As we search further into the psyche of millennial consumerism and habits, digital natives and their preferences become realized. At the same time, we are also being introduced to newer, potentially more influential, demographic that is setting foot into the payments realm: Generation Z.
Generation Z, according to the Pew Research Center, is defined as those born from 1997 to 2020. These people will have never known life without the internet. Constant connectivity and on-demand entertainment have made up their experiences from the onset. Smartphones are intertwined into their lifestyle, along with Wi-Fi, social media and platforms like Google, Facebook and Amazon.
Even more insight is given into Generation Z in this recent Forbes article, which notes that this generation doesn’t differentiate between their online lives and real lives. There are 74 million Generation Z members in the United States today, and they account for 25% of the national population. By 2020, they will surpass both baby boomers and millennials in population. This group represents the next largest group of influencers and trendsetters, and they’ll drive what gets marketed and what will sell.
The key differentiator that Generation Z controls and influences in the payments industry will be by revealing what they desire in a customer experience. With 70% of Generation Z desiring a more robust and holistic payments management experience, it will become inevitable that we curate solutions with their preferences in mind. The real question is, how do we provide them with what they want?
Based on analytics from a 2017 study performed by the Capital Performance Group, banks today have control over the data needed to create a robust and meaningful customer experience. With access to users’ bank account information, it seems logical that banks would go a step further and implement a solution where consumers can access all of their accounts, finances and credit cards in one place. The study goes on to disclose that 219 banks responded to their survey, and of this group, 87% revealed their institutions did not have a formalized payments strategy, and 41% indicated they had no plans of developing one.
The desires of Generation Z consumers are demanding, and a possible reason banks haven’t kept up is the complexity in developing and rolling out plans. Due to this complexity, third- party, nonbanking technology companies need to work with banks to test and launch new intuitive products.
Now is the time that banks can work with payment technology API providers to create relevant strategies that move past the minutia of transactions and re-envision the power of the payments industry. The market is poised to blossom far beyond the reaches of individual transactions, and new influencers outside of the traditional banking industry can help embrace and nurture this new day for the payments industry.