Five trends that will shape the future of Gen Z's banking experience

Banks have a responsibility to help youths build resilient financial futures as they begin entering the workforce

Many young adults in developed economies are struggling to achieve similar financial milestones as their parents. Getty Images

As society’s youngest cohorts enter adulthood with unique pressures and insecurities, banks now have a historic opportunity to help Generation Z overcome their unique challenges, achieve personal success and build resilient financial futures.

Born into a digital world, many Gen Zs live their lives through the lens of social media, with about 99 per cent either owning or having access to a smartphone.

They are considered to be digitally literate and a socially responsible generation that advocates for change. There are also about two billion of them – 26 per cent of the world’s population – and they face a world that is increasingly competitive and complex.

Economic inequality is worse than before the global financial crisis and the pandemic, according to the World Economic Forum.

This has led to concerns that many young adults in developed economies are struggling to achieve what their parents did – such as getting on the property ladder or having enough disposable income to put money aside for retirement.

And, according to Deloitte, Gen Z also report growing financial instability, with higher numbers living pay cheque to pay cheque.

These realities are affecting all those who are now entering the world of work and, as such, will impact how our societies (and economies) evolve in the coming years.

The good news is that many of us who work in banking and finance have an opportunity to talk directly to Gen Z as a whole, work with them in their daily lives and help them to build brighter futures. Here are five trends that will shape their banking experience in the future.

1. Hyper-personalisation

Analytics are at the centre of the future of youth banking.

They form the bedrock of personalisation in every industry sector within the digital economy.

Research shows that 32 per cent of Gen Z transactions occur on a mobile device, and real-time personalisation is the norm.

As Gen Z grows up and enters the workforce, banks have a unique opportunity to use analytics to build platforms offering them tailored experiences and products such as mortgages, investment products, savings schemes and other non-financial products and services.

Moreover, through the prism of Banking-as-a-Service (BaaS), banks can create a complete ecosystem of life solutions across financial and non-financial products and services that are intuitively tailored to the precise real-time needs of the person and are embedded in their lifestyle activities.

2. Values

There is one Gen Z need that must always be met – social, environmental and governance integrity, or ethics.

With an affinity for socially aware brands, Gen Z is inherently predisposed to gravitate towards ethical, responsible and liberal-minded brands and businesses.

The explosion of ESG-focused investment products that deliver social impact or mitigate environmental damage, for example, are attractive to Gen Z because of their integrity and ability to deliver sustainable returns.

Broadly known as sustainable investing, these financial vehicles offer positive returns while assessing the long-term impact on society, the environment and the performance of the business.

3. Saving

Today’s youth is also more geared towards saving. Because of their exposure to the 2008 financial crisis and Covid-19 pandemic at such a young age, Gen Z often feels more professionally and financially exposed than their older friends and relatives who may already have savings and assets.

We know that Gen Z adults entering the workplace are already cognisant of the need to start saving as early as possible – and the least likely to have any form of debt.

The future of youth banking is, therefore, much more focused on incentivising savings while also educating young people on the pros and cons of taking on debt at various life stages. This is where parents can also play an important role.

Watch: How to open a bank account in the UAE

4. Financial literacy

Many digital banking platforms around the world are specifically designed to enable parents to help their children become financially literate.

They typically give teenagers access to a debit card and an app where they can save towards their goals, but leave their parents in control by allowing them to schedule recurring pocket money for their children, monitor transactions and set challenges for them to boost their allowance.

The apps help teenagers to begin their journey to financial independence while maintaining family-friendly controls – with parents and teens both having access through their respective log-ins.

5. Digital assets

Despite turbulence in the crypto markets, our increasingly cashless societies have begun to normalise the concept of tokenisation and digital assets.

Gen Z is instinctively predisposed to exploring digital assets, in part because they are built using blockchain, which is considered to be safer and more transparent with fewer intermediaries.

For banks, there are opportunities right now to educate young people on the opportunities and dangers of digital assets; and they can do this through financial gamification and the simulation of crypto trading.

Banks that act as pioneers in digital payments have a unique ability – and indeed responsibility – to prepare Gen Z for life in a highly dynamic world through education.

We know that when we work with Gen Z, we have the ability to reshape the future of youth banking – and reframe how tomorrow’s leaders build financial security and fulfilling lives.

Radu Topliceanu is head of NEO and Personal Banking at Mashreq