By Zavida Mangaru
North American Bancard
It's a remarkable time to be alive. Looking back to how people lived 30 years ago presents a striking contrast and reveals how truly futuristic our lives have become. How did we change so much so fast? A generation of millennials harnessed the power of a burgeoning Internet and reimagined how we live our lives – everything from how we catch a ride to how we watch TV and interact online. While their influence is felt across the board, a new force is rising: Generation Z.
While many assume Generation Z will be much like the millennials, there are some important differences. Born from the mid-1990s through approximately 2014, Generation Z has grown up with iPhones, apps, Wi-Fi, "hip" social media (that is, Snapchat and Instagram) and constant connectivity.
While millennials can recall the "good ole days" of commercials and accessing the Internet through AOL, Generation Z will likely have to google AOL to know what we are talking about. They not only are digital natives, but the Internet they grew up with was already ruled by Google, Facebook and Amazon.
When it comes to digital payments and electronic banking, we have seen a slow but significant change across the generations in terms of how we pay for things and manage our personal finances. We've gone from writing checks to swiping cards to a quick tap with a phone. Yet there is much more that can be done to streamline payment processing, and the rate of change has never been greater. While millennials have been patient (because they still remember checks and can appreciate how far we have come), Generation Z will not be.
To understand this demographic better and how they think about the payment process, a March 2016 Forbes article provided the following insights into the characteristics of this growing demographic:
With 74 million individuals strong, and counting, Generation Z makes up almost one-quarter of the U.S. population. Their mark on the world will be felt across many aspects of our daily lives, and the electronic payments industry will be no exception.
Understanding what goes on in the mind of a Gen Zer is important in determining where they will find value and what matters most when it comes to financial topics. In a 2017 Accenture report on transaction trends, researchers found that 70 percent of millennials and Gen Zers are interested in a more holistic payments management experience, including digital payments, advisory services and expense management.
The study stated this is "a clear signal that payments have moved beyond the transaction. Next-level customer experiences matter more than ever. Experiences that align not just with how people pay, but with moments of influence in their lives. To deliver, the industry must design payments experiences around human needs."
Before we know it, Generation Z will represent a large portion of the world's purchasing power. As the banks hold customer data and information, it's up to them to answer the call for a simplified and holistic approach to finances. Banks can be the key to enabling this leap forward in the payment processing industry by recognizing the need for a digital wallet solution that gives consumers access to their finances, bank accounts and credit card information all in one location.
However, given the level of complexity and lack of focus on the long-term vision, the majority of banks have not formalized a payment strategy or have plans for developing one, based on analytics from a 2017 study completed by the Capital Performance Group LLC. This is where third-party, non-banking technology companies come in. By working with payment technology API providers, banks can create timely strategies that will appeal to Generation Z.
Together, banks and API providers can re-envision what the payments industry can do and make transformational changes to meet the needs of customers today and in the future.
Significant opportunities exist for the industry as a whole to evolve far beyond the reaches of individual transactions and begin to instigate social and lifestyle changes than can have a meaningful impact on how we buy and pay for goods and services. The key element in effecting these changes is for the traditional market players, such as banks, to join forces with the new fintech companies to offer a full set of capabilities that will enable them to meet the needs of any generation.
A 20-year payment technology veteran, Zavida Mangaru has served in leadership roles at Mastercard and American Express and is the current Executive Vice President of Product Strategy and Innovation at North American Bancard. Contact Zavida at TalkToUs@nabancard.com.
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.Prev Next