Navigating Priorities: Two-thirds of Gen Z Prefer Financial Wellness Over Personal Wellness
It’s no surprise that the youngest generations are making a statement when it comes to selecting their financial institution. Research from IBM shows that 87% of bankers are concerned about Gen Z customers’ increased willingness to switch bank accounts compared to older generations, therefore making it critically important to find ways to attract and retain them.
But if it’s not loyalty that keeps them, what is it?
As it turns out, it’s financial wellness. While this isn’t anything new or riveting, what is interesting is this group’s priority of financial wellness over physical wellness. According to a survey from Marcus by Goldman Sachs®, a whopping two-thirds of Gen Zers, today’s 16- to 26-year-olds, prioritize their financial fitness over their physical fitness. Additionally, nearly seven out of ten (68%) would rather hire a financial advisor over a personal trainer at a gym if the cost was the same.
So, if younger generations are willing to spend money on a financial advisor, wouldn’t it make sense to offer them tools that support being financially fit?
Gen Z’s Financial Concerns Are Rising
To understand why financial wellness reigns supreme, look no further than what keeps Gen Z up at night – money woes. Historically thought of as something only older adults worry about, a new study reveals that more than half of Gen Z (52%) say they are very worried about not having enough money, representing the highest increase among their concerns in three years.
This shouldn’t be surprising. As student loan debt tops $1.74 trillion, college graduates are earning 10% less compared to their parents after adjusting for inflation, according to new research. Additionally, a Deloitte survey from 2023 found living paycheck to paycheck was a concern cited by about half of this generation.
Meanwhile, the digital fitness boom may be over. After seeing double-digit growth in 2021, research from Insider Intelligence forecasts that users will drop to 38.9 million adults by 2027. Much of this is due to individuals returning to the gym after COVID-19, but Gen Z’s unique perspective on “wellness” has increasingly turned its focus on finance.
Traditionally, discussions around wellness have centered on physical and mental health, emphasizing exercise, nutrition and mindfulness. However, for Gen Z, the concept of wellness now extends beyond the confines of personal health.
How Banks Can Lean Into Gen Z’s Obsession with Wellness
In an industry that is nearly saturated with financial wellness tools, gamification is key. By combining the importance of financial wellness with the concept of gamification, banks can support Gen Z customers’ interest in working towards a healthier financial position while boosting their bottom line.
Even more, it doesn’t have to be boring or stagnant. With gamification, banking apps can turn financial management into an enjoyable journey, helping to increase engagement and stand out against nonbank apps like Rocket Money. Leveraging gamified elements such as earning points and badges for good financial behavior, financial wellness technology allows customers to have a fun and interactive way to improve their financial health.
Additionally, banks must provide tools that are less threatening and more action-oriented. For instance, traditional PFMs focus on past spending and highlight poor behavior. This approach can be perceived as invasive and judgmental, causing users to completely abandon the app. After all, who wants to hear about how terrible their finances are? Instead, banks should encourage and incentivize positive behavior by offering users appropriate guidance.
Banks should also limit the self-service aspect often seen in popular budgeting apps. Consumers want actual guidance; not a tool that makes them do all the heavy lifting. Financial advisors also suggest that self-service budgeting apps don’t work well because people are rarely honest about their finances – even with themselves. Therefore, if the app doesn’t provide noticeable results for the user, they’ll likely abandon it and move on to something else.
Exciting Every Customer, Including Gen Z
Gamification has proven to be a game-changer for banks aiming to engage customers in their mobile applications. For instance, Finotta saw users go from spending less than one minute a month in their mobile banking app to over 13 minutes a month.
Additionally, customers have more reasons to share their data, using account aggregation to see all their financial information in one place. This allows banks to serve customers in more targeted and personalized ways and offers users true results.
Every interaction with customers is customized to their unique financial health. This level of personalization ensures that each customer feels valued and understood throughout their financial journey. This not only enhances the overall customer experience but also opens up new opportunities for banks to offer relevant products and insights, thus driving the bottom line.
Financial wellness has become an integral aspect of modern banking, especially for wellness-obsessed Gen Zers. Gamification has revolutionized how customers engage with their finances, empowering banks to better serve customers and improve their financial health while also driving their bottom line. By combining personalized guidance, engaging gamification, and seamless digitized support, banks can build stronger relationships with Gen Z customers and create a more financially secure future for all.