Generation Z: Moving the Payment Experience Forward

May 23, 2018         By: Zavida Mangaru

For a long time, Millennials have been the growth strategy for most businesses. The driving force behind important political topics, they have certainly done their fair share to reshape social and cultural norms. It’s increasingly evident that Millennials have helped change the world in a significant way. They’ve “Uber-ed” our taxis, “Netflix-ed” our TV and “Amazon-ed” everything else.

Their impact on how we interact with digital payments and electronic banking has been notable as well. It wasn’t long ago that the idea of tapping your phone to pay for groceries seemed out of reach. That said, a dramatic shift and revolutionary change in how we pay for things and manage our personal finances has yet to occur. Instead, we’re left with a fragmented set of technologies and systems that compete for attention and make it difficult to simplify and improve the way in which we pay for goods and services.

While we haven’t seen the last of the Millennials, there’s an important new force entering the payments market: Generation Z. Many are quick to assume Generation Z will be much like the Millennials, but there are some important differences. First and foremost, Generation Z has never known life without the internet and the internet they know has always had the likes of Google, Facebook, and Amazon. Born from 1997 to 2020, Generation Z has grown up with iPhones, Apps, Wi-Fi, high bandwidth cellular service, social media, constant connectivity and on-demand entertainment. Millennials remember with nostalgia the days when we had to watch commercials, whereas Generation Z members may not even know what a commercial is.  

Recently, a Forbes article provided additional insight into Generation Z. According to the article, Generation Z shares the following characteristics:  

  • They don’t create distinctions between their online lives and real lives.
  • They are their own brand managers, personal and professional.
  • They understand social media and utilize it to promote their own curated self-images and professional identities.
  • They seek both social validation and differentiation.
  • They understand their options are innumerable, but their time is limited.
  • They use their social media network and influence to share what they like and dislike.

There are currently 74 million Generation Z members in the United States. As a quarter of the national population, this group of influencers will drive the future of the electronics payment industry. Understanding the psyche of a “GenZer” is important in understanding where they will find value and what matters most when it comes to the ever-important topic of finances.

Based on findings from a 2017 Accenture report on transaction trends, researchers concluded that 70 percent of Millennials and “GenZers” are interested in a more holistic payments management experience including digital payments advisory and expense management.  According to the study, “this is a clear signal that payments have moved beyond the transaction. Next-level customer experiences matter more than ever. Experiences that align not just with how people pay, but with moments of influence in their lives. To deliver, the industry must design payments experiences around human needs.”

In order to meet the expectations of Generation Z, it’s up to the banks to recognize the importance of providing a single digital wallet where consumers can access their finances, bank accounts, and credit card information all in one place. As the banks hold all of the customer data and information, they are the key to enabling this leap forward in the payment processing industry. But given the level of complexity and lack of focus on a long-term vision, the majority of large banks have not formalized a payment strategy and many do not have plans for developing one. This is where third party, non-banking technology and software companies come in.  

By working with payment technology API providers, banks can create timely strategies that will appeal to Generation Z. Together, banks and API providers can re-envision what the payments industry can do, making transformational changes to meet the needs of customers today . . . and tomorrow.

A 20-year payment technology veteran, Zavida Mangaru has served in leadership roles at Mastercard and American Express and is the current executive vice president of product strategy and innovation at North American Bancard.