According to new Packaged Facts report Gen Z and Payments: The Next Big Cohort is Here, Gen Z is not as wealthy now as its members will be in their 40s and 50s. Currently, they are the standard bearers for the services and products required from financial technology (fintech) firms, as well as traditional financial institutions.
The payment preferences they develop now will inform their choices of products and providers for years to come. Of course, those preferences will morph over time, but the selections they make now will have coattails and inform their future decisions while also swaying the payment choice of older cohorts and becoming the baseline for Gen Alpha (the generation younger than Gen Z).
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The dynamism of the payments industry is reflected in the constant tweaking of long-established products and the introduction of new ones that are constructed from the ground up with seemingly few ties to previous iterations. It is a tension between gaining market share with entrenched products and creating brand new product types that create and tap new consumer demands.
As the youngest generation able to secure credit cards, Generation Z are understood to be financial trendsetters and influencers of product ownership and purchasing methods. Their emerging preferences are chased by product developers and marketers for both traditional financial institutions and financial technology (fintech) firms alike. They are also the generational cohort targeted by billions of dollars of private capital investments.
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In 2021, global fintech investments reached $210 billion and, among the fintech subsectors, payments is the largest at $51.7 billion in investments in 2021 – up from $29.1 billion in 2020. The money is following companies capitalizing on trends and developments, including BNPL, embedded banking, and open banking aligned solutions.