Generation Z (Gen Z) is your greatest opportunity, both as new account

holders and talent for your workforce. While Millennials are a crucial market
for community financial institutions, the subsequent generation (Z) is taking
their first steps into adulthood, and they need financial partners. Loosely
defined as anyone born between 1995 and 2015, “this group makes up a
quarter of the U.S. population and by 2020 will account for 40% of all
consumers,” according to Fast Company.
While Millennials are the largest group of consumers now, Generation Z is the
future; and now is the time to begin thinking about how to best engage them.
How will you serve them as consumers? How will you recruit them as
employees?

In this blog, we’ll touch on some of the early research and what it indicates
about the mindset of Generation Z and how it may affect the future of your
institution.

Who are Gen Z?

Generally, Gen Z was born between the years 1995 and 2015, making the
youngest members 3 years old and the oldest 23.
As you can see from that range, lumping generational cohorts together based
on a ~ 20-year birth window can lead to some unhelpful generalizations. In
any given generation, the oldest and youngest members will differ greatly —
but looking closer reveals some general similarities in mindset, behavior, and
life experience. This blog explores some “working” observations based on
current research. Use it as a springboard for your understanding of what
makes Gen Z unique.

Generation Z is Purposeful
About the Content they Engage
With.
Despite the assertion that attention spans have dwindled to a goldfish
proportions, Generation Z spends a lot of time on social media, and
advertising on those platforms needs to be customized to fit the medium. They
can sniff out canned or insincere messages in seconds — take the time to
meet them and create purposeful conversations.

Fast Company suggests that “Gen Z have a carefully tuned radar for being
sold to and a limited amount of time and energy to spend assessing whether
something’s worth their time. Getting past these filters, and winning their
attention, will mean providing them with engaging and immediately beneficial
experiences.”
A Great Customer Experience is
Table-stakes.

As native denizens of the Internet, they expect financial transactions to be

almost frictionless. They will look for financial service providers who can fit
into their digital lives, and think far less in terms of the “bank or credit union
down the street.” When your “map” of the world is an internet-equipped
smartphone, “local” has less to do with zip code, and more to do with
relevance.
Industrious and Looking for
Stability.
Numerous sources have identified a strong entrepreneurial tendency in
Generation Z. Fast Company unearthed more nuance in that trend; “We
found that while Gen Z like the idea of working for themselves, the majority
are risk-averse, practical, and pragmatic. Their supposed entrepreneurialism
is actually more of a survival mechanism than an idealist reach for status or
riches.”

This pragmatism leaves little room for opaque, top-down decision-making or

order-giving. Michael Litt, CEO of Vidyardsays this about engaging Generation
Z in the workplace, “...when I take the time to explain why my company
operates the way it does and how their roles contribute to that, they’re
excellent team players. Command and control don’t work with them. Sharing
the bigger picture — and being transparent about motives and outcomes —
does. Gen Z won’t blindly follow without justification, and that might be their
biggest strength.”

Gen Z Consumes with a Cause.

They’re a values-driven cohort, identifying with causes and supporting
organizations that embrace them. Adweek cites“...studies have shown that
Gen Z is interested in racial, gender and income equality, as well as
environmental issues. Standing up for these values is becoming a
differentiator for brands.”
This preference can play very well into the ethos of most community financial
institutions — your commitment to the people and neighborhoods you serve is
a major advantage. Look for ways to clarify your values and weave them into
everything you do — including your marketing communications. Give Gen Z a
reason to care about what you do and you’ll find them more than willing to
engage with you, as account holders and employees.
 Boomers, Gen X, Gen Y,
and Gen Z Explained
What separates Generation Y from X, and is Generation Z a thing? How old is
each generation? Are they really that different? It’s easy to see why there is
so much confusion about generational cohorts.

If you’ve ever felt muddled by this "alphabet soup" of names…you’re not

alone. The real frustration hits when you realize that Gen Y consumers will earn
46% of income in the U.S. by 2025.1 And unless you understand who they are
and what they want, you won’t capture a dollar of their money. Furthermore,
as one generation’s spending power decreases (i.e. Boomers) another is
increasing.

People Grow Older, Birthdays

Stay the Same
A common source of confusion when labeling generations is their age.
Generational cohorts are defined (loosely) by birth year, not current age. The
reason is simple, generations get older in groups. If you think of all Millennials
as college kids (18 - 22), then you are thinking of a stage in life and not a
generation. Millennials are out of college and that life stage is now dominated
by Gen Z.
 Another example, a member of Generation X who turned 18 in 1998 would
now be nearly 40. In that time, he or she cares about vastly different issues
and is receptive to a new set of marketing messages. Regardless of your age,
you will always belong to the generation you were born into.

