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The Green Sheet Online Edition

February 12, 2024 • Issue 24:02:01

Three ways Gen Z is changing the world of finance

By Chad Otar
Lending Valley

Gen Z, comprising individuals born between 1997 and 2012, represents almost 70 million individuals in the United States (see tinyurl.com/yv58mmwc). Since the young adults in this group have enormous spending power, businesses are tailoring their offerings to this cohort's unique preferences.

In this article, I'll explain how the money mindset of Gen Zers differs from that of preceding generations and what that means for financial service providers.

1. They pay for goods and services differently

Gen Z is up to three times more likely to use payment apps, in-game currencies and other alternative payment methods than older generations. The young adults in this group who prefer digital methods expect the process to be almost immediate. That's why payment providers started removing any additional steps during the transaction experience.

However, that does not mean that Gen Zers are entirely online. In fact, cash usage is also on the rise when it comes to this generation. Nearly a quarter of young adults use cash for most of their purchases, as they believe that would help them keep better track of their spending habits, according to Credit Karma (see tinyurl.com/2dkazn2u).

This generation tends to stick with their preferred form of payment. If such a method is not available, a Gen Zer would be twice as likely to delay the purchase instead of using an alternative payment method. For this reason, many businesses started offering a wide range of payment options.

2. They value other things

EY researchers found that over 50 percent of Gen Z respondents admitted that environmental, social and governance factors are important for them when choosing a payment provider or a business to buy from, compared with a little over 35 percent from previous generations (see tinyurl.com/mpdtyvr8).

No wonder the idea of proactive transparency started taking root in progressive companies. Younger adults are more willing to support businesses that are transparent about sourcing, production, and the impact of their products and services.

Furthermore, Gen Zers are astute at telling whether someone is being genuine. That's a primary reason why professionals whose sole function is to make sales can't be successful with this generation (young adults hate being sold something). Gen Z mostly resonates with brands that provide education and value.

3. They have distinct spending habits

Members of Gen Z are both big spenders and big savers. It might seem hard to believe, but in 2023, most young adults managed to save money on something and then spend a lot on a different item or experience (more than any other age group, in fact).

Gen Z has been dramatically affected by the pandemic and inflation. And while COVID-19 made them actively think about what they valued the most, soaring inflation has forced them, along with other generations of Americans, to learn to save and scrimp.

Young adults can easily be cheap with certain necessities that don't mean much to them. They also enjoy thrifting, and they know how to take care of their belongings so that they last longer. However they will splurge on things that matter the most such as a concert featuring their favorite band, the best food for their pets, luxury skincare, high-quality home goods, or tickets to a Broadway show—and they don't even think about how much it will cost (see tinyurl.com/2p89cwpw).

As a result, companies started emphasizing the quality of their products and the long-term benefits of their services.

Get to know Gen Z

Gen Z is now the largest generational group in the United States. By flexing their spending power, they are quickly changing the world of finance.

This generation values simple buying experiences, transparency, authenticity and quality. Though Gen Zers are young, they have already been through a lot: the aftermath of 9/11, the financial crisis of 2008, the pandemic, and the current inflation surge. These events have shaped them into a purposeful, pragmatic generation of digital natives who prefer to splurge only on the things that truly make them happy. end of article

Chad Otar is CEO of Lending Valley Inc. For information about the company, please visit www.lendingvalley.com. To reach Chad, send an email to chad@lendingvalley.com.

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