Gen Z and Lending: Three Trends to Watch in 2023

How Gen Zers search for information to educate themselves on personal financial management, products and services is important for those building the next generation of lending experiences and wanting to grow sustainably by better serving this demographic.

Recent findings highlight Gen Z inherited a world of unprecedented socioeconomic chaos: £500 billion in COVID-19 debt, the energy crisis, high inflation, taxation. Today’s young people are increasingly overburdened by previous generations’ debts while falling further behind older generations when it comes to earning or saving for the future.

As more of Gen Z progress to college and university and enter the workplace, they’re becoming credit hungry, and their needs and expectations will be influential in shaping the digital banking platforms and products of the future.

Three key takeaways for lenders striving to better reach and retain digital natives are: 

1. Feed their appetite for credit education and personal growth

The financial attitudes and technical savviness of those in this generation have powered their hunger for credit education. With 92% of Gen Z believing credit monitoring is important, and over half of them monitoring their credit scores at least monthly compared to 40% of Gen X, lenders need to capitalize on this interest to be at the forefront of Gen Z minds when they apply for new credit.

With this in mind, TransUnion launched our Credit Scores Explained programme aimed at helping young adults prepare for a financially fit future. It specifically caters to people aged 13 to 18 and is part of our #KnowYourScore initiative. The sessions cover specific aspects of managing money and the role credit information plays in day-to-day life, with lessons aligning to financial education. Additional findings have proven Gen Zers love digital formats, including auto-fill forms and user-friendly applications. They favour these rather than relying on manual processes; in fact, 84% of 18 to 24-year-olds use mobile banking apps at least once a quarter. There are many ways lenders can foster loyalty with this generation — through education, commitment, and customer experience, helping you to harvest growth.

2. Meet Gen Z’s expectations for rich digital experiences

With technology rapidly advancing, Gen Z is used to fast, efficient and engaging digital experiences that not only influence their customer experience journeys but also their perceptions of a company’s brand. Gen Z are familiar with financial educational content created by “fin-fluencers” across platforms, such as, Instagram, YouTube and TikTok — which alone has 7.2 billion videos using the #personalfinance hashtag. Additionally, lenders need to have mobile-first and intuitive journeys. Klarna found 76% of Gen Zers shopped more on their mobile phones compared to two years ago versus 56% of the overall general population.

Kelli Fielding, whose team at TransUnion is responsible for developing our award-winning CreditView solution, explains its superpower to build new, trusting relationships: “Our CreditView product evolves through customer asks and the opportunities we spot using the unique data insights we have at our fingertips.”

Today’s consumers want a hands-on approach to their finances, and with our CreditView product, we make this possible. With its highly configurable, easy-to-view dashboards containing credit report data, along with tools to monitor, understand and improve their financial status, CreditView can helpe educate consumers about financial matters and feel more in control. 

3. Engage their interest with personalised customer experiences and innovation

As Gen Z begin to earn their first paychecks, it’s obvious a rich, personalised customer experience is a must-have. In order to create customised experiences, lenders need to remain aware of the multiple subgroups — each with different motivations and needs. Yet, they all expect a seamless brand experience tailored specifically to them.

A one-size-fits-all approach would ignore the opportunity afforded by Gen Zers. Recent studies found 78% of Gen Z views a brand’s commitment to innovation and new technologies as a decisive reason for purchasing an item, and an equally staggering 76% of this cohort gets frustrated if the expected level of personalisation isn’t achieved. By becoming more digitally optimised, unified, and collaborative across all customer interactions, businesses can lay the groundwork to drive potential revenue and brand loyalty.