2023-06-29 10:03:21
Between 2021 and 2022, the share of banks with room for improvement in terms of digital maturity has thus increased by 12 points. But they also recognize that the industry is changing rapidly and that they need to act fast, or be left behind by their competitors and by Generation Z, born between 1997 and 2012, who are rapidly transforming traditional financial management practices in a world ever more digital.
It’s no surprise that Gen Z is shunning traditional financial advisers and banks, turning to social media for advice. They are now looking for a digital experience commensurate with their usual uses (Netflix, social networks, etc.) and instantaneousness, which are more offered by Fintechs or Neo-banks than by traditional financial advisers. . They are also looking for a relationship of proximity, trust and advice to better manage their money and grow their capital. To do this, they turn to sources of information with which they are confronted daily. Thus, short-form video app TikTok has become one of the world’s leading sources of financial advice and investment information for this tech-savvy segment of the population.
Financial education: how Gen Z learns to manage their money
This trend was first fueled by young people hoarding money during the pandemic, looking for ways to “get rich quick” by investing in stocks and cryptocurrencies, and learning on-the-fly skills. smart management of their portfolio. Today, global economic uncertainty and the cost of living crisis continue to push the #FinTok and #MoneyTok hashtags to viral levels on the app. Combined, they have already garnered 16.9 billion views on TikTok, while the investment videos have generated around 11.7 billion views according to data from the platform.
But Gen Z isn’t just looking for investment advice on TikTok. She is also looking to boost her financial skills by learning regarding student loans, how to manage credit card debt, as well as advice on saving and budgeting.
According to a Bankrate study, only 23% of millennials say they get financial advice from social media channels such as Facebook or Twitter, and 13% from blogs or websites. However, this figure increases dramatically when you consider Gen Z: 40% of them get their financial information from social media, and 26% turn to blogs and websites for help.
This trend is evidenced by the number of followers of “finfluencers” on TikTok, which number in the millions, according to the World Economic Forum. According to the same organization, traditional financial institutions must do more than pivot to new channels to attract young investors, who are looking for personalized experiences similar to those they already find on TikTok.
Growing concerns regarding the platform
However, governments, including the US, Canada, UK and France, are increasingly sounding the alarm over issues of trust, privacy and data management related to several social media platforms, including TikTok. Moreover, according to a Oxford University paper from May 2023, many “finfluencers” lack the financial expertise to advise their followers on investing or managing their money, and are often paid for their efforts by brands more interested in raising their profile than promote fiscal responsibility among consumers. Financial scams are also commonplace on social media platforms, experts say, and Gen Z might be at risk of losing their life savings. THE number of victims of online scams aged under 20 increased by 156% between 2017 and 2020 in the United States.
But how can traditional banks go regarding winning the trust of Gen Z and making them loyal customers? According to our recent study, the increase in the number of hyper-connected customers is already pushing banks to adopt a more personalized, safer and more environmentally friendly approach. It is now up to traditional banks, which already enjoy great trust from their customers, to fully realize what is at stake and help Generation Z acquire financial knowledge, save and invest in new ways. responsible manner.
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