The payments industry has long been focused on Millennial consumer habits and with good reason: They are a highly influential consumer base and our first generation of digital natives. Now, however, it’s time to be aware of an even more revolutionary demographic stepping into the payments spotlight: Generation Z.
According to the Pew Research Center, Generation Z are those born between 1997 and 2020. They’ve never known life without the internet. They’ve grown up with iPhones, Wi-Fi, and social media.
A recent Forbes article tells us that GenZers don’t create distinctions between their online and real lives. They understand social media and utilize it to promote their own curated self-images and professional “brands.” They understand their options are innumerable, but their time is limited.
There are 74 million Generation Z members in the United States today, accounting for 25 percent of the national population. By 2020, they will outnumber both Baby Boomers and Millennials. In short: They are our next big trendsetters in the payments industry.
One of the key ways that Generation Z may influence our industry is regarding the customer experience. In 2017, an Accenture report revealed:
About 70 percent of Millennials and GenZers are interested in digital payments
advisory and expense management services. This is a clear signal that payments
have moved beyond the transaction. Next-level customer experiences matter more
than ever. To deliver, the industry must design payments experiences around human needs.
According to a 2017 study completed by the Capital Performance Group (CPG), banks today have control over the data needed to create a meaningful customer experience. However, they are yet to create the ultimate digital wallet. The CPG study noted the banking industry’s lack of preparedness for payments industry changes: After defining large banks as those holding at least $10 billion or more in assets, the study noted that of the 219 banks responding to the survey, most held $1 billion or less in assets. Of this group, 87 percent revealed their institutions did not have a formalized payments strategy and 41 percent had no plans of developing one.
A major reason banks have not kept up with the desires of Generation Z consumers for payments services may be because of the complexity in developing and implementing plans. It’s an extremely arduous process involving risk management, compliance, operations, and information technology departments, amongst many others. Because of this complexity, it is imperative that third-party, non-banking payments technology companies actively work with banks to test and launch new products.
Together, we can capture the attention of the sought-after Generation Z demographic. Now is the time to think past the minutia of transactions and re-envision what the payments industry can do. The industry can blossom far beyond the reaches of individual transactions and help instigate social and lifestyle changes than will influence future generations.
Founded in 1992, North American Bancard is a leading payments technology company who helps more than 350,000 satisfied merchants process more than $50 billion in transactions each year. For more, visit gonab.com.