Gen Z will be opening up a lot of new bank accounts, but banks will have to win their business

The news: As Gen Z achieves financial independence, its members want to separate from the adults who helped open their first accounts, per Morning Consult.

• Financial institutions (FIs) looking to secure Gen Z clients should ensure that their strategies align with this generation’s unique vision for banking.

Breaking down the data: As Gen Z leaves their parents’ homes, starts college, or enters the workforce, they want to assume control over their own individual financial paths.

• 25% of Gen Z plans to open a new bank account in the next six months, while just 10% of the general population plans to do so.
• 72% of Gen Z has a checking account, while 57% has a savings account. Many of these existing accounts could have been created jointly with another adult.
• 9% of Gen Z is considered underbanked—along with a whopping 52% of millennials. That means they have a bank account but also use alternative financial services, such as cashing checks through a non-bank entity or purchasing money orders.

Gen Z’s evolving saving habits: Inflation has throttled Gen Z’s ability to set money aside for the future, per a recent Bank of America survey of 1,156 general population adults and a partially overlapping sample of 1,167 Gen Z adults.

• Almost 40% of Gen Z individuals reported recent financial setbacks, leading to diminished savings or accumulating new debt.
• More than half of Generation Z lacks a basic emergency fund capable of covering three months' worth of expenses.
• 25% of Gen Zers admitted having resorted to borrowing money from family or friends due to financial constraints.
• Due to inflation, 75% of Generation Z has reduced spending by focusing on cooking at home, spending less on clothes, and buying only essential groceries—indicating a desire to save, or at least slow down their debt accumulation.

Gen Z’s vision for banking: And inflation isn’t the only factor influencing Gen Z’s financial decisions. 

• Gen Z wants their FIs to choose eco-friendly partnerships and practice transparency in disclosing the types of companies they work with—pushing some FIs to reconsider associations with non-environmentally friendly industries like Big Oil.
• When choosing an FI, Gen Z seeks tailored financial services like personalized advice geared towards helping them meet their specific financial goals.
• They’re so serious about seeking out seamless digital banking experiences that they want to test-drive applications before committing.

Key takeaways: To compete for Gen Z’s business, FIs will need to refine their strategies and brands.

• If FIs want to tap into this market, they need to evaluate whether maintaining less-than-eco-friendly partnerships outweighs the benefits of Gen Z customers.
• And given Gen Z’s desire to save, FIs can build stronger relationships by offering personalized advice on how to achieve their savings and debt remediation goals. 
• As the US and other countries advance toward an open banking environment, no customer relationship is a given—FIs will need to keep continuously earning loyalty.