Cultural change is happening faster than ever—and Gen Z and millennials are at the forefront, together reshaping the world and driving seismic shifts in consumer behavior, working norms, and technology adoption.
This disruption is perhaps no more keenly felt than in the financial services industry, where the collective characteristics of the younger demographics are pushing brands into pivotal and profound tactical evolution. Advertisers in this space know they cannot simply market to Gen Z and millennials in the same way they did (and do) to Gen X and baby boomers who have altogether different financial goals and consumption behaviors. The young consumers of today are digital-first, technologically savvy, TikTok obsessed, streaming everywhere, and relate to financial institutions with a high degree of pragmatism. In other words: they require a standalone marketing strategy.
Gen Z and millennials are also openly embracing a wide variety of emerging FinTech tools designed to democratize personal finance and help users manage money more effectively. These providers have set their advertising sights squarely on younger cohorts, executing campaigns and simplifying messaging in a way that breaks down the complexities of navigating the financial landscape. Thanks in no small part to those efforts, 51% of consumers aged 18-24 and 49% aged 25-34 name a FinTech company as their most trusted financial brand, while only 23% and 26%, respectively, name a more “traditional” national bank.
Legacy financial institutions won’t be conceding market share easily, though—not with $30 trillion inheritance on the line. The big banks may be behind the curve when it comes to targeting Gen Z and millennials, but they’re beginning to catch up, either by striking partnerships with emerging tech or establishing their own brand of modern products (à la Marcus by Goldman Sachs).
In short, the fight to engage and resonate with younger generations is on, and coming out victorious will require understanding those consumers’ preferences and needs. And that isn’t just about digitizing current experiences—it’s about omnichannel connections, education, convenience, and marketing with authenticity.
To understand the financial attitudes of young consumers today is to understand the economic instability they endured across the formative years of their adult lives. Millennials were kneecapped by the Great Recession. Gen Z similarly by the COVID-19 pandemic. Living through these periods of turbulence and intense financial hardship has made these generations anxious about their finances—they’ve adopted a cautious approach to saving, they’re highly risk averse, and they’re eschewing conspicuous consumption.
But there is more at play here. That is, compounding everyday financial pressures.
Gen Z and millennials have some serious economic baggage that they won’t be shaking off any time soon: soaring student loan debt, stagnant wages, skyrocketing house prices and, most recently, staggeringly high inflation. As of right now, almost half of zoomers (46%) and millennials (47%) live paycheck to paycheck and worry they won’t be able to cover their expenses. Indeed, for both these demographics, the cost of living is their number one concern.
Against this reality, young people are looking for clear actions they can take to ease their financial distress. That’s where financial brands have great opportunity. They can step in to help young consumers feel more in control—they can assuage fears with connective, relatable messaging that demonstrates how various financial vehicles work and how they can be utilized to secure both short- and long-term financial stability.
In many regards, Gen Z and millennials demand more from brands, but there are certain strategies financial advertisers can adopt to reach them effectively. Here are four:
Young consumers continue to look to friends and family most often for financial advice, but they are also digesting financial content from an ever-expanding list of digital avenues—a trend that is opening the door for challenger brands to garner the attention of information-gathering consumers.
Social media platforms are, predictably, the most popular of these sources—around four in ten zoomers and millennials are gravitating toward them to learn about personal finance, shares that massively exceed those for Gen X and baby boomers. The increasing influence of TikTok is likely playing a huge role here. The financial TikTok space (dubbed FinTok) is global and growing, and it’s engaging young people who may not otherwise have an interest in personal finance. A significant 41% of zoomers are turning to TikTok for investment information, a percentage that beats out both financial advisors (21%) and personal finance websites (also 21%).
This is a fascinating statistic, but it’s also a potentially hazardous situation for young consumers. TikTok, like any social platform, can be a breeding ground of unvetted content, and reports are surfacing that detail the scale of the widespread misinformation it harbors. As such, financial brands have a chance here to cut through the clutter. They can establish a trusted presence on what is a massively Gen Z and millennial-skewed platform and offer up thoughtful, caring content that comes from a place of authority. Winning on this channel (and, indeed, all social channels) may then also have a multiplicative effect, as young consumers often seek the opinions of their friends. How’s that for a bit of #symmetry!
