Gen Z taking ‘traditional’ approach to banking

Nine out of ten Gen Z consumers are choosing banking incumbents like HSBC and NatWest over FinTech challengers, according to new research.

A survey of 500 UK banking customers aged 12-23 by payments and card issuing provider Marqeta found that despite their status as the most tech aware and ‘digitally savvy’ generation, many are choosing more traditional financial services than expected.

However, while 87 per cent said they currently bank with traditional High Street providers, many are also interested in the prospect of banking with Big Tech, which the report suggests points towards a future where Big Tech providers such as Google, Apple, Amazon and Facebook grow their influence in the financial services market.

Contrary to a perception that challenger banks like Monzo and Revolut are leading the field for younger customers, just 12 per cent of those surveyed said they use FinTech providers in some capacity, with with 4 per cent saying they use them explicitly, and 8 per cent saying they bank with both traditional providers and challenger banks.

In addition, despite the rise in digital payments and online transactions, 80 per cent of Gen Z respondents still use cash weekly, suggesting that they are not yet ready to forego their physical wallets.

And when it comes to Buy Now, Pay Later credit services such as Klarna, nearly two thirds (62 per cent) said they had never used these services.

When asked which BigTech firms they would be most interested in banking with in the future, 44 per cent said PayPal, while others cited Apple (27 per cent), Amazon (27 per cent) and Google (22 per cent) as their preferred option.

More than one in five (22 per cent) say that an easier way to pay through social media platforms would be a key feature in selecting a financial services provider in the future.

More than half (54 per cent) said offers and incentives would make financial services more attractive; other popular features include convenience and speed (34 per cent) and better prices (31 per cent).

Meanwhile, looking into their financial futures, more than half said that their biggest life challenge for the next 10 years would be to buy a property, with one in five (22 per cent) naming it as a major financial priority.

Commenting on the findings of the report,Niels Pedersen, senior lecturer at Manchester Metropolitan University, said: “Gen Z’s interest in banking with the likes of PayPal, Apple, Amazon, and Google suggests that, to stand a chance, the financial sector must become more like the tech industry over the coming years.”

“However, digital-first does not mean digital-only. A healthy balance between traditional and digital services must be struck for this generation – as the research shows. It’s vital for providers to build features and services that reflect these unique preferences and demands, particularly as 70 per cent of the trendsetting Generation Z say they influence their families’ purchasing decisions.”

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