The Business Journal asked a couple of top officials at area banks how to educate and serve this emerging group of consumers. Suzanne Knowlton is senior vice president of marketing and communications for Santa Rosa-based Redwood Credit Union, which has 322,000 members in the North Bay and San Francisco.
What are your institution’s experiences with Gen Zers banking habits? There’s some American Banker research that finds if you combine those who have an account with a bank or credit union, plus those who have a joint account with their parents, it’s as much 67 percent. How about what you have seen?
We can only speak to our membership: young people ages 14-22 make up about 6 percent of our total membership. This includes all accounts where someone in that age range is listed as the primary account holder. In many cases — particularly for those under 18 — a parent or responsible adult is joint on their account.
- About 77 percent of our member in this age range have a checking account.
- About 75 percent of them are enrolled in online or mobile banking.
- About 20 percent have a credit card.
And can you relate any experiences you have had with this group relative to their view on debt, (some data suggests they seek to avoid it) and how it compares with Boomers or Gen X.
We find that many people in this age group haven’t encountered debt or aren’t really aware of it yet, and many assume all debt is bad.
In reality, most people need to take on debt in order to buy a car or house or other important purchases. As long as debt is managed well, it can help you build credit and equity, which will give you more financial security in the long run.
RCU focuses on education to help people learn to manage their debt. We offer a credit builder credit card which allows someone with no credit history or with a challenged credit history to build credit and improve their credit score.
RCU also provides free FICO scores to anyone who has a loan or credit card with us. This allows members to track their score and also includes a variety of educational articles to help people improve their credit score. Members who bank with us also have access to free credit counseling from our partners at BALANCE Financial Fitness.
What ways do you find effective to attract this group to your firm, or to educate them? Or both? Is that message different than has been for those who are older, say 25- to 35-year-olds?
RCU provides financial education for people of all ages, with the goal of helping people learn to manage their money in a way that gives them peace of mind. (If we attract new members as a result, that’s great, but it’s not why we do it.)
One of our financial education programs aimed at young people is our “Bite of Reality” teen financial fair. Bite of Reality begins by providing teens with a fictional identity, including occupation and salary, family, credit cards, and a checking account. Attendees must visit eight stations to purchase housing, transportation, food, clothing, household necessities, child care, and more.
Participants face “pushy” salespeople, commission-based Realtors, and other vendors as they weigh wants versus their needs. During the exercise, teens must make challenging decisions as they find that the money from their salaries may not meet their desires for goods and services. Volunteers from the credit union are on-hand to help students budget and reprioritize if they overspend.
Catering to Gen Zers about money
Banking (saving, borrowing, paying bills) will eventually, if not already, be of interest to those who are part of the Gen Z generation (ages 14 to 22). They have not yet gotten as much press as millennials (ages 22 to 37) or Gen Xers (38 to 53), but they are starting to. Worldwide, according to Bloomberg’s reporting on United Nation’s data, they will be 32 percent of the world’s population next year, beating out millennials.
Work Design Magazine reported they have already edged out millennials as the largest group in the U.S.
As far as how they bank and feel about banking, in July the American Banker publication gathered stats showing they are already thinking about it, at least some of them.
Where Generation Z keeps their money
33% have their own bank account
34% have a joint account with parents
21% never had an account
8% don’t know
4% had an account in the past
Source: Raddon Research Insights
Who they bank with?
47% major banks
12% multistate banks
12% community banks
19% credit unions
10% don’t have a bank
Source: Raddon Research Insights