Generation Z growing concerns
Having grown up around the threat of cybercrime, those in Generation Z appear to be more aware of the risks of fraud than millennials (born between 1981 and 1994). Our research found that nearly three-quarters (74%) of 16-24-year olds believe it is too easy to find someone’s personal information online nowadays. On top of that, more than half (52%) of Generation Z are worried about someone stealing their identity.
While observing a focus group of 18-24-year olds held to support our research, I noticed a high level of awareness about banking and online security from the respondents. Many of the young consumers showed that they don’t just install the latest banking apps simply because they are new or cool. They are considered with their consumer decisions and assess how well services or technologies fit their security and financial needs, prior to acting.
One respondent, Nikki, who is 24 and from London, stood out for rejecting mobile payment apps, the opposite of the perceived image of someone in Gen Z: “I only use my bank card to pay for things,” she said. “I deliberately keep my phone separate because I don’t want spending money to be too convenient.”
Do banks still have our trust?
Like Nikki, many Generation Z consumers are more cautious while banking or shopping than retailers and banks may realise. Our research shows that, far from being over-sharers of their personal information, more than three-quarters (76%) of Generation Z accept that it’s their responsibility to look after their data and keep their identity safe. In return, these consumers expect their banks and service providers to work just as hard to deliver a high level of protection for them.
Although new challenger banks, such as Monzo and Starling, are growing rapidly among young consumers, that doesn’t mean Generation Z trust them more when it comes to security than the high street giants.
Although new challenger banks, such as Monzo and Starling, are growing rapidly among young consumers, that doesn’t mean Generation Z trust them more when it comes to security than the high street giants. Michael, a 19-year-old student from London also in the focus group, summed up the care with which Generation Z approach digital banks: “I feel the online banks have to push up their security because there’s no physical presence”, he said. “So they’ve got to be more secure to be on top of their game.”
Our study also reveals a wider lack of confidence in all banks, as only half of Generation Z shoppers (54%) are certain that their bank would refund them any losses if someone fraudulently accessed their bank account and stole any amount of money. The new generation of banking customers want to see even greater security and responsibility from high street banks, which in turn is driving their consumer choices.
A modern solution for a digital world
The findings also show that Generation Z wants to see banks adopting new technology to combat card and online fraud. Nearly two-thirds of them (62%) think all banks should offer biometric payment cards to help reduce fraud.
Additionally, nearly half (45%) of Generation Z can’t believe credit and debit cards don’t already use biometrics for payment and ID security. Again, this is even higher among 16-17-year olds, with nearly two-thirds (63%) of them expecting banks to already use biometrics for payment card security. As high street banks often thrive on signing-up new customers while they are young, appealing to this new generation of consumers is vital for the industry.
Therefore, financial institutions must now add biometric technology to the payment card market to attract young customers and grow loyalty with them. In fact, nearly half of those in Generation Z (46%) would choose a bank that offered biometric payment cards over one that didn’t.
Most importantly, Generation Z consumers are willing to pay for added security as two-in-five (43%) would expect to pay a little more for a biometric payment card, with a third (33%) willing to pay between £3-5 per month for it.
The time to act is now
As Generation Z will soon create a large proportion of banks’ customer bases, it is imperative for the prosperity of the banking industry that these security needs are not ignored. If high street banks remain slow to respond to the demands of Generation Z and fail to address its security concerns, they will soon be surpassed by digital challengers who are able to revolutionise the system faster.
It has become increasingly clear that under 24-year-olds are now expecting to be using innovative and secure biometric technology for improved payment security and convenience. Banks now hold the responsibility to make this change as soon as possible. The introduction of new biometric payment cards will entice younger customers, protect users from fraud and encourage continued faith in consumer banking.