Analysis

May 14, 2021

4 things fintechs need to know about Gen Z

They’re growing up — but how are they spending, saving and investing their money?


Poppy Koronka

5 min read

Sponsored by

Generation Z — AKA ‘zoomers’ — are growing up. The oldest zoomers are already 23, and by 2030 their collective earnings will make up more than a quarter of global income. 

As the first generation of digital natives, this tech-savvy bunch are the next consumer powerhouse. And for fintechs jostling to capture their attention, understanding what they do with their money is key.

So how does Gen Z spend, save and invest their money? We spoke to fintech and security experts ahead of our upcoming Sifted Talks panel on Gen Z finance about the defining trends.

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1. Generation Z-aver  

While millennials entered the working world during the 2008 recession, Gen Z watched the older generations struggle. This financial turmoil has birthed a generation of financially responsible savers. 

And the economic uncertainty of the past year has only made Gen Z even more frugal, according to research from gohenry, an app which helps under 18s learn how to manage their finances. Gohenry’s UK Youth Economy report found Gen Z’s savings increasing by a staggering 77% during the first lockdown. 

“Gen Z are saving more than their parents,” gohenry cofounder and COO Louise Hill told Sifted. “British children saved a total of £12.7m in 2020 — which equates to 12% of their total income. The idea of being able to save 12% of my total income is wishful thinking.”  

British children saved a total of £12.7m in 2020 — which equates to 12% of their total income. The idea of being able to save 12% of my total income is wishful thinking.

While the pandemic contributed to Gen Z’s financial anxieties, Maisum Dairkee, junior product owner at neobank Revolut, says being stuck inside has also allowed them to save much more: “As young people could not go out and live their lives as they normally would, this reduced their spending.” 

2. Investing is cool now

Gen Z has saved their money — but it’s not all gathering dust in a bank account. 

Research shows Gen Z invest their cash proportionally more than other demographics. A Halifax Bank report found 16% of Brits aged 16 to 24 began investing for the first time, compared with 10% across other age groups. 

Investing money requires time and research. Gen Z are more likely to seek financial advice than other generations and are also more likely to educate themselves via social media platforms, like Tik Tok

While financial advice via TikTok might seem worrying, Alex Campbell, PR and communications lead at investment app Freetrade, told Sifted it’s not such a bad thing: “Gen Z has grown up with social media permeating their daily lives. They have more experience than many of us when it comes to determining whether a resource provides trustworthy information.”

Gen Z has grown up with social media permeating their daily lives. They have more experience than many of us when it comes to determining whether a resource provides trustworthy information.

“This stands many self-directed investors in an excellent position — there’s an enormous range of free or low-cost resources for those who are interested in investing,” he adds. 

3. Despite being digital natives, Gen Z are more likely to be victims of fraud 

Gen Z are an impressively financially fluent bunch — but being digital natives comes with its problems. 

Digital verification company Mitek’s CTO Stephen Ritter told Sifted that due to their familiarity with tech, Gen Z are actually more likely to fall victim to increasingly sophisticated fraud tactics: “They have grown up comfortable with mobile devices and are just now going through the learning experience of fraud. Often, they have a false sense of security as it’s the channel they’re most confident with.”

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They have grown up comfortable with mobile devices and are just now going through the learning experience of fraud.

Despite being adept at verifying trustworthy investment information, Gen Z actually lost as much money as senior citizens did to fake cheque scams in 2020. Gen Z are also more likely to share personal details online and fall for scams on social media than other generations, partly because they’re so used to being online

“More research needs to be conducted on Gen Z’s vulnerability to identity theft and fraud online specifically,” Ritter told Sifted. “If their susceptibility to fraud tactics outside of identity theft is anything to go by, then [it doesn’t seem] they take enough precautions to protect themselves online.” 

If their susceptibility to fraud tactics outside of identity theft is anything to go by, then [it doesn’t seem] they take enough precautions to protect themselves online.

4. Gen Z are socially conscious — and put their money where their morals are 

“Gen Z and even younger Gen Alpha want to have a social impact. They're aware they can impact society and that they can change things,” Hill told Sifted.

“During the pandemic we saw charitable giving rise by 59%. They’re quite a mature generation and they put a lot of thought into how they can affect change.”

During the pandemic we saw charitable giving rise by 59%. They’re quite a mature generation and they put a lot of thought into how they can affect change.

Gen Z are not only socially conscious donors, but also investors. According to Campbell, Gen Z tends to invest in companies that align with causes they care about. 

“Gen Z have witnessed what’s happening all around the world straight from their smartphones. It’s becoming the norm rather than the exception to set money aside for charities and be part of the change to help make the world a better place,” says Dairkee.  

Want to hear more from these experts on how fintechs can prepare for Gen Z? Register now for the Sifted Talks on May 19.