A Question of Trust: Gen Z, Financial Institutions, and the Future of Engagement

Today’s 20-somethings have been portrayed as pessimistic consumers with a deep suspicion of financial brands. But is talk of Gen Z’s trust issues overblown?

Our research suggests that it is. The picture that emerges is of a younger population—reputation aside—that is surprisingly open, unjaded, and eager to learn.

In fact, based on our findings, Gen Z financial consumers appear to be:

• Trusting: Those 26 and under are significantly more likely to say they trust financial institutions than those 43 and older.
• Curious: Of those in the 18–26 bracket, nearly half say they would like to learn about investing.
• Confident: Younger consumers are much more likely than those 59+ to report feeling confident about their financial skills. In fact, 43% of respondents under 26 self-identify as more knowledgeable than most, and 12% declare themselves experts.
• Receptive: Believe it or not, we found that younger consumers say they want more—not less—marketing communications from financial services providers than their older counterparts.

What it means for financial institutions

Contrary to expectations, our research indicates that Gen Z financial consumers are not disaffected but instead hold traditional lenders in reasonably high regard. The question is, how can financial brands capitalize on this sentiment and deepen their relationships with younger borrowers? For starters, we recommend the following:

Meet them where they are: As the first generation to grow up with smart phones in their hands, Gen Z shops, banks, and learns differently than their predecessors. For instance, our research revealed that 54% of those aged 18–26 rely on social media as their preferred source of information on financial topics.

Guided by this knowledge, the digital moments you provide should not only satisfy Gen Z’s demand for convenience and choice, but deliver fun, interactive, and hyper-personalized experiences along the way. Reaching young financial consumers in the consideration process with truly differentiated experiences and then cementing their loyalty with consistent and authentic digital touches (delivered through the channels they prefer) is essential to creating loyal customers.  

Help them reach their goals: Not surprising, the most important financial goal for those between 18 and 26 is improving their credit score, followed by becoming financially independent. Financial brands can make the most of this interest by providing younger consumers with interactive tools and clear milestones that can help them understand how to make progress against their credit and savings challenges.   

Model effective financial habits: We found that only 18% of respondents ages 18–26 work with a financial advisor, compared to 30% of those ages 43-58. It makes sense: Formalized relationships cost money and are usually sought by clients with significant resources to invest.

At the same time, 84% of survey respondents 26 and under say they are “very” to “extremely” interested in improving their financial skills. The lesson here is that banks, credit unions, and other lenders can fill the gap by dispensing financial advice and rich experiences to young consumers in ways that make them feel valued and empowered—and bind them to the institution for the long term.

Looking ahead

In our next article, we’ll take a deeper look at how financial institutions can help bridge the consumer trust gap through educational content.

Born between 1997 and 2012, Generation Z (“Gen Z”) accounts for more than 20% of the U.S. population and is expected to make up roughly one-third of the nation’s workforce by 2030 (U.S. Census Bureau). Financial institutions are wise to pay attention to Gen Z’s needs, concerns, and preferences.