Fintech
62% of FinTechs develop products with Generation Z consumers in mind
As we recently reported, credit unions (CUs) are aggressive marketing towards Gen Z consumers. 95% of them are focused on getting Gen Z to join their registries.
FinTech? Not so much. According to data from PYMNTS Intelligence, only 62% of financial technology companies are developing products with Generation Z consumers in mind.
As we reported in “The fintech innovation agenda”, a relationship created in collaboration with Velera (formerly PSCU/Co-op Solutions), about seven in 10 FinTechs say Gen Z consumers simply aren’t making enough deposits to justify efforts to win them as customers.
However, this demographic would appear to be an ideal segment for FinTechs to pursue. After all, Gen Z is predominantly made up of digital-first consumers who appreciate the convenience of mobile banking and digital payments, which many FinTechs recognize.
42% of FinTechs say attracting more Gen Z consumers is very or extremely important to achieving their business goals (which is noteworthy, but still well below the 95% of CUs who say attracting more members of Gen Z is very important).
However, 59% of FinTechs recognize that Gen Z consumers are a growth market, while 49% say Gen Z consumers are highly connected and can lead to further expansion of their account holder base.
Given this recognition, why does Gen Z generate so little interest among FinTech executives?
As the figure above illustrates, a significant share of FinTechs don’t see enough value in trying to attract them. As mentioned, 71% said Gen Z consumers aren’t making enough deposits, while 53% cite this as the most important reason. 53% said Gen Z consumers have low credit utilization rates, while 24% cite this as the most important reason.
The churn rate of account holders is third at 47%. Interestingly, only 12% cite the abandonment of Gen Z as the most important reason, suggesting that FinTechs may be too focused on the short term and may not realize the potential long-term value of winning over this cohort. In a separate report, “How credit union innovation can drive Gen Z engagement,” PYMNTS Intelligence found that Gen Z consumers are expected to increase their spending up to six times by 2030.
If there is a lack of attention to Gen Z consumers among FinTechs, this does not necessarily mean that they will not benefit from the innovations that FinTechs are implementing.
As our most recent report reveals, around half of FinTechs currently sell their products or services to CUs, a trend that has been on the rise since hitting a low of 36% in early 2022. In fact, around eight FinTechs out of 10 see themselves more as suppliers serving CUs rather than competitors, indicating that FinTech and CUs are likely to work together for the foreseeable future.
In other words, because CUs are aggressively marketing their services towards Gen Z, these consumers are very likely to gain access to FinTech innovations, after the fact, through CU membership.
