They're relatively frugal, hyper-connected and prefer cashless payments. They video blog, socialize on Snapchat and pay each other via Venmo. They have an average attention span of eight seconds. And they're the most ethnically diverse and inclusive generation in history.
Meet the digital natives of Generation Z, the smartphone-first generation that follows the millennials. They are the kids of calamity born roughly between 1996 and 2010 ― who don't remember 9/11 but have never known a world without heightened vigilance toward terrorism.
Yes, they're young (the oldest are about 23), but they're also huge in numbers.
As of 2019, they became the largest generation, representin about 32 percent, or 2.5 billion, of the world's population, according to analysis by Bloomberg.
That's a massive cohort of young people already shaping and changing the world of payments with their financial habits and preferences. Also known as the post-millennials, Generation Z is about to become a major force in financial services and payments as they enter the workforce as young consumers and entrepreneurs. And given their ability to navigate new technologies, Gen Z is the best-prepared generation for the digitization of money and financial services.
"This is a generation that expects technology to make life easier for them when it comes to finances and banking," says David Stillman, a generational expert, national speaker and author of Gen Z @ Work: How the Next Generation is Transforming the Workplace. "They [Gen Z] demand an exceptional digital payments experience on all platforms, especially on their smartphones."
Indeed, while millennials are often referred to as the internet generation, Gen Z is the first generation to come of age with smartphones. And that has impacted how they bank, shop, save money, invest and make payments.
"Generation Z has never known a world where their phone isn't smart," says Stillman. "And their phones can do anything for them."
Driven by technology
According to generational expert and consultant Amy Lynch, Gen Z's financial and payment decisions are driven by technology, convenience and value.
"A high number of them save money for something specific," says Lynch, owner of Generational Edge in Nashville, Tenn. "And they want quality and value when they purchase. They don't place a high value on owning extravagant things."
In their still-abbreviated lives, Generation Z has experienced two major economic recessions that have impacted their families, notes Lynch, a baby boomer and grandmother of two Gen Zers. Plus, they have always felt the threat of terrorism.
"Because of this uncertainty and instability, they are pretty frugal and fiscally conservative," she says.
The oldest members of Generation Z are in college and carry very little cash, preferring to pay with plastic or their smartphones, notes Lynch. Most don't have credit cards yet, but do own debit cards. They are also avid users of person-to-person payment apps such as Venmo, Zelle and PayPal, adds Lynch.
Gen Z is also a generation that is online almost all the time. Some 74 percent of Gen Zers said they like to spend their free time online either surfing social media or shopping, according to a recent study from the National Retail Foundation and IBM. The report also highlights how Gen Z has an affinity to shop online through sites like Amazon and eBay.
Connected to a digital world, Gen Z is also leading the way when it comes to mobile payments. According to the 2019 Global State of Mobile Report, those aged 18-24 spent nearly three-fourths of their screen time on smartphone apps (including payments), compared with desktop computers, tablets, or even web on their mobile device.
At the end of the day, what Generation Z really needs is not more "standalone" features like social media or shopping, but a digital platform that combines all aspects of financial services from banking and payments to investing and receiving loans.