Yes, Gen Z is buying, but how they are paying may surprise youNew data from Logica Research’s The Future Of Money study reveals emerging trends in the spending habits of younger generations, and how this is playing out throughout the economy. Read the full report here.
There’s no doubt that Gen Z is moving strongly ahead with their spending power and, as this generation comes into their own, brands need to deeply understand trends affecting this diverse, progressive group. In our ongoing Logica® Future of Money Study, we expand our sample with an augment of older Gen Zers (age 16-24) so we can take a closer look.
Gen Z & Payments
One of the interesting standouts from our study is that Gen Z is still using cash to pay—37% of our older Gen Zers in the study prefer to pay with cash (even after cash payments declined during COVID-19). In terms of digital payments, there is room for growth in usage among this population. Gen Z is using their phone for online purchases and about a third plan on using payments apps to pay for online purchases in 5 years.
P2P, BNPL & Gen Z
And while digital peer-to-peer (P2P) payments have grown significantly during the pandemic among Millennials and Gen X, Gen Z is slower to adopt—with P2P growing only 5 percentage points over the past year, compared with growth of 23 percentage points among Millennials and growth of 20 percentage points growth among Gen X. We see the same with Buy Now Pay Later (BNPL) installment plans, with BNPL growing 7 percentage points with Gen Z compared to growth of 15 percentage points in usage among Millennials and Gen X.
For financial brands, Gen Z offers an area of significant growth and innovation—it will be key in the coming years to gain insights into their motivations and behaviors to encourage adoption of various payment options available in today’s world.
Shifting Trends In How Americans Pay & Spend
From mobile and contactless payments to online purchasing trends and from peer-to-peer payments (P2P) to buy now, pay later (BNPL) installment plans, the payments space continues to shift rapidly. For the first time since the onset of the pandemic, the Logica® Future of Money Study data shows some signs of stabilization in how people pay and that cash may be making a comeback. At the same time, payment apps continue to rise in popularity across most of the generational groups, with Millennials leading the way. This wave of the study also looked at online checkout behaviors, finding that Americans want both choice and some consistency in the checkout experience.
How Americans Save & Invest In Today’s World
There is no doubt Americans are still stressed, but the level of financial stress is trending down across most groups as the pandemic wanes in the United States. Savings is up with a significant increase in the amount of people able to cover monthly expenses. What does this mean for financial brands? Our Logica® Future of Money Study shows that Americans are ready to invest more, especially men and Millennials, and are reaching out to their financial advisors for advice.
Americans Are Turning To Financial Brands
One thing has become abundantly clear over the past few months: people are looking to brands for leadership and guidance in times of change. In order to meet audiences where they are, it is essential that brands understand what exactly their customers need and want as they continue to navigate these uncertain times. The Logica® Future of Money Study shows that trust in financial advisors and financial institutions is still high despite decreases in trust of other sources—and Americans are looking for help, advice and tools from financial brands.
Moving Forward From COVID-19
The impact of COVID-19 on work is shifting as people are working more hours. As we look forward, increases both in early and postponed retirement will have an impact on employers, retirement planning, and investment services.
Americans lean toward wanting both choice and standardization in their checkout experience. Top payment methods of debit, credit and apps are mostly showing stabilization for in-person and online payments. Buy Now Pay Later and installment payment methods are on the rise, particularly with younger Americans and those who are more financially stressed. P2P continues to increase.
The accumulation of savings over the past year has impacted how people manage their money. We see an increase in investing and an interest in talking to financial advisors, particularly among men and younger generations, that will continue in 2021.
- Brand Engagement
Americans continue to look to financial brands to provide great value and financial advice on how to invest, make the most of their money, and manage to a budget. Financial institutions need to meet these needs with both digital tools and people.