Bank Financial Advice Can Win Gen Z, Millennial Loyalty
Young consumers’ financial evasion may represent a loyalty opportunity for banks to create new account analytics.
A Wall Street Journal article Earlier this week (April 17) said the youngest generation of adult consumers’ preferred method of dealing with mounting debt is to ignore it. This less-than-healthy strategy that psychologists call financial avoidance has seen millennials’ average credit card debt rise 29% year-over-year, and Gen Z’s rise 40% over the same period. While this behavior may be common among young consumers of all generations, the volatile economy reinforces it inflation has put extra pressure on millennials and members of Gen Z.
However, American consumers are seeking help to get the tools they need to change this and other unwanted financial habits. This search for assistance is indicated in the PYMNTS collaboration with PSCU, “Credit Union Innovation: Product Development Slowdown Tests Member Loyalty.”
Source: PYMNTS
Credit Union Innovation: Slowdown Tests for Product Development Member Loyalty, January 2023 N = 3,227: FI account holders seeking product innovation, sent October 17, 2022 – November 7, 2022
From Q4 2020 to Q4 2022, a significant proportion of account holders say they would be willing to change their primary financial institution (FI) for better innovation in financial account analytics. This means that some consumers, which may include millennials and members of Gen Z, want guidance on getting rid of theirs increasing debt.
In a interview with PYMNTS, NCR Strategic Marketing Director Eric Brandt explains how banks can shape these consumer literacy tools aimed at Gen Z and millennials. “There are two components here: financial literacy and economic literacy. Interactive tools such as fast-paced, on-demand videos and gamified content, as well as simplified terms and conditions that are easier to understand, will go a long way in building financial literacy and impacting the financial well-being of these consumers. When it comes to financial prowess, it’s a whole different animal. But offering financial management solutions to help set and manage a budget or easily calculate when a loan will be paid off, for example, will be critical to building skills among less financially savvy consumers. Providing these solutions and services will build trust, loyalty and ultimately more engagement.”
Financial advisory tools may seem like a clear winner for banks looking to improve their loyalty-driven offers, especially now that Americans show a 4% basic financial literacy. Financial institutions lagging behind these offerings now find themselves facing stiff competition from FinTechs and other firms also seeking loyalty through financial wellness tools. Klarna, for example recently rolled out a “money feature” through the app that enables core users to better track their spending behavior. The Cash app too, launched a feature earlier this year that allows customers to save with separate balance lines, set savings goals and round up purchases to top up their savings.
The FinTech that has made the most progress in the consumer-facing financial wellness space so far seems to be Greenlight. In January, the technology firm launched Level Up, a gamified financial literacy curriculum aimed at children and teenagers and available via the Greenlight banking app. Level Up features content designed to develop both real-world financial skills and core knowledge through challenges and rewards, while allowing parents to monitor their children’s progress. Greenlight has the site rolled out its first job-centred tool for financial literacy. The employer-provided benefit gives participating employees access to Greenlight products for family finances and education. It’s also Greenlight now allows integration with FIs by allowing banks and other institutions to add their app to their financial service offerings.
Consumer demand for financial wellness tools, especially among younger generations, is especially high these days. But without innovative offerings to meet this demand, FIs may find themselves crowded out from millennial and Gen Z market share.
