‘Quick, tangible, teachable moments’: Financial literacy could be the ticket to Gen Z appeal
- Consumers are putting more importance than ever before on financial literacy, especially Gen Z.
- As Gen Z takes up more space in the adult population, financial literacy could be a way to get early access to a loyal user base.
Financial literacy has had a history of being a sort of backburner topic among families.
People just weren’t all that interested in talking about this stuff. No more than 65% of adults say they were taught about how to find a bargain, according to research by Bank of America. Meanwhile, only 46% said they were taught about how to manage credit cards and credit card debt.
But that attitude seems to be changing. Parents today are much more motivated to teach their kids how to manage their finances. According to Matt Gellene, head of consumer client management at Bank of America, Covid has led to increased financial concern among consumers. On top of that, there are a lot more tools available today to help people better understand their finances.
The whole topic of financial literacy is therefore feeling much more accessible, both to parents and kids.
83% of parents openly talk with their children about their finances today, the research showed. They’re also more motivated to pass along financial lessons and knowledge to their kids compared to previous generations. 93% of parents want to teach their kids about saving money and finding bargains. 92% want to teach them about managing credit cards and credit card debt.
“As current parents become more financially educated, they are committed to passing down that knowledge – something they wished they had received more of when they were younger,” said Gellene.
Gen Zers are also more interested in learning about financial literacy.
97% of teens believe financial literacy is important, according to research by teen banking app Step. 89% say it’s a priority for them to learn about personal finance, according to research by Tallo, a software company that connects students with employment opportunities. And 75% say they’re interested in taking personal finance classes.
With financial literacy becoming more of a priority among consumers, financial education could become a genuine way to gain usership, both among parents and Gen Zers.
Teen banking apps, which have Gen Z and parents as their target consumers, use financial literacy as part of their main appeal, for instance.
Through its social media channels, Step emphasizes its Money 101 blog as a resource for financial literacy. Parents are also able to track their kids’ spending, which, according to Step’s CEO and founder CJ MacDonald, allows for ‘quick, tangible, teachable moments.’
Greenlight, meanwhile, includes financial education material within its app, including ‘how-to’ videos and an in-app feature ‘learn mode’, which explains different financial terms.
The challenger bank also offers free financial literacy learning material through its partnership with game-based learning platform Kahoot!.
“We’re focused on shining a light on the world of money with easy-to-use, accessible tools and educational resources that families can trust,” said Tim Sheehan, co-founder and CEO of the company.
And for financial service providers that don’t yet have Gen Z as their focal points, financial literacy may be a way to reel in younger customers early on.
“If these financial institutions can market directly to Gen Z, and offer them financial support in terms of education, then they'll find a user base that is committed to improving their financial literacy. And I think that's a really important takeaway for them to understand. It's something that can pay off in the long run,” said Casey Welch, CEO of Tallo.
Last month, Stash acquired PayGrade, a financial literacy platform that aims to teach students how to build healthy financial habits.
Stash bought the company to help it build its upcoming feature, Stash101, which the fintech says will help kids learn how to better spend and invest.
“Stash101 aims to help students and kids understand that delayed gratification, and taking the long view can be motivating and life-changing,” said Brandon Krieg, CEO and co-founder of the company. “We’re empowering the next generation, as well as the parents and educators who are in need of a better way to teach kids about money -- from budgeting and debt management, to long-term investing and retirement planning.”
Incumbents are also digging into financial literacy.
Bank of America has a free financial education platform called Better Money Habits, which includes financial education resources and how-tos and know-hows around topics like budgeting and saving. Around half of the active users on the platform are young adults, including Gen Z and students.
Dallas-based Vista Bank, which has 15 locations throughout Texas, participates in and donates to local events surrounding financial literacy. It also launched a campaign earlier this year where every Friday it shares a piece of financial advice on social media.
The bank also plans to leverage technology more when it reaches out to Gen Z.
“The thing that technology allows us to do is have a consistent message. It doesn't matter whether they’re in Tel Aviv or Dallas, we can put a Gen Zer through the exact same training,” said John Steinmetz, CEO of Vista Bank. “And that's one of the reasons our outreach and communications team is working around the clock to find better ways to ensure that we have a better future client, as well.”
Other financial service providers are choosing a different route to provide financial literacy tools to users.
Zogo is a Gen Z-run financial literacy platform that uses games and quizzes to teach users about financial concepts. Last month, the company announced it had partnered with 100 credit unions and banks to connect them with younger consumers. Zogo’s partners are able to integrate the platform into their mobile banking solutions.
“I realized that there was an opportunity to not only boost young adults’ personal finance acumen, but to also help financial institutions engage their fastest-growing customer segment in ways that resonate,” said Bolun Li, CEO and founder of the company. “Zogo's gamified solution takes into account the learning style of younger generations, making it fun, easy and rewarding to learn about financial concepts.”
Focusing on improving financial literacy seems to be an effective way for financial service providers to appeal to Gen Z early on. The move could be a pretty strategic way for these companies to call dibs on a continuously expanding portion of the adult population.
“Gen Z are not the highest in net wealth yet, but if you connect with them earlier, and you build a rapport, you can have life customers that will supply your business for many years to come,” said Tallo’s Welch.