Bob Dylan’s song from the sixties, “The Times They Are A-Changin’” is an apt anthem to describe today’s payment industry. The change, in this case, is being driven by younger generations who are coming of age and are devoted to their mobile phones. By 2020 approximately 40% of Americans will be in the Gen Z demographic (born 1997-2010), thus making them the largest generation of consumers. By 2025, those from Gen Y (born 1981-1996) are projected to generate 46% of all income in the United States. Here’s how both groups are shaping the payments industry.
Younger generations want to be able to pay for goods and services where they want and how they want. They crave convenience and immediacy, and expect to have a personalized, seamless shopping experience whether it’s online or in-store. As digital technology continues to evolve, those in the financial services industry will need to adapt and innovate in order to keep pace.
Younger generations, particularly Gen Z’ers, are drawn to brands that are transparent, authentic, and able to connect with them on a personal level. Today’s youth isn’t moved by traditional advertising. The best way to reach them is by using influencer marketing via social media. Having been raised with digital technology, younger generations are able to quickly gather information. This makes them informed consumers that tend to avoid impulsive decisions. If you can win them over early on, you have a chance to earn their loyalty for the long-term.
In an increasingly competitive environment, customer service is crucial to win over Gen Y and Gen Z consumers. This includes quick response times to inquiries made via social media, which can often times make or break their allegiance to a company. A 2017 study by Accenture found that younger generations want to be able to simply manage their personal accounts, and are interested in payment advisory services that offer better understanding and control of their spending.
Mobile Payments & P2P
More than any other group, Gen Z’ers are open to emerging channels. According to a recent American Express study, 33% of Gen Z respondents compared to 22% of millennials used a mobile wallet (Apple Pay, Samsung Pay or Android Pay) over a three-month period. Aided by APIs and open banking, it’s logical that Gen Z’ers will usher in mobile wallets. In addition, according to the recent Accenture study, two-thirds of those in this new generation are interested in instant person-to-person payments.
While there are differences between millennials and post-millennials, their financial service needs are similar. You can win both generations of consumers without a radically different approach. But for those who intend on surviving and prospering in this rapidly changing environment, they would be wise to heed Bob Dylan’s advice, “You better start swimmin’ or you’ll sink like a stone.”
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