From building emergency funds, to paying off credit card balances, to saving for new homes, to opening investment accounts, Gen Z and millennials are juggling a lot of financial goals.
This ambition has the potential to get overwhelming pretty quickly, so by breaking down financial planning in simple terms, FinServ brands can start to combat financial illiteracy and build brand trust that helps sow the seeds of long-term brand loyalty. Across both Gen Z and millennials, a top priority is putting money aside to cover any number of unforeseen financial situations, signaling this might be a good place to start for financial advertisers—creating snappy content that provides tips and tricks for building a financial firewall and laying out a plan of action.
Another forward-thinking goal for financial brands to draw on is investing, with 24% of Gen Z and 28% of millennials saying they are interested in opening an investment account. When it comes to marketing, online trading platforms have led the way in this space—their easy-to-use apps are educational and fun all at once and they serve to demystify, and even gamify, investing while removing brokerage intermediaries and making it straightforward to get started with only small amounts of money. And that’s ultimately what reaching young prospective FinServ clients is all about: this notion of breaking through inertia and simplifying industry jargon to help make the sometimes-daunting world of finance a more accessible place.
Just a short time ago, back in 2018, only 39% of consumers said it was important that they were able to do all their banking using a mobile device. Fast forward to 2022, and that figure has soared to 65%. Broken down generationally, that number increases again to 84% for Gen Z and 82% for millennials, indicating app-based mobile banking is now a concrete expectation among young consumers.
With such widespread adoption and high expectations, it’s essential that brands optimize their app experience. Around six in 10 zoomers and millennials even said they would switch financial services providers for a better mobile app experience (talk about unforgiving!)
While perhaps a bit daunting for app developers, this appetite for mobile banking actually represents a great opportunity for marketers. As the cookieless future edges closer and advertisers search for reliable ways to uncover consumer behavior, a great app ecosystem can help financial brands seamlessly collect and piece together valuable first-party data. The benefits of this are fairly clear (if not guaranteed): a deeper understanding of customer journeys, optimized targeting, more consumer-centricity, more personalized advertising (something else younger generations love, by the way) and, ultimately, smarter campaigns.
And side note: a mobile app enables advertisers to connect with users on a deeper, individual level through push notifications that simultaneously avoid the crowded marketplace of email and the somewhat invasive nature of SMS.
Trust is an extremely valuable commodity. Without it, the whole premise of successful relationships breaks down. No, you didn’t accidentally click away to a marriage advice column. We’re talking about just how important trust is between a consumer and their financial services providers.
For traditional institutions, in particular, this is a major problem area. They have a reputation issue—especially with younger consumers. Among teens, 42% think banks don’t care about their financial futures and 25% believe they aren’t seen as valuable customers because they don’t make enough money. For most, however, the skepticism goes far beyond simply feeling misunderstood: young consumers also worry financial institutions will take advantage of them in some capacity, be it through unpredictable interest charges, hidden fees, or other predatory practices.
After the Great Recession, many have come to view large financial institutions as exploitative and are looking to disestablish the status quo. In one famous example, young investors who were part of a Reddit community used FinTech investment platforms to drive up the share prices of meme stocks such as GameStop and AMC to manipulate the markets and prevent larger “establishment” hedge funds from cashing in.
This innate distrust of the big players is a driving force behind the rise of non-bank entities and other FinTech brands that are more comfortable engaging with digital natives. Gen Z and millennials respond more favorably to communications from organizations they believe are honest, authentic, and transparent, and that actively acknowledge their barriers in life. If these cohorts sense that brands are not truly working to help them reach their financial goals, they won’t hesitate to go elsewhere.
The takeaway here: be truthful and authentic, always!
Gen Z and millennial consumers are steadily reshaping the financial services industry. Although there are generational differences both in terms of financial literacy and financial priorities, it’s clear that educational experiences and relatable advertising are top priorities for reaching these two cohorts. Appealing to them involves truly understanding their pain points and then presenting them with easy-to-use, non-complicated solutions in the channels and places they want them.
Looking for more financial advertising tips and tricks? Check out Basis Technologies’ dedicated financial services resource center.