials make up more than half (53%) of active credit monitoring consumers, banks and credit unions that place a credit score simulator within a digital banking dashboard can empower Zoomers to explore options to see how each might impact their credit scores.
2. Identity Risk Scores
Giving Gen Z consumers an insider’s view of their data breach histories is another way to deliver hyper-personalized insights. Identity risk scores, which are based on a person’s unique history of exposure, outline the greatest risks to a particular individual. By coupling risk scores with tailored action plans, banks are helping educate consumers on the personalized steps they can take to reduce their unique risk. While it may be counterintuitive to think socially active digital natives value privacy, studies show Zoomers are especially eager to protect their digital identities. Nearly three-quarters (74%) of Gen Z consumers are concerned about having personal information or data stolen.
3. Personal Financial Management
Dashboards that monitor transactions and categorize spending are good, but solutions that turn personal data into tailored financial advice are great. Gen Z will be more eager to follow advice for optimizing their spending, saving and investing when recommendations are tailored to them as individuals. Keeping recommendations in the digital channel is key as Zoomers are much more likely to engage with money advice that comes to them online.
Empower financial health while carving out a niche.
As Zoomers mature financially, banks and credit unions will need to create opportunities to prove their value to a generation of consumers who are less reliant on traditional financial institutions.
By leveraging data and hyper-personalization to boost the adoption of financial wellness tools, banks and credit unions can stay in their lanes as trustworthy financial experts—while also carving out a niche among young people who care about financial wellness. The win-win: a healthier financial future for Zoomers and a brand-loyal following for financial institutions.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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