Cultural change is happening faster than ever, with Gen Z and Millennials leading the charge. They are reshaping the world and driving significant changes in consumer behavior, work norms, and technology adoption.
This disruption is especially evident in the financial services industry. The unique characteristics of these younger demographics are forcing brands to evolve their marketing tactics. Advertisers know they cannot approach Gen Z and Millennials the same way they did with Gen X and Baby Boomers, who have different financial goals and habits. Today’s young consumers are digital-first, tech-savvy, TikTok enthusiasts, and stream content everywhere. They interact with financial institutions pragmatically, necessitating a unique marketing strategy.
Gen Z and Millennials are also quick to adopt emerging FinTech tools that democratize personal finance and help manage money effectively. These companies target younger audiences with campaigns and simplified messaging that make financial concepts easier to understand. As a result, 51% of consumers aged 18-24 and 49% aged 25-34 trust a FinTech company as their primary financial brand, compared to only 23% and 26% who prefer traditional national banks.
Legacy financial institutions are not giving up market share without a fight, especially with $30 trillion in inheritance at stake. While big banks may be lagging in targeting Gen Z and Millennials, they are starting to catch up by partnering with emerging tech companies or creating modern products like Marcus by Goldman Sachs.
To engage and connect with younger generations, financial brands need to understand their preferences and needs. This involves more than just digitizing existing services; it requires building omnichannel connections, offering education, providing convenience, and marketing with authenticity.
Setting the Stage—Why Have Financial Attitudes Changed?
Understanding the financial attitudes of young consumers today requires recognizing the economic instability they faced during their formative years. Millennials were hit hard by the Great Recession, and Gen Z by the COVID-19 pandemic. These experiences have made these generations cautious with their finances, risk-averse, and wary of conspicuous consumption.
Compounding these pressures are everyday financial challenges. Gen Z and Millennials carry significant economic burdens: high student loan debt, stagnant wages, rising house prices, and recent high inflation. Nearly half of both groups live paycheck to paycheck and worry about covering their expenses. For them, the cost of living is the top concern.
Given this reality, young people are seeking clear actions to alleviate their financial stress. Financial brands have an opportunity here to help them feel more in control by offering relatable, informative messaging that explains how various financial tools can secure both short- and long-term stability.
Effective Strategies for Reaching Young Consumers
Here are four strategies financial advertisers can use to effectively reach Gen Z and Millennials:
1. Establish a Trusted Social Presence
Young consumers primarily turn to friends and family for financial advice but also rely heavily on digital sources. Social media platforms, especially TikTok, are popular among Gen Z and Millennials for financial content. About 41% of Gen Z users get investment information from TikTok, surpassing both financial advisors and personal finance websites.
However, the unvetted nature of social media content poses risks. Financial brands can cut through the noise by establishing a trusted presence on these platforms, offering thoughtful and authoritative content.
2. Create a Path to Financial Literacy
Gen Z and Millennials juggle many financial goals, from building emergency funds to investing. Financial brands can combat financial illiteracy and build trust by breaking down financial planning into simple terms. Content that provides tips for building a financial safety net or explains investment basics can be particularly effective.
Online trading platforms have set a good example by making investing educational and accessible, which helps demystify finance for young users.
3. Improve Mobile App Experience
Mobile banking is crucial for young consumers, with 84% of Gen Z and 82% of Millennials expecting to handle all their banking via mobile apps. A poor mobile experience can drive them to switch providers.
A well-designed app offers an opportunity for brands to gather valuable first-party data, understand customer journeys, and deliver personalized advertising. Push notifications can also engage users more effectively than crowded email inboxes or intrusive SMS.
4. Be Truthful and Authentic
Trust is essential in financial relationships. Many young consumers distrust traditional banks, seeing them as uncaring or exploitative. This distrust drives the popularity of non-bank FinTech brands.
Financial brands must be honest and transparent, acknowledging the financial challenges young consumers face and genuinely working to help them achieve their goals. Authenticity is key to building lasting relationships with Gen Z and Millennials.
Conclusion
Gen Z and Millennial consumers are reshaping the financial services industry. Although they have different levels of financial literacy and priorities, education and relatable advertising are crucial to reaching them. Financial brands need to understand their pain points and provide simple, practical solutions in the channels they use.
