In the next few years, a new generation of consumers will enter the marketplace, changing the rules for all of us.
Known as Generation Z, this group of post-millennial consumers born sometime after 1995 has lived in a world quite different from that of past generations. And they are about to enter the market in mass.
According to a recent article in Fast Company, Generation Z makes up 25 percent of the U.S. population, and will represent 40 percent of all consumers by 2020. All of which means, in order for credit unions to remain viable 10 to 15 years from now, they need to understand just what makes these young consumers tick.
“When you are talking about Generation Z, you are talking about individuals that have never known life without the Internet,” said Terrence Griffin, chief information officer for CO-OP Financial Services. “Their lives have been constructed around the concept of availability. For example, when a child or teen today wakes up at 3 a.m. and wants to watch Nickelodeon, Nickelodeon is on. If they want to download and pay for an Xbox game at midnight, no problem. They live in a 24/7 culture, and credit unions that want to attract these consumers will need to follow suit.”
Their Tech-Driven World
According to Griffin, one defining characteristic of Generation Z consumers is their easy access to affordable technology. “The cost of technology has decreased significantly during the last 20 years, so kids today are used to infusing every facet of their lives with tech,” he said. “They have the smartphones, the smart TVs, the Kindles, the PS4s. They rarely pick up a newspaper or visit a library. And many don’t even use printed books in school anymore. Everything is available to them online, and this dynamic has shaped their consumer expectations.”
And, Griffin notes, they have a language of their own. “Texting is huge with this generation, and they text in code to keep their messages private,” he said. “Plus, they are highly mobile and in constant contact with each other. This impacts the way a credit union should interact with this consumer. Don’t expect them to call you or visit a branch if they are interested in opening an account. They will text first to touch base with the credit union, and they will expect to receive a text back. Immediately.”
Their Impact on Fraud Detection
Social media has shaped their world as well. “This has its advantages for credit unions,” said Griffin. “For example, when Gen Z consumers are out on the town, they are more likely to post their exact location, down to the restaurant where they are eating dinner, on Facebook. This can be tremendously helpful for fraud detection, especially when these members travel. If your fraud analysts can see via Facebook that a member from California has arrived in Dallas for the weekend, then transactions occurring in the Dallas area are more likely to be legitimate. Eventually, fraud detection technology will tie directly into social platforms.”
To engage these young consumers, Griffin emphasizes the importance of acting now. “As a credit union, you should be actively marketing to Generation Z today if you aren’t already,” he said. “Introduce them to checking and savings accounts, and tailor these accounts for their values and preferences. Remember that young consumers will use checks minimally, if at all. They will require mobile apps that are geared to their age group, that can be customize with unique features and visual elements that express their individuality.”
He continued, “As a credit union, you always need to be forward thinking about attracting younger members. Today, you have the opportunity to ‘grow up’ with Generation Z, providing these consumers with the right products for every new milestone they hit. For example, you can present them student loan information when they are ready to go off to college, or an auto loan when they graduate. Getting these kids engaged in your brand early can help inspire their long-term loyalty so you can serve as their financial institution of choice throughout their lives.”
The original article Get Ready for Generation Z: The Member of the Future can be found on Insight Vault.
