The Business Journal asked a couple of top officials at area banks how to educate and serve this emerging group of consumers. Ann Hudson is the senior vice president of retail banking at Exchange Bank. The Santa Rosa-based bank was founded in 1890 and has 18 branches in Sonoma County as well as an SBA lending office in Roseville and Marin.
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?
Our younger customers generally start their banking relationship with us with a savings account. They are introduced to Exchange Bank by their parents who bank with us or know about our strong commitment to the community.
As they begin to earn paychecks and head off to college, our younger customers open checking accounts. We offer several accounts specially designed for our high school and college-age customers. They access those accounts online and transact business utilizing our debit cards, mobile applications and with PopMoney (our peer to peer payment application).
They easily adopt to technology and prefer to use it for their day to day transactions. We plan to continue to evolve those services to keep pace with new technologies that allow for all of our customers to easily transact business with the bank, like voice banking and mobile account opening.
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 do not have any specific data on the way this group of customers feels about debt. Our employees who provide financial education in the schools tell us Gen Z’ers are wary of debt. This wariness is most likely a response to having witnessed the impact of the recession on their families and the awareness of the burden caused by student loan debt.
If some other data is true about this group of 14- to 22-year-olds, they also have jobs – (about three-fourths in one survey) — do they have a different attitude than other, older groups, about saving that money?
They indicate they are more likely to save for large purposes, rather than incur debt. The sharing economy and the rise of companies like Über and emergence of ridesharing applications could delay or negate the need for large purchases for a young person like a first car.
What ways does a financial institution 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?
We know Gen Zers are interested in financial education and tools that will help them achieve their financial goals, including how to save and invest. Exchange Bank offers financial education in schools.
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?
One interesting company that has entered the marketplace is Acorns; they have a mobile application that rounds up your debit or credit purchases to the nearest dollar, investing those pennies into diversified portfolios. Financial institutions will benefit from learning from these companies and figuring how to integrate beneficial services into their product offerings.
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