In our modern, digital world, the financial landscape is evolving—and fast. Today’s money moves at the speed of the Internet, which means banking isn’t what it used to be.
What’s shipping, you ask? As a financial services blogger and Millennial who’s desperately trying to keep up with the Youths on social media, I spend a fair amount of time on sites like Urban Dictionary trying to decode Gen Z jargon. Among the more endearing terms this generation has coined is shipped:
Ship (shipping) \ship\ verb
Definition: Usually used as a verb, a term in the fandom world that describes the strong desire of the viewer for two usually fictional characters to end up in a relationship. (e.g. “I am shipping them hard.” or “I ship Nick and Jess.”)
In this blog post, we’re shipping Gen Z and vehicle protection to help financial institutions modernize their approach to offering this point-of-sale product to a new generation of consumers. We’ll also highlight data from a new whitepaper from MX, Gen Z and Millennial Consumer Perspectives on Banking, and provide tips for syncing your messaging with this generation’s unique consumer preferences.
Gen Z Borrowers Tend to Have Limited Emergency Savings
The youngest American generation currently commands about $44 billion in spending power. As Millennials and Gen Z inherit the transfer of wealth from the aging Baby Boomer population, their future spending horizon stretches to $60 trillion.
Contrary to popular mental pictures of young people being frivolous and irresponsible with money, Gen Zers (those born between 1997-2012) are known to be frugal and utilitarian in their spending habits.
This makes sense for a generation that came of age during the Great Recession. Parents who were raising children through a historic housing market crash and tight labor market likely spent more time educating their kids about the importance of financial stability.
Despite possessing a healthy dose of financial sensibility, Gen Z borrowers are struggling to build up their savings accounts. According to the MX whitepaper, “Where Millennials are more likely to have financial difficulty and debt, Gen Z is more likely to have limited emergency savings…Members of Gen Z are extremely worried about their savings, although they haven’t yet learned how to effectively set aside money.”
The Financial Institution Solution for Limited Emergency Savings
Many Gen Zers are just now getting their first cars. If their first-car experience was anything like mine, they’re not driving off the lot in a brand-new Tesla. More likely, they are inheriting a car from their parents or buying a reasonably priced used car.
The thing about first cars is, they’re more susceptible to breaking down than the brand new Tesla. If your Gen Z borrowers have limited savings, this is not a great combination.
This isn’t just a challenge for Gen Z borrowers. Only about four in 10 American consumers have enough money in savings to cover an unplanned expense of $1,000. Unfortunately, many of the most common auto repairs cost at least this much.
Offering vehicle protection products like GAP and MMP to Gen Z and other borrowers with limited savings can help them avoid being saddled with the cost of unexpected expenses if their vehicle breaks down, protecting their financial stability.
Gen Zers Are Digital Natives
A majority (58%) of Gen Zers said they couldn’t go more than four hours without Internet access before becoming uncomfortable and 59% can’t go a day without texting (no data on what happens if they exceed this time restriction, but one assumes it involves spontaneous combustion).
According to the Financial Brand, “Some of the variances in Gen Z from Millennials can indeed be credited to how its members connect with the rest of the world. Nearly all of Gen Zers in the United States shop online. Another 65% say they get ideas of things to buy from all social media platforms.”
Since the COVID-19 pandemic, even the most reluctant adopters of digital technology are now competently using video messaging platforms, mobile apps, and web services to continue working in a remote environment. Gen Z may be the digital native generation, but the pandemic has created an entire society of people who are comfortable using digital technology to tend to their financial needs.
The Financial Institution Solution: Offer Online Enrollment for Vehicle Protection
Though it is particularly true for Gen Z, to effectively reach all of your borrowers, your financial institution must create tools and services that are digitally accessible. This is especially vital in today’s marketplace where consumers are increasingly conducting their financial business on their own using self-service technologies.
Offering convenient online enrollment for your vehicle protection program that is supported by a mobile app will create a hassle-free experience for your members that meets their expectations for accessible technology.
Gen Z Is Stressed Out
Gen Zers have come of age in a stressful time.
According to MX, “Gen Z and Millennials are similar in many ways, but what will likely distinguish them the most moving forward is the influence of the pandemic. Millennials lived their adulthood through the lens of the 2008 financial crisis, while for Gen Z the lens is Covid. This has led to Gen Z being labeled as the ‘most stressed-out generation.’ This experience has shaped their perceptions of financial health.”
The Financial Institution Solution: Offer Products That Bring Peace of Mind
The truth is, we’re all feeling a little frazzled, these days. That’s why it’s more important than ever to take as much stress out of your borrowers’ lives as possible. You want your borrowers to view your institution as a trusted assistant they can count on to help identify financial stressors and lend a helping hand.
As the arbiter of home and auto loans, the custodian of checking and savings accounts, and the primary contact for financial inquiries, you play a major role in your members’ financial well-being.
While consumers’ needs may vary from generation to generation, one thing that remains consistent is they want products and services that minimize stress and bring value to their lives.
To help financial institutions deliver a product to members that is both relevant and timely in today’s economy, SWBC’s Financial Institution Group is pleased to introduce healthCAR. It’s a new, budget-friendly way for members to protect their vehicle after their manufacturer’s warranty expires with easy online enrollment and no mileage restrictions. Best of all, it will help your institution build a better relationship with Gen Z and Millennial borrowers.
A graduate of the Plan II Honors program at UT Austin, Amanda Harr is the Content Manager for SWBC. A clever wordsmith who appreciates artful persuasion and authenticity in writing, Amanda uses a structured creative process to craft marketing strategies, develop communications solutions, and deliver top-notch content.