What's your tip for the younger generation

Guest PostWho is Generation Z - and what do they want?

Are you a boomer? Or a millennial like me? Regardless of whether they belong to the baby boomer generation (born between 1946 and 1964), Gen X (born between 1965 and 1980) or to the millennials (born between 1980 and 1994), one thing unites us: We are not part of the generation Z.

Generation Z includes all those who are between 15 and 25 years old today. In Germany that is around 12.5 million people, in Europe around 117 million. This makes them one of the largest consumer groups, but also one of the most difficult. In order to better understand them, our team at Finleap carried out a study with 636 respondents and also carried out intensive group discussions with the target group.

The results are amazing

Although Gen Z is the first generation that grew up with the Internet, smartphones and social networks and is therefore really digitally native, the flood of information from the Internet is rather a hindrance for them. Especially when it comes to decisions about their financial future, this generation procrastinates and shies away from long-term savings plans or investments. Instead, what matters more is the satisfaction of desires in the near future.

On the one hand, this has something to do with what they experienced themselves or through their parents at a young age: the global financial crisis, the euro crisis and now the corona pandemic. Although this generation in Germany was not exposed to an existential threat such as war, insecurity and financial instability are not unknown to them.

Gen Z loves their freedom of information, seeks self-fulfillment and constantly strives for individuality. This is also reflected in their consumer behavior: Brands have to be able to explain what they stand for (in the past, now and in the future), they should help to underline the personality of each individual and, of course, their products have to be found at the touch of a finger on the smartphone and to be ordered. A company that wants to achieve Gen Z not only has to explain its vision credibly, but also communicate it emotionally. Emotionality helps to identify with the brand.

Clash of cultures

And now imagine a representative of Gen Z who is confronted with classic banking, i.e. with savings accounts, overnight money investments, ETFs, share custody accounts, building society contracts, bank advisors and branches with rubber trees.

And it doesn't help that some banks have fancy apps on offer that the Gen Z‘s can use to open a checking account at most. In order to get them excited about long-term savings plans, the hurdles must be low, the language simple and complex issues transparent. A little less than half of the respondents do not even bother with finances because there are no trustworthy and tailor-made approaches. They rely more on their parents as advisors instead of scrolling down the Internet smartly as usual. Because there they are left overwhelmed: The digital abundance of different financial products causes stress, making a decision is difficult. And because that is uncomfortable, this decision is postponed - usually to the never-day of Santa.

Our study found that the Gen Z is still willing to save - for the next vacation, the e-bike, the new sneakers - but only for things that they need emotionally to satisfy. Pension is not one of them.

What should banking products be like that inspire Gen Z?

Some fintechs are already doing it. Vivid, for example, a neo-bank with Russian roots that is just starting in Europe, attracts Gen Z with the fact that they can get cashback of up to 20 euros per month for card payments - and invest this money directly. For this, Vivid holds stocks of technology companies that are very familiar to Gen Z, such as Apple or Tesla. This is how stock trading becomes part of the everyday life of the young target group.

Another good example is Peaks, an investment app from the Netherlands that is now also active in Germany. With a click, purchases are rounded up to the full amount - the difference creates peaks in investments for the user. In contrast to conventional ETFs, investors can invest from 1 euro - the hurdle is extremely low, therefore tailor-made for Gen Z. The app is also hard to beat in terms of simplicity: Peaks offers sustainable investment funds, structured in four risk categories: " mild “,“ spicy ”,“ hot ”and“ fiery ”. That makes the choice of the fund about as difficult as the choice of sauce when buying a kebab.

Tomorrow Bank from Hamburg approaches its customers with a lot of emotion. The Challenger Bank gives its customers the feeling of improving the world sustainably and thus meets a concern that Gen Z has a great impact on. The “green” smartphone bank not only promises to reduce its own CO2 footprint through its checking account alone, but also only offers investments in certified sustainable and ecological bonds. Here, too, a decision is made easy for Gen Z - everything you click on at this bank is guaranteed to be ethically harmless. Like shopping in the organic market.

In all honesty, I'm a huge fan of how Gen Z is challenging our financial world. It took far too long for human experts, aka consultants or similar middlemen and women, to get customers to invest their money. The fact that systems are so complicated that people with no banking training can understand them also makes them vulnerable to abuse. The requirements of Gen Z - transparency, digitality, simplicity - shed light on a world in which consumers were far too often dependent on their respective advisors.

I can therefore only welcome the change and would be happy if it happens much faster.


Ramin Niroumandis the founder and CEO of the fintech ecosystem Finleap. You can find more columns by him here