Deep Dive into the Emerging Trends in Gen Z's Relationships with Financial Services Providers in the United States

DUBLIN, Aug. 15, 2022 /PRNewswire/ -- The "Gen Z and Payments: The Next Big Cohort Is Here" report has been added to ResearchAndMarkets.com's offering.

"Gen Z and Payments: The Next Big Cohort Is Here" lays out the demographic characteristics of the most diverse generation in U.S. history and provides statistics and analysis of the group's current and future households, income and spending. It provides a deep dive into the emerging trends in Gen Z's relationships with financial services providers as well as their use of, and preference for, specific payment products.

In 10 years, Gen Z will be the largest American generation and as with previous generations, product developers and marketers are tasked with determining which of their current behaviours and preferences reflect their youth and which reflect the unique attributes and characteristics of the cohort.

In the payments space, consumers have typically turned to credit cards as they age and their incomes rise. Millennials, Boomers and Seniors all migrated from debit cards - pay-as-you-go products - to credit. However, Gen Z, much more than Millennials at the same age, appears less willing to abandon debit and short-term buy-now, pay-later (BNPL) instalment loans (with low or zero percent interest rates) as their tools for purchasing and financing purchases.

The youngest adults are raising the bar for payments and financial services providers by demanding more versatile and nimble payment options and are comfortable using fintechs as providers of the products and services they use. Its members are embracing household finances management by debit card transactions as well any card product that offers cryptocurrency as either a reward or that lets them spend crypto in online or in-person transactions.

Gen Z adults have lost financial ground in the past year as real average hourly earnings decreased 3.0% from May 2021 to May 2022. That lost ground will have an ongoing impact on their incomes for the next 10 years. But while Gen Z is not as wealthy now as its members had hoped and are certainly not as wealthy as they will be in their 40s and 50s, they are the standard bearers for the services and products required from financial technology (fintech) firms, as well as traditional financial institutions.

The payment preferences they develop now will inform their choices of products and providers for years to come. Of course those preferences will morph over time, but the selections they make now will have coattails and will inform their future decisions while also swaying the payment choice of older cohorts and becoming the baseline for Gen Alpha (the generation younger than Gen Z).

Key Topics Covered:

SCOPE AND METHODOLOGY OF REPORT

CHAPTER 1: EXECUTIVE SUMMARY

• Why the Market Is in Hot Pursuit of Gen Z
• Payments Are a Key Product for Building a Relationship with Gen Z
• Fintechs, Big Banks and Big Tech All Want Gen Z
• Which Gen Z Preferences Reflect Their Youth? Which Ones Their Uniqueness?
• Gen Z Adults
• Gen Z and Payment Cards
• Gen Z Have Relatively Lower Credit Card Usage
• Gen Zers Are Somewhat Less Confident About Credit Card Issuers
• Gen Z Spends Less than Other Groups When They Use Credit Cards
• Gen Z and Credit Card Rewards Programs
• Debit Card Ownership
• Contactless Payments
• Gen Z and Buy-Now, Pay-Later (BNPL) Loans
• BNPL Market Size
• Overall BNPL Usage and Key Cohorts
• Post-Boomer Generations Dominate as BNPL Users
• Gen Z Are Most Likely to Be Increasing Their Use of BNPL
• Platforms for Use of BNPL Services
• Characteristics of BNPL Loan Usage
• Enter BNPL-Style Loans Through Bank Credit Cards
• Digital Wallets
• Bank on Your Phone
• Gen Z is Increasing its Use of Digital Wallets
• P2P Payments
• Gen Z and P2P
• Payment-to-Merchant (P2M)
• Cryptocurrencies
• Emergence Tied to Global Recession
• Crypto Opportunities for Card Networks and Issuers
• Visa
• Mastercard

CHAPTER 2: THE GEN Z COHORT

• Placing Gen Z Within the Generational Grid
• COMPOSITION OF GEN Z
• Ethnicity and Racial Composition of Gen Z
• Rapidly Changing Demographics
• Education
• Employment
• Gen Z Was Working from Home During the Pandemic
• Zoomers Led the Charge Back to the Office
• Gen Z Wanted the Office, But (Emphatically) Not the Office Full-Time
• Federal Pandemic Relief Programs Gave Gen Z a Cushion
• Economy Now Worries Gen Z More than its Core Concern: Climate Change
• Pros and Cons of Working Remotely
• Digital Drives Everything
• Gen Z Using Digital to Create New Ways of Managing Finances
• What Gen Z Wants to Learn About Finances
• Gender Difference in Financial Approaches
• Crowdsourcing Knowledge, Advice and Investments
• Which Gen Z Preferences Reflect Youth? Which Reflect Their Uniqueness?
• Will Gen Z Transition to Credit Cards?

