Every spring, a fresh batch of graduates exits the sacred halls of higher education for the real world’s streets of uncertainty. Graduation marks a pivotal transition to adulthood, where young adults must balance major lifestyle changes with newfound fiscal responsibility—from paying off student debt to getting a car loan or even a first credit card. This change can be a lot to navigate, and as such, it presents a unique opportunity for financial institutions to step in and build a solid relationship with a new clientele.
This year’s graduating class is unlike any generation prior. Financial service providers can lay the foundation for lifelong relationships during these formative years with the right tools and a personalized approach. Adding SMS to your generational marketing strategy creates a high-quality customer engagement experience that today’s young adults seek. To better serve this market, let’s look at what Gen Z values, their financial habits, and how technology plays an impactful role in their lives.
Understanding Gen Z
This generation’s birth coincides with the first smartphones, and they’ve never known a time without the internet. True digital natives, 25% were smartphone-connected before the age of 10 (1). Smartphones are essential to the everyday life of a Gen Zer, and they are connected on an average of five screens (2). 75% prefer using their smartphone over other devices (Institute of Business Management).
Highly career-oriented and financially anxious, Gen Zers are the most racially and ethnically diverse, the best educated, and their sheer size gives them significant purchasing power—estimated at $323 billion in the U.S. alone. What’s surprising is that only four in ten Gen Zers have a credit card. 45% of Gen Z shoppers prefer to pay with cash, while the remaining majority prefer to pay by other means. (3)
Gen Z is estimated to have an annual purchasing power of $323 billion in the U.S. alone.
Gen Z has embraced mobile banking, with 95% penetration as of May 2021. The majority of Gen Zers (90%) use mobile banking for checking balances and transferring money between accounts (63%) (4). They are on par with their millennial counterparts for using mobile banking to send money to others (43%) and paying for purchases using Apple Pay or Google Pay (30%). While Gen Z ranked towards the top for most mobile banking activities in this study (4), they were the lowest in utilizing bill payment options through mobile banking. The drop is likely due to the widespread ages of the Gen Z demographic, a significant portion of whom are still financially supported by an adult.
Gen Zers entering the workforce manage their lives with their smartphones, with 52% saying it is their most important device (5). Financial service providers can continue to grow with this generation as more come of age by implementing a personalized approach that takes advantage of the most common and widely used mobile channel: SMS.
3 Ways to Serve Gen Z Graduates With SMS:
1. Understand Their Preferred Channels:
Understand their preferred channels: An IBM study (6) found that 73% of Gen Z polled use their internet-connected devices primarily for texting and chatting—their preferred method for communicating with friends, family, and businesses. To meet this generation where they are, implement Two-Way Texting into your client communication systems. Serve your young adult clients by reaching out over text with financial product recommendations, payment reminders, and account assistance.
Providing customer service over Two-Way Texting is not only convenient for smartphone-based clientele. It relieves pressure from call centers, provides service agents with the necessary tools for delivering competent service, and builds credibility for your financial institution. Gen Zers are looking for a conversational experience right out of the gate, not just when seeking assistance.
2. Personalize the Experience:
Personalize the experience: A common theme amongst Gen Z is wanting to be seen and understood. Personalization is the first step financial service providers can take when marketing to Gen Z graduates, and SMS takes personalization to a level other channels fail to do. Simply using the name of the person with whom you are communicating will go a long way. 77% of consumers across many generations (8) have chosen, recommended, or paid more for a brand that takes the time to personalize their communication experience.
More than any other generation, Gen Z relies heavily on the experiences of others. 63% of Gen Zers trust their friends’ recommendations for learning about products and brands (9). SMS makes it easy to start a conversation by recommending financial products and services based on the client’s history and preferences. Show Gen Z graduates that you know who they are and what they need for this stage in their life with customized SMS messaging.
3. Ease Financial Stress:
Ease financial stress: While millennials faced the great recession, Gen Z was poised to enter the workforce at a time with the lowest unemployment—that was until COVID-19 derailed everything. The first round of Gen Z graduates dropped into the workforce in the spring of 2020 facing the worst unemployment rate since the depression (https://www.washingtonpost.com/business/2020/05/08/april-2020-jobs-report/). While this year’s graduates will benefit from entering a workforce with a pre-pandemic unemployment rate of 3.6%, the last two years have heavily influenced Gen Z graduates regarding careers, financial goals, and life milestones.
More than half of the Gen Z (over18 years old) polled in this Pew Research survey (11) said that they or someone in their household experienced a pay decrease or job loss due to the pandemic. Financial stressors for older Gen Zers include saving money (36%), funding basic needs (35%), and dipping into savings (34%) (12). Since the pandemic began, 46% of these young adults have had to borrow money from friends or family (12).
Financial service providers can help Gen Zers by providing education and support for their financial futures. This year’s graduates will likely begin paying back their student loans by the end of the year. Previous graduates eligible for COVID-19 relief for federal student loans will begin repayment in August 2022. Both categories need guidance from lenders as they navigate repayment options. Loan officers can talk one-on-one with clients through SMS to develop a plan, remind them of upcoming payments, and make payment portals convenient.
Gen Z will graduate and enter the workforce over the next decade, and financial institutions can play an impactful role as these young adults take their first steps to financial independence. While similar in many ways to their millennial predecessors, Gen Z adults have differing views on both money and technology. SMS is a critical tool in reaching these digital natives through personalization, relationship building, and preferred communication methods. It’s imperative that financial institutions take steps to understand how Gen Zers think, what they value, and the best way to reach them.