Present-day fintech and digital payment solutions are at the forefront of empowering consumers. Gone are the days of having to stand in line waiting for a bank teller. With growing fintech and digital payment platforms, consumers have a wide array of financial services available at their fingertips — at anytime, and from anywhere.
New consumption patterns
The COVID-19 pandemic has presented significant challenges, and has dramatically impacted consumer habits and patterns. The health crisis turned into an economic one quickly, as closures and restrictions were imposed. Businesses worldwide were affected and employees across multiple industries have felt the crunch. While the economic repercussions were noticed by all age groups, Gen Z was disproportionately affected. COVID-19 disrupted education, put career plans on hold and diminished the financial outlook for many younger Canadians. The Canadian Bankers Association (CBA) published a survey of Gen Z respondents in November 2021 to mark Financial Literacy Month in Canada. The research found that more than half (53 per cent) of Gen Z respondents (aged 18-25) felt the pandemic upended their financial security, with that number rising to 73 per cent for those in less stable financial situations.Â
The pandemic also led to a drastic decline in cash usage and created an unprecedented surge in demand for digital and contactless payments; such as Apple Pay, Square and PayPal. Millennials and Gen Z had preferred these payment tools for some time before other age groups adopted them, as cash and in-person transactions dwindled throughout the COVID era. Younger Canadians have expedited this move toward a cashless future and have cited sheer convenience as one of the main reasons for switching from cash to contactless payments.
Responding to younger consumers’ unique needs
Financial institutions that want to effectively communicate with and support these younger generations must change their usual approach. These groups are tech-savvy and peer-aware; they prioritize transparency and expect hyper-personalized solutions. Fortunately, industry professionals are coming up with innovative options and strategies. Fintech and EdTech firms are introducing leading-edge solutions that are being embraced by these generations, resulting in the subsequent adoption by their parents and older generations. To remain competitive, service providers must offer solutions to hurdles young people face. Specialized and niche fintech companies that offer bespoke solutions for those specific needs are more likely to attract and retain those important users.Â
Furthermore, younger populations are constantly on the lookout for tools and technologies that cater specifically to their needs. As new workforce employees and income earners, this generation spends more on education and living costs, rather than mortgages and insurance typically prioritized by older Canadians. They are also being educated on investing and cryptocurrency, in addition to saving and budgeting. Studies have shown that despite common misconceptions, most Gen Z’s have sought professional advice to broaden their financial literacy. Moreover, 81 per cent of Gen Z and 76 per cent of millennials said that the pandemic has made them want to focus more on their financial security.
Setting new standards for efficiency, convenience and user-friendliness
Modern-day consumers have access to financial transaction tools that they can use at their own pace and convenience. According to McKinsey, the use of mobile banking channels increased by 20-50 per cent just within the first few months of the pandemic. This trend is likely to continue well after the pandemic. Today’s digital payment services are designed to be efficient, feature-rich, intuitive, user-friendly, straightforward, and informative in their approach to helping users better understand and manage their money, and with a very high engagement ratio. Below are a few factors that make these tools more adaptable and popular among their users:
- Highly secure and reliable – Users can log into their accounts at any time of the day and are not bound by bank branch operating hours. In addition, they can receive instant notifications of their transactions, and their accounts are updated in real-time.Â
- Information in straightforward language – Unlike traditional banking statements and documents that confuse and intimidate customers by using industry jargon, lengthy statements, clauses and small font, digital financial solutions tend to be clear and concise.
- Interactive digital payment tools – Users can make calculations and assessments virtually to help them understand their finances. This added personalization is often expertly designed to help users complete tasks specific to their needs.Â
- 24/7 live chat support – Helps users feel at ease, knowing that should any questions arise on their end related to troubleshooting or account-related matters, there will be a team of professionals to address their needs.
Access to digital payment and fintech technology fuelling financial literacy among new user groups
Mobile money services and platforms have been on the rise, bridging the digital divide and enticing new age groups. Digital transaction platforms have also proven effective in helping traditionally underrepresented groups go online and manage their funds accordingly. Digital payment technologies provide the tools and incentives for better money management, and young people are early adopters who have shown immense interest in those technologies. Innovative and forward-thinking companies have a unique opportunity to win the hearts, minds and wallets of Gen Z and millennials, while also adding value to their lives. Fintech and digital payment technology users today have unlimited access to tools that equip them with financial guidance to help them meet their financial planning goals. This type of access is how we set up these next generations for financial independence and success — financial literacy, digital tools and convenience enable today’s user to be in true control of their financial future.
