Are Gen Zers the most dangerous clients for banks?
From racking up credit card debt to engaging in first party fraud, Gen Zers present as tricky customers for banks. But developing marketing strategies that speak to their unique pain points will help bankers foster a more harmonious relationship with these younger customers.
Gen Zers could be the riskiest clients for financial institutions right now. From racking up credit card debt to pay for a vacation to engaging in first party fraud, many banks don’t see Zoomers as stable long-term clients.
Gen Zers are using credit more often than millennials did during early adulthood, according to research from TransUnion. Gen Z borrowers are opening more credit lines and have both higher debt levels and delinquency rates compared to millennials at the same age, the report found. They’re also using bank cards and taking out auto loans more frequently than millennials did.
While Gen Zers may be riskier clients, banks that ignore them are missing out on a key long-term business opportunity. Young women, for example, are getting richer. Over the next 20 years, $80 trillion will change hands as older generations leave money to their children — and millennial and Generation Z women are expected to benefit. Millennials already make up the majority of the American workforce, with Gen Z following quickly behind.
“At the end of the day, a lot of young people are going to inherit an enormous amount of wealth over time passed down from their family members,” says David Donovan, executive vice president of Financial Services in the America’s for Publicis Sapient. “I don’t know if banks are motivated to engage with Gen Zers, they’re motivated by the highest margin business. But there is an opportunity.”
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