When tailoring services to a younger audience, many people might think about millennials and their unique preferences. But it's important to look at the next generation of consumers as well.
Millennials are growing up, many having been adults in charge of their own finances for years. They are buying homes, having children and opening businesses. Their younger brothers and sisters, on the other hand, are just reaching adulthood. Generation Z is typically described as those born between the mid-90s and 2010. The oldest of the pack are about 20 years old - certainly old enough to have their own credit cards and bank accounts.
While appealing to a millennial mindset is important, it's also crucial for credit unions to have their eyes set on those just beginning their financial lives. Gen Z are digital natives, which means they don't remember a time when the internet wasn't an eternally accessible resource, and most of them learned how to type and use computers and connected devices at a young age.
Mobile is a must
This has largely impacted the way they view the world. To them, smartphones and constant connectivity isn't a luxury - it's the norm. As such, being able to access their financial information and money should also be a given, in their opinion. According to a study by TD Bank, consumers ages 17-20 place high value on debit cards and mobile banking, followed by convenient ATMs and uncomplicated online banking. By comparison, the top priorities of all respondents were simple online banking, online bill pay, and convenient branch locations and hours, The Financial Brand reported.
While online bill pay was a high priority among nearly one-fifth of survey participants, just 11 percent of Generation Z respondents said it was important. This is because many of them don't see the point - they're already accessing everything they need through their phones, so the efficiency or even availability of an online portal is unnecessary or even redundant. Because of this, credit unions need to be focusing on their mobile apps to make sure they are in top shape as this new highly influential generation begins to choose their financial institutions and develops their opinions on banking.
PaymentsSource also noted that these younger consumers aren't just forming opinions on virtual financial products. They're also exploring products like credit, debit and prepaid cards, and for the most part, they are drawn to the prepaid route. While a prepaid card might be an excellent birthday gift for a young shopper, many Generation Z consumers know that these cards have the potential to be more than just a piece of plastic to throw away when the card's balance hits zero.
A Prepaid International Forum survey of 1,000 parents found that, of the about one-quarter of respondents whose children ages 16 and younger use financial products to make purchases, almost 60 percent use prepaid cards while just 40 percent use debit cards linked to a bank account. Most of these parents indicated that allowing their children to use prepaid cards helps them learn about budgeting, gain financial responsibility and have a sense of independence. Using prepaid cards from a young age can influence these consumers' views on these cards and show them that they are viable options for managing their money responsibly.
These two categories - mobile offerings and prepaid cards - should be two priorities for credit unions hoping to bring young consumers on as members. The oldest Generation Z consumers have already reached adulthood. Many are beginning their first jobs and heading off to college. Now is their time to form their opinions of credit unions, so it's important to ensure that your products and services are easy to use and attractive options.
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