As of 2019, the breakdown by age looks like this:

 Baby Boomers: Baby boomers were born between 1944 and 1964. They're
current between 55-75 years old (76 million in U.S.)
 Gen X: Gen X was born between 1965 - 1979 and are currently between 40-54
years old (82 million people in U.S.)
 Gen Y: Gen Y, or Millennials, were born between 1980 and 1994. They are
currently between 25-39 years old.
o Gen Y.1 = 25-29 years old (31 million people in U.S.)
o Gen Y.2 = 29-39 (42 million people in U.S.)
 Gen Z: Gen Z is the newest generation to be named and were born between 1995
and 2015. They are currently between 4-24 years old (nearly 74 million in U.S.)
The term “Millennial” has become the popular way to reference both
segments of Gen Y (more on Y.1 and Y.2 below).
Realistically, the name Generation Z is a place-holder for the youngest people
on the planet. It is likely to morph as they leave childhood and mature into
their adolescent and adult identities.
Why are generations named
after letters?
It started with Generation X, people born between 1965-1979. The preceding
generation was the Baby Boomers, born 1944-1964. Post World War II,
Americans were enjoying new-found prosperity, which resulted in a "baby
boom." The children born as a result were dubbed the Baby Boomers.

But the generation that followed the Boomers didn’t have a blatant cultural
identifier. In fact, that’s the anecdotal origin of the term Gen X — illustrating the
undetermined characteristics they would come to be known by. Depending on
whom you ask, it was either sociologists, a novelist, or Billy Idol who
cemented this phrase in our vocabulary.
From there on it was all down-alphabet. The generation following Gen X
naturally became Gen Y, born 1980-1994 (give or take a few years on either
end). The term “Millennial” is widely credited to Neil Howe, along with William
Strauss. The pair coined the term in 1989 when the impending turn of the
millennium began to feature heavily in the cultural consciousness.

Generation Z refers to babies born from the mid-2000s through today,

although the term isn’t yet widely used. This may signal the end of ‘alphabet
soup’ (it does coincide with the literal end of the alphabet, after all). A flurry of
potential labels has appeared, including Gen Tech, post-Millennials,
iGeneration, and Gen Y-Fi.

Splitting Up Gen Y
Javelin Research noticed that not all Millennials are currently in the same
stage of life. While all millennials were born around the turn of the century,
some of them are still in early adulthood, wrestling with new careers and
settling down, while the older millennials have a home and are building a
family. You can imagine how having a child might change your interested and
priorities, so for marketing purposes, it's useful to split this generation into Gen
Y.1 and Gen Y.2.

Not only are the two groups culturally different, but they’re in vastly different
phases of their financial life. The younger group are financial fledglings, just
flexing their buying power. The latter group has a credit history, may have
their first mortgage and are raising toddlers. The contrast in priorities and
needs is vast.

The same logic can be applied to any generation that is in this stage of life or
younger. As we get older, we tend to homogenize and face similar life issues.
The younger we are, the more dramatic each stage of life is. Consider the
difference between someone in elementary school and high school. While
they might be the same generation, they have very different views and needs.

Marketing to young generations as a single cohort will not be nearly as

effective as segmenting your strategy and messaging.

Why are generation cohort

names important?
Each generation label serves as a short-hand to reference nearly 20 years of
attitude, motivations, and historic events. Few individuals self-identify as Gen
X, Millennial, or any other name.

They’re useful terms for marketers and have a tendency to trickle down into
common usage. Again, it’s important to emphasize that referring to a cohort
simply by the age range gets complicated quickly. 10 years from now, the
priorities of Millennials will have changed — and marketing tactics must adjust
instep.

Whatever terminology you use, the goal is to reach people with marketing
messages that are relevant to their phase of life. In short, no matter how many
letters get added to the alphabet soup, the most important thing you can do is
seek to understand the soup du jour for the type of consumer you want to
attract.

What makes each generation

different?
Before we dive into each generation, remember that the exact years born are
often disputed, but this should give you a general range to help identify what
generation you belong in.
 The other fact to remember is that new technology is typically first adopted by
the youngest generation and then is gradually adopted by the older
generations. As an example, 95% of Americans have a smartphone, but Gen
Z (the youngest generation) is the highest user.

