Move Over Millennials, Gen Z is Banking Smarter: Why Banks and Fintechs Must be Mobile Centric to Capture the Market
August 14, 2019
It may be hard to believe but Generation Z, those born between 1996 and 2010, now hold up to $143 billion in spending power. This generation is heading off to college, getting their first job and buying their first car. As they embark on their lifelong financial journey, Gen Z is ripe opportunity for fintechs and traditional banks alike as their value is likely to increase as they age.
But first, a few data points to show how important this fresh demographic is and how different they are from their older counterparts. You can read more about the research studies at Raddon Research and the Center for Generational Kinetics. Gen Z has strong views, habits and preferences that researchers theorize were impacted by the Great Recession and reflect a sharp contrast to Millennials. Data shows they are hardworking, debt averse, frugal and already saving for retirement. 77% of Gen Z are already working in some capacity and 38% plan to work through college.
Additionally, two-thirds of Gen Z members already have a bank account. While nearly 50% have relationships with the largest banks, it isn’t out of loyalty but a powerful preference for technology and convenience. At the same time, the fintechs are making moves specifically targeted this technology savvy and savings driven generation. New options from heavyweights like Amazon, Walmart and American Express as well as startups like Current, Greenlight and MoneyLion are using technology and convenience to acquire young customers.
Let’s understand that Generation Z isn’t just technology-driven, they are immersed in it. From their earliest days, Gen Z has been connected to the internet with access to apps and their social circles via mobile devices. They aren’t using desktop computers to conduct their daily online activities. Research shows that 95% of Gen Z have a smartphone and they are on them constantly – 65% say they are on their smartphones after midnight a few times a week, or more. Gen Z is already embracing “cashless” using mobile payment apps like Venmo and Zelle, and they are saving at a higher rate than Millennials did. Studies show that Gen Z is using mobile apps to help them save and sharing those activities with friends.
Gen Z is also less likely than previous generations to open an account where Mom and Dad bank. Instead, Gen Z is mobile-first and more likely to ask friends for recommendations on where they bank. This generation represents a huge opportunity for customer acquisition, but if banks want to appeal to this tech savvy and mobile centric generation- they need to adapt and evolve quickly.
Arguably, the first area to focus on is the process of opening and onboarding a new mobile banking relationship. This is usually a challenge for most financial institutions but it will be important to make this process intuitive and as frictionless as possible. Sadly, two-thirds of those who try to open and onboard online are unable to complete their applications and barely half are able to successfully fund their account. To capture Generation Z and the potential revenue stream, banks will need to do better.
Three ways Acuant makes mobile onboarding easy for consumers while managing risk and reducing fraud for banks:
Auto-Fill: The process to open an account starts with an app or mobile web page and a simple “Open an Account” button. But once you have them engaged, don’t ask Gen Z to fill in page after page of tedious information – that experience is likely to end in abandonment. Instead, banks can keep it simple with image capture. Applicants can use their smartphone to easily capture a quality picture of their ID. Acuant IDscan® uses the image of any government-issued identity document to accurately auto-fill forms in seconds, streamlining and modernizing the workflow for new customers. Identity card information is processed securely in the cloud and collected for KYC compliance. Proprietary technology allows for the best image capture which means ID images are clear and easily read- preventing user and machine reading errors.
Document Authentication: It is also important to verify that the ID is authentic. With a quality image of the ID, Acuant AssureID™ extracts biometric and alphanumeric data to authenticate it by applying 50+ forensic document specific tests and utilizing the industry’s largest document library – all in seconds. IDscan capture means you pass more valid IDs that might fail due to user error in cropping/lighting, poor image, worn, faded or damaged IDs. Recently Acuant was named a Bronze winner by the American Business Awards (The Stevies) for AssureID’s use of machine learning to protect against identity fraud.
Identity Proofing & Verification: Banks must also verify that the person behind the screen is the same person in the ID. That’s where Acuant Face™ software comes in. Using powerful biometric facial recognition, Acuant Face offers three classes of facial match and liveness tests in seconds using only a quick selfie from the customer. Liveness detection ensures the genuine physical presence of the individual and thwarts deep fakes and presentation attacks such as image spoofing. Facial recognition also offers a much more customer friendly and low friction option to logging into apps, verifying transactions and other ongoing workflows.
In Gartner’s latest Hype Cycle for Cloud Security, 2019, analysts Jonathan Care and Akif Khan mentioned that “identity proofing and corroboration services are used to prevent new account and transaction fraud, comply with various regulations and prevent account takeover, as well as other use cases. It is applicable to any remote interaction channel including contact centers, web or mobile web interactions and mobile app-based interactions. These services establish confidence that a claimed identity exists and that the person claiming the identity is that person. Most commonly used at new account creation to detect the use of stolen or synthetic identities, they can also be employed to elevate trust during an authentication event or during a high-risk activity.” Acuant was included as sample vendor for Identity Proofing and Corroboration in that report.
While traditional banks have been focused on offering mobile services to existing customers – such as check deposit or bill payment – the new battleground will be a fully digital process from onboarding to funding to daily transactions. Gen Z will expect simple, smooth, customer friendly banking apps.
When it comes to targeting Millennials and/or Gen Z – Acuant helps banks and fintechs increase conversion rates, enhance security, prevent fraud and meet KYC regulations.