Digital Payments for a Digital Generation: Getting to Know Gen Z

December 8, 2017         By: Andrew Vahrenkamp

While financial institutions, merchants, and payment facilitators have spent significant time and energy understanding how Millennials pay, a new group is appearing on the horizon. Gen Z, those consumers born after 1999, represent a new wave of payees, and they view the world completely differently.

In its new study Generation Z: The Kids Are All Right, Raddon finds that this new generation is more comfortable than prior generations with digital methods of moving money, and that many anticipate supplementing traditional banking services with solutions from technology companies.

The study is based on a survey of more than 2,500 high school students from 16 to 18 years old. It finds that 67 percent of these students currently have a bank or credit union account, either in their own name or with their parents. They are already in the payments space, whether we are ready for them or not.

In terms of technology, members of Gen Z have grown up in the world of the smartphone and touchscreen. Yet while 73 percent of this generation use their smartphone at least once an hour, and usually more often than that, they do not all fall into a digital box. About a third (34 percent) are Conventionals, who prefer to conduct business face-to-face with traditional banking providers. Another 37 percent are Digitals, who also prefer traditional providers but who eschew face-to-face interaction in favor of digital or virtual communication. And then there are the Pioneers, the 28 percent who think all financial institutions are the same and who want to bank in a way that is most convenient for them, no matter the provider. These Pioneers are the ones most likely to push the revolution in payments.

Smartphones are not the only screen you will find a member of Gen Z viewing. Fifty percent of those surveyed have a tablet, 75 percent have a laptop computer and 50 percent have a desktop computer. Taking these numbers into account, it is not unreasonable to picture a Gen Z individual consuming content on three or four screens simultaneously. This multiscreen viewing demands constant and unique content and also makes capturing attention more difficult, as the choices available are virtually unlimited.

Consider their use of mobile banking, accessing a bank or credit union via app or mobile website. Currently, only 48 percent of Gen Z consumers with banking accounts use mobile banking, compared to 57 percent of adults. We expect that as Gen Z moves into college and the job market, their use of mobile banking in particular will exceed that of Millennials (currently 85 percent). With smartphone ownership outpacing laptop or desktop ownership, mobile banking appears to be more likely than online banking to win this generation in the long run.

With such robust ownership of smartphones and appreciation for technology, one might expect Gen Z to mirror their Millennial counterparts in using their phones to purchase things at a retail establishment. In fact, Gen Z is already outpacing Millennials in their use of mobile payments.

Just as with mobile banking, attitude toward technology has a strong relationship with mobile payments usage. Only 15 percent of Conventionals have paid for something with their phone, compared to an impressively high 45 percent of Pioneers, with Digitals in between at 24 percent.

The survey revealed members of Gen Z use their phone to make purchases at a wide variety of places: 44 percent at a department store; 41 percent for coffee, tea or snacks; 33 percent at convenience stores; and 28 percent at supermarkets.

By embracing new payment technology, Gen Z has become open to a world where they might turn to disruptive technology firms or other non-incumbent firms for future banking needs. Gen Z is much more likely to say they envision a future where technology companies supplement the financial services they might receive from traditional banks or credit unions. Forty four percent of Gen Z anticipates supplementing traditional banking services with solutions from technology companies, compared to only 37 percent of Millennials and 26 percent of Gen X.  

Among the three attitudinal segments of Gen Z, more than three of four Pioneers were willing to conduct their financial business with tech companies. The threat to traditional providers does not end there. As many as 31 percent of all of Gen Z agree that they will not have to rely on banks for financial services in the future.

Disruptive technology companies are targeting the payments space more than any other portion of the industry, and Gen Z seems more willing than other generations to give them an opportunity. Keeping on top of trends in order to deliver the payment capabilities and experiences consumers expect will enable financial institutions to retain transactions, revenue and ultimately accounts and balances as the next generation comes of age.

An executive summary of Generation Z: The Kids Are All Right as well as the full report are available at

Andrew Vahrenkamp bio

Andrew Vahrenkamp is responsible for Raddon Research Insights, the national consumer research program from Raddon, a Fiserv company.  A former finance and marketing executive in the credit union industry, he uses his 20 years of experience to find trends and patterns in consumer behavior and to develop solutions for institutions, particularly in their strategic planning, product development, and marketing strategy.