As Gen Z and Gen Alpha, specifically those in high school, come of age, their financial habits and preferences are beginning to take shape, presenting both opportunities and challenges for the banking industry. Investing in young people is not just about capturing a new market; it is about playing the long game and securing a prosperous future for both banks and their youngest customers. Here are the reasons why financial institutions should prioritize investing in young people despite it not always having an immediate return.
Brand-Building Takes Time
To effectively invest in Gen Z, especially in a competitive landscape, banks and credit unions must set themselves apart by introducing their brand in a trusted setting like a classroom as early as possible. This allows them to make a positive impression on students before or during when they’re making early financial decisions like setting up a savings account. Being the “first” to reach a young person is vital in the financial services industry to build a long-term relationship with them. This doesn’t happen overnight, but rather, with repeated touchpoints that help ingrain a brand into a person’s mind subconsciously. In fact, according to the marketing “Rule of Seven,” a potential customer needs at least seven interactions with a brand before acting or making a purchasing decision. That’s why sponsoring financial education is so powerful – it affords financial institutions the ability to have multiple touchpoints throughout a course or even over several years and different financial education courses.
Embracing Innovation
To stay relevant in the eyes of Gen Z, financial institutions must embrace innovation and continuously evolve their offerings. Younger generations are quick to adopt new technologies and expect the same from the companies they interact with. Banks and credit unions should explore emerging trends such as blockchain, artificial intelligence, and open banking to enhance their services. They should also introduce students to peer-to-peer transaction tools and other nontraditional products that young people are quickly embracing. By staying at the forefront of technological advancements, banks can meet the evolving needs of Gen Z and stay ahead of the curve.
Long-Term Customer Relationships
Investing in young people is a strategic move that goes beyond immediate financial gains. By cultivating long-term customer relationships, banks and credit unions can benefit from the loyalty and advocacy of younger generations. Teenagers’ values authenticity and trust, and they are more likely to remain loyal to brands that demonstrate a genuine commitment to their needs and values. Building these relationships requires a customer-centric approach, where banks actively listen to and engage with their Gen Z and Gen Alpha customers. Financial institutions should consider students’ Customer Lifetime Value and realize that it’s not based on a single transaction or decision, but rather, a relationship that’s fostered based on trust where a customer feels compelled to come back time and time again. Introducing young people to your brand helps plant that seed for future financial decision-making in later life stages.
Financial Literacy Translates into Confidence, Then Action
Gen Z and Gen Alpha are entering adulthood at a time of economic uncertainty, with record high student debt, rising living costs, and an unpredictable job market. Financial education is a critical area where financial institutions can make a meaningful impact and inspire students to take action. By offering resources in the form of sponsoring digital financial education in schools, banks and credit unions can help Gen Z build a strong financial foundation in an engaging and dynamic way while also helping schools in 27 states meet state mandated financial education requirements. Knowledge has a clear impact, but confidence-building through education is what can truly inspire action and change. That is because financial education can demystify complex or even intimidating topics. When students feel that these topics are within reach, they’re less likely to resist them. This investment in their financial well-being not only fosters loyalty but also positions financial institutions as trusted partners in their financial journey in the communities that they serve.
Conclusion
Investing in the next generation is not just a strategic imperative for financial institutions; it is an investment in the future. Banks and credit unions that play the long game and invest thoughtfully in Gen Z and Gen Alpha will be well-positioned to thrive in the ever-changing financial landscape, securing a prosperous future for themselves and their customers. Sponsorship of financial education in schools can help financial institutions get in front of teenagers and introduce them to their brand, while helping cash strapped school districts meet state mandates. Learn how you can take the next step and make an impact on the next generation at everfi.com/sponsorship.