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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

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

From buying a car to paying off credit card debt to covering childcare expenses, Bite of Reality gives students a realistic — and sometimes shocking — understanding of the financial decisions and challenges adults face every day.

Do you see opportunity to create financial instruments that are tailored to their habits? Walmart and American Express offer accounts tailored to teens – others have products like debit cards aimed that that market. What kinds of products make sense and what cautions should be considered.

RCU has offered youth accounts since 2004, with programs tailored specifically for kids and for teens. The teen account (for ages 13-17) offers an ATM or debit card with limits set by the adult co-owner on the account, and teens 16 or older can also open a checking account with adult consent.

Our youth accounts are designed to help educate kids and teens about responsible money management to develop good saving and spending habits. Youth accounts require an adult co-owner (parent or legal guardian) to be a joint signer on the account. This is beneficial for parents to monitor transactions and provide guidance.

Research suggests that they might be more inclined to develop a banking relationship with larger institutions. That your experience?

In our experience, most people in this age group tend to open an account wherever their parents do their banking. Banking isn’t something that’s generally taught in school, so most teens are introduced to banking by their parents or an older relative.

If it is, as they get older and more connected to their community, do you think they will drift back to more local or area financial institutions and why?

The American Banker article indicates that 88 percent will invest only in companies that share their values. We believe that’s also indicative that this age group wants to do business with companies that share their values, so we expect that many who are currently banking with larger national banks will eventually move to community credit unions and banks where the service is more personal, and their money is more likely to stay in the local economy.

Lastly, do you see that these users, among all generations, are less likely to feel the need to bank at a physical locations? In fact, do they even think they need traditional instruments, like checking accounts? So are there aps you might consider or are considering tailoring to fulfill their needs? What might they look like?

Technology allows us to provide our members more choices in how they do their banking. People ages 14-22 are considered “digital natives,” so mobile and online transactions are an expectation. However, we find that as the older segment of this age group starts to explore more complex services such as credit cards and auto loans, they also want to be able to speak in person to a trusted expert. So we think having both is still important.

RCU offers free online banking and a mobile app which allow our members to access their money and perform most transactions remotely, including: monitoring account balances and activity, depositing checks, making loan payments, transferring money to other accounts, and many other transactions.

Last year we introduced RCUpay, a free service which allows members to send money to anyone with a U.S. bank account — the service is similar to PayPal or Venmo. We developed the program in-house, and earlier this year RCUpay received a national award from NACHA (National Automated Clearing House Association).

We are continually monitoring new developments in banking technology as well as listening to our members’ needs. We will continue to add and improve services that will help our members achieve their goals — and we always encourage them to share their feedback with us.