The Baby Boomer Generation

 Years Born: 1944 to 1964

 Current Ages: 55 to 75
 Generation Size: 76 Million
 Media Consumption: Highest consumers of traditional media like television,
radio, magazines, and newspaper. However, 90% have a Facebook account.
 Banking Habits: Prefer to go into a branch to do transactions.
 Shaping Events: Post-WWII optimism, the cold war, and the hippie movement.
 What's next on their financial horizon: Unexpectedly, this generation is
experiencing the highest growth in student loan debt. They have a belief that you
should take care of your children enough to set them on the right course but
don't plan on leaving any inheritance.

Generation X
 Years Born: 1965 to 1979
 Current Ages: 40 to 54
 Other Nicknames: "Latchkey" generation, MTV generation
 Generation Size: 82 Million
 Media Consumption: Gen X still reads newspapers, magazines, listens to the
radio, and watches TV -- about 165 hours worth of TV a month. However, they
are also digitally savvy and spend roughly 7 hours a week on Facebook.
 Banking Habits: Since they are digitally savvy, Gen X will do some research and
financial management online, but still prefer to do transactions in person. Believe
banking is a person-to-person business and exhibit brand loyalty.
 Shaping Events: End of the cold war, the rise of personal computing, and feeling
lost between the two huge generations.
 What's next on Gen X's financial horizon: Gen X is trying to raise a family, pay
off student debt, and take care of aging parents. These demands put a high strain
on their resources. The average Gen Xer carries $142,000 in debt. They are
looking to reduce their debt while building a stable saving plan for the future.

Millennials (Gen Y)
 Years Born: 1980 to 1994
 Current Ages: 25 to 39
 Other Nicknames: Gen Y, Gen Me, Gen We, Echo Boomers
 Generation Size: 95 Million
 Media Consumption: 95% still watch TV, but Netflix edges out traditional cable
as the provider. Cord-cutting in favor of streaming services is the popular choice.
This generation is extremely comfortable with mobile devices but 32% will still
use a computer for purchases. They typically have multiple social media
accounts.
 Banking Habits: Millennials have less brand loyalty than previous generations.
They prefer to shop product and features first and have little patience for
inefficient or poor service. Because of this, Millennials place their trust in brands
with superior product history such as Apple and Google. They seek digital tools
to help manage their debt and see their banks as transactional as opposed to
relational.
 Shaping Events: The Great Recession, the technological explosion of the internet
and social media, and 9/11
 What's next on their financial horizon: Millennials are entering the
workforce with high amounts of student debt. This is delaying major purchases
like weddings and homes. Because of this financial instability, Millennials prefer
access over ownership which can be seen through their preference for on-
demand services. They want partners that will help guide them to their big
purchases.
 Gen Z

 Years Born: 1995 to 2015

 Currently Aged: 4 to 24
 Other Nicknames: iGeneration, Post-millennials, Homeland Generation
 Generation Size: Roughly 25% of the population
 Media Consumption: The average Gen Zer received their first mobile phone at
age 10.3 years. Many of them grew up playing with their parents' mobile phones
or tablets. They have grown up in a hyper-connected world, and the smartphone
is their preferred method of communication. On average, they spend at least 3
hours a day on their mobile device.
 Banking Habits: This generation has seen the struggle of Millennials and has
adopted a more fiscally conservative approach. They want to avoid debt and
appreciate accounts or services that aid in that endeavor. Debit cards top their
priority list followed by mobile banking. Over 50% have not entered a bank
branch in at least 3 months.
 Shaping Events: Smartphones, social media, never knowing a country not at
war, and seeing the financial struggles of their parents (Gen X).
 What's next on Gen Z's financial horizon: Learning about personal finance.
They have a strong appetite for financial education and are opening savings
accounts at younger ages than prior generations.
If you want to know more about Gen Z, check out this deep dive into their
media consumption and banking habits.
 Do Generations Bank
Differently?
Absolutely, and for several reasons.

 Each generation has been in the workforce for different lengths of time and
accumulated varying degrees of wealth.
o Baby Boomers have an average net worth of $1,066,000 and a median net worth
of $224,000.
o GenXers average net worth is around $288,700, but the median is $59,800.
o Millennials have an average net worth around $76,200, but their median net
worth is only $11,100
o Gen Z's average net worth is difficult to report on since so much of the generation
has no net worth or career.
 Each generation is preparing and saving for different life stages; be that
retirement, children's college tuition, or buying a first car.
 Each generation grew up in evolving technological worlds and has unique
preferences in regard to managing financial relationships.
 Each generation grew up in different financial climates, which has informed their
financial attitudes and opinions of institutions.