CHAPTER 3: GEN Z AND FINANCES

• Key Concerns
• Pandemic Was Massively Disruptive to Gen Z
• 24% of Gen Z Reported that Pandemic Had a Positive Impact on Their Finances
• Federal Pandemic Relief Payments Often Surpassed Income From Low-Wage Jobs
• Gen Z Workers Pushed for Higher Wages and Better Relations With Management
• Economic Events Have Long Coat-Tails
• Past as Prologue - Millennials and the Great Recession
• Millennials Will Never Be Able to Make Up Lifetime Earnings Lost Because of the Global Recession
• Gen Z Has Tried to Learn Lessons from Millennials - A for Effort
• Gen Z Workers Successfully Achieved Higher Wages. In the Short Term
• The Devil Is in the Details of Labor Market Composition
• Inflation Has Clawed Back All Pandemic Wage Gains and Left Workers Poorer than Before
• Federal Student Loan Repayment Freeze Helped Gen Z
• Other Sources of Education Financing
• Student Loan Debt Repayment Pause Put Money into Pockets and the Economy
• Real Estate and Gen Z: Big Dreams Meet Little Money
• Gen Z Wants To Be Homeowners
• Gen Z's Top Anticipated Obstacles for Buying a Home
• Older Adults Think Gen Z Has a Harder Time than Gen X
• Gen Z Is Tapping New Sources to Get Their Credit Scores Up
• Gen Z Is Focused on Building a Payments History to Boost Their Credit Scores
• Timely Payments on Rent and Streaming Services Boost Credit Scores
• Gen Z Is Saving for a Down Payment
• Gen Z Sees Home Ownership as Essential to Starting a Family and Building Wealth
• Gen Z Income
• How Gen Z Is Spending Its Money
• How Gen Z Is Paying its Bills
• Gen Z Rationalizes Spending Money Today Because Tomorrow Is Uncertain
• Allocating a Percentage of Discretionary Income to Savings or Investing
• REITs Through Crowdsourcing
• REITS Could be the Democratization of Higher Yields

CHAPTER 4: GEN Z AND FINANCIAL SERVICES

GEN Z IS PURSUED BY MARKETERS

• The Gen Z Population Count
• Gen Z and Digital Banking
• Gen Z Pays High Monthly Service Fees to Bank
• Friends and Family Recommendations Drive Bank Selection
• Checking Accounts

INVESTING

• 20 Million New Investors
• Robinhood

CRYPTOCURRENCIES

• Roots in Global Recession of 2009-2009
• Crypto Opportunities for Card Networks and Issuers
• Targeting Gen Z and Millennials Cardholders, Card Networks Offer Crypto Rewards to Cardholders
• Visa
• Mastercard
• Models for Crypto-Cards: Credit Cards and Prepaid Debit Cards
• Crypto Rewards Credit Cards vs. Crypto Rewards Debit and Prepaid Debit Cards
• Cryptocurrency Credit Cards

CHAPTER 5: GEN Z AND PAYMENTS

INTRODUCTION

• Why the Market Is in Hot Pursuit of Gen Z
• Payments Are a Key Product for Building a Relationship with Gen Z
• Fintechs, Big Banks and Big Tech All Want Gen Z
• A Word About the Payment System
• The Backbone of the Payment System
• Real Time Payments Routing is Expensive for Gen Z
• Credit Card Networks

GEN Z AND PAYMENT CARDS

• Growth of Credit Card Industry
• Gen Z Have Relatively Lower Credit Card Usage
• Gen Z Spends Less than Other Groups When They Use Credit Cards
• Gen Zers Are Less Likely to Prefer Credit Cards for Payments
• Gen Zers Are Somewhat Less Confident About Credit Card Providers
• Gen Zers Lag Millennials in Awareness/Assessment of Credit Card Benefits
• Gen Z Shows its Pragmatism in its Credit Card Rewards Program Selections
• Gen Z Is Nonetheless the Fastest Growing Source of Credit Card Originations
• Debit Card Ownership
• Debit Card Use Increasing Since the Pandemic

GEN Z AND BUY-NOW, PAY-LATER (BNPL) LOANS

• BNPL Was Made for a Global Pandemic
• Retail Payments Have Become the New Alternative to Marketing Campaigns
• BNPL Financing Upstreamed and Downstreamed to Larger/Smaller Purchases
• Consumers Demanded BNPLs for Debit Card Sized Transactions
• PayPal Credit Responded to Consumers by Offering 0% Interest on $30+ Purchases
• Fintech Innovation Capitalized on Greater Consumer Demand for Personalization
• Card Products Enhanced Security and Loyalty Programs
• Overall BNPL Usage and Key Cohorts
• Post-Boomer Generations Dominate as BNPL Users
• PayPal Credit Remains Most Used BNPL Loan Provider
• Apple Pay Later
• Drama in Product Development
• Recentness of BNPL Loan Usage
• Gen Z Are Most Likely to Be Increasing Their Use of BNPL
• BNPL Loans by Amount Borrowed
• Platforms for Use of BNPL Services
• Characteristics of BNPL Loan Usage
• Enter BNPL-Style Loans Through Bank Credit Cards

DIGITAL WALLETS

• Standard Bank-on-Your Phone Features
• Gen Z Is Increasing its Use of Digital Wallets
• Apple Dominates the Phone-Based Digital Wallet Space
• Apple Offers Limited BNPL Installment Loans
• Amazon Pay
• Google Pay
• PayPal

GEN Z AND P2P

• IRS Interest in P2P Payments
• Payment-to-Merchant (P2M)
• Contactless

Companies Mentioned

• Visa
• Mastercard
• Apple
• Amazon
• Google
• PayPal

For more information about this report visit https://www.researchandmarkets.com/r/2dr0e5

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