3 Takeaways From Canapi’s “The Great Wealth Transfer” Webinar
With over $80 trillion expected to change hands in the next 20 years, Generation Z (defined as anyone born between 1997 and 2012) will soon be in control of their families’ finances—and all signs point to this generation having drastically different money management approaches than their parents and grandparents. As the world’s wealth transfers into the hands of Gen Z, the first cohort of digital natives to ever control it, financial institutions are faced with an impending challenge: understanding and meeting the distinct needs of these unique customers.
Canapi’s “The Great Wealth Transfer” webinar, featuring Nash Ali, Head of Operational Strategy at NeuroID, Pablo Cerrilla, VP of Marketing at Nova Credit, Matt Wolf, SVP of Business Development at Greenlight, and Christina Bechold Russ, Head of Strategic Investment Initiatives at Truist Ventures, broke down what financial institutions can expect as Gen Z takes the reins of the financial world, highlighting three key points every fintech should focus on in order to appeal to this next generation of consumers.
Gen Z is an open book – and wants you to be one, too.
From their social lives to their salaries, Gen Z doesn’t shy away from sharing their experiences with friends or posting their thoughts online (two-thirds of Gen Zers say social media is essential to their everyday lives). This carries over to interactions with companies: Gen Zers are willing to provide more of their personal information to businesses if it improves their experience.
“What’s unique to this audience is, while they’re a lot more conscious and a lot more protective about certain information, they’re also a lot more open to sharing,” said Pablo. “They’re more willing to give you access to their information in exchange for benefits. So we’re seeing a lot of openness in younger generations to give access to what we’re calling consumer permission data.”
But Gen Z expects businesses to return that level of transparency in kind. They want institutions to be open about how their money and data are used, stored, and protected.
“Everything needs to be very transparent, and the full customer journey needs to be known to both sides,” said Christina. “When you look at where we’re coming from, and the demands that are being set for by consumers in the market and where that’s going to take us, Gen Z has the potential to fully disrupt the traditional advisor-driven model.”
Gen Z was raised in an instant world
As the first generation with widespread access to the internet, Gen Zers have had their work, social lives, education, and entertainment always available at the click of a link or the tap of an app. This seamless, always accessible world is the norm for young consumers, and they expect managing their finances to be no different.
“There is this expectation of higher efficiency. Things need to be automated. They need to be immediate. They need to be in real-time,” Nash said. “There’s no longer this concept of ‘I’m going to take hours or days to come back with a request that’s been made.’ It needs to be within minutes, if not seconds.”
But providing instant gratification in financial interactions is dangerous. Real-time transactions have opened the door for opportune fraudsters to attack, and with Gen Z more willing to provide businesses with their personal data, the stakes are higher than ever.
“With the advent of real-time digital services, there’s a greater pressure on fraud and risk management. We see, interestingly, your traditional fraud has grown exponentially,” said Nash. Yet that tangled fraud stack might not even solve the problem, as genAI and other fast-evolving fraud techniques require ever more nimble fraud prevention strategies.
Gen Z trusts people—not businesses
Unlike their parents, Gen Z is less willing to leave their financial futures in the hands of individual advisors and big-name businesses, instead looking towards friends, family, and even social media influencers—over 50% of Gen Z turns to TikTok for financial advice—for help managing their money.
“This younger generation is naturally skeptical of a lot of later generation brands and corporations,” said Pablo. “In the 60s to the 80s, people trusted institutions. In the 80s to early 2000s, people trusted corporations, and now the newer generation trusts individuals.”
This trend will force companies to rethink their strategies when trying to attract Gen Z consumers. Matt from Greenlight Financial Technology (which provides debit cards for teens), believes driving young customers to refer their connections is key to building relationships with Gen Z: “Having a trusted source recommend a product will only become even more important,” Matt said. “It puts the onus on all of us to make sure that we’re really doing the job we’re being hired to do so that you can organically get those referrals. I think word of mouth just becomes so much more important in terms of acquisition.”
How Onboarding and Fraud Prevention Play a Crucial Role
As Gen Z takes control of the world’s financial future, companies can’t expect to retain customers based on name recognition, size, or history with customers’ families. Appealing to Gen Z consumers means meeting them in their world with easy access, transparency, and a human-centric approach to building trust with them. It also means meeting their expectations for real-time, instant access. As financial institutions of all sizes strategize about meeting the new wave of digital consumers, they should continue to internally assess if their onboarding is efficient and user-friendly to the high-expectations of digital natives and if their fraud checks are streamlined and transparent regarding biometrics and other data being collected.
Some quotes have been lightly edited for clarity and context.