Gen Z (born 1997-2007) is starting to experience some of life’s major financial challenges. Many are in college or starting their careers, and after living through COVID-19, they have a strong desire for financial stability.
In a recent episode of CSI’s Banking on Community podcast, author and generational researcher Jason Dorsey shared how the pandemic shaped Gen Z’s outlook on everything from work and mental health to money and long-term goals. They’re worried about their futures and open to ideas like universal basic income. They crave financial peace of mind, and they’re making an effort to achieve it.
Over the past year, 72% of Gen Z took steps to improve their financial health, including saving more (51%) and focusing on paying down debt (24%). This trend provides an opening for community banks and credit unions to do what they do best: build trust and help account holders develop better financial habits for life.
The state of Gen Z’s finances
This generation is driven, but also feels the pressure. About half cite high cost of living as a major financial roadblock, and 53% feel they don’t earn enough to live the life they want. Family support is also fading: only 39% receive regular help from their parents, down from 46% just a year ago.
Credit card debt is a growing concern, too, with 56% of Gen Z carrying it. Plus, delinquency rates for this group are the highest of any generation. According to a Newsweek poll, Gen Z adults average $94,101 in personal debt, compared to just $59,000 for Millennials and $53,000 for Gen X.
Still, they’re determined to get ahead.
Spending less, learning more
Gen Z on the whole are practicing financial responsibility by cutting back: 41% eat out less often, 23% shop at lower-cost grocery stores and over half say they spend $0 a month on dating.
For them, it’s worth it, seeing financial health as a form of self-care. And they’re taking the DIY route, learning as they go, often in less traditional ways. Over one-third follow financial influencers, use YouTube tutorials or create their own saving strategies. They still have a long way to go as a group, though: they score an average of 38% on financial literacy tests, the lowest among all generations.
While 60% of Gen Z want financial education, talking about money is a touchy subject for them. Intuit data shows they’d rather discuss almost anything besides finances: workplace and relationship drama, climate change, mental health, politics and parenting struggles all rank as more comfortable discussion topics than credit card debt, earnings, savings and investment mistakes. That’s where community financial institutions can step up with support that’s personalized, approachable and judgment-free.
For Gen Z, shopping smart means building habits that protect their wallet and their future.
Gen Z’s money mindset
For Gen Z, digital is the default. Many would switch financial providers for a better digital experience, and they consider their primary financial institution to be the one whose app they use the most.
Unlike Baby Boomers (who still highly value in-person banking) or Gen X (who like digital tools but still want to be able to talk to a human sometimes), Gen Z is comfortable with AI if it delivers real-time, seamless and personalized support. As Dorsey explains, this generation never lived without smartphones and automated processes, so they naturally trust AI as a built-in part of the instant feedback loop.
But Gen Z doesn’t want everything digital. They still value in-person guidance and learning. So, combining technology and convenience with genuine, human support can give community banks and credit unions a competitive edge.
Financial health equals loyalty
Gen Z values progress over products. They stay loyal when they feel financially supported.
This represents a shift for financial institutions traditionally focused on high-speed acquisition. As Dorsey points out, chasing “more-better-faster” misses the chance to offer integrated, effortless solutions that deliver clear value for Gen Z’s current stage of life.
What community financial institutions can do
To better serve Gen Z and help them build financial literacy, community banks and credit unions can:
- Offer financial check-ins or “money dates.”
Gen Z likes structured, accurate progress reports. Make it easy for them to see where they stand, and what they can do next.
- Deliver bite-sized educational content.
Use mobile tips, reels and push notifications to deliver short, actionable insights. Modern account revenue solutions can automate and personalize this content using data intelligence.
- Reward and engage.
Debit cards with tiered rewards that offer cash-back, shopping discounts and spending insights deliver all the perks of credit cards, without the risk of debt. Promoting debit over credit helps account holders build smart habits and lets financial institutions reach more people.
- Send targeted, behavior-triggered messages.
The right third-party partner can help tap into transaction and account data to send hyper-targeted, relevant messages that engage Gen Z.
Community banks meet Gen Z where they are — on their screens — with actionable, personalized advice.
Building lasting relationships
Becoming a true partner in Gen Z’s financial health is essential to building long-term, high-value relationships. When they see their financial institution actively supporting their goals with personalized recommendations (not just selling them products), they’re more likely to stick around.
Doing that well means using personal data and insights strategically. The good news is that Gen Z is generally open to their data being used in this way, if it helps improve their lives. Research shows that when account holders are satisfied with how their data is used to make relevant recommendations, they’re more likely to remain loyal (42%), refer family and friends (42%) and adopt additional digital products or features from their institution (38%).
Yet only 38% of Gen Z say their community bank or credit union’s personal recommendations have improved in the past year. That’s far behind national and online-only banks, and a clear sign that there’s work to be done.
In the end, Gen Z just wants financial systems that anticipate their needs, promote good money habits and help them live better lives. Community banks and credit unions already offer the transparency and genuine goodwill that Gen Z values. Pairing those strengths with data-driven technology can boost literacy, encourage better habits, and reward engagement, securing loyalty for the long term.
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Charles Baker, Director of Client Service
Charles brings with him over 26 years of executive level sales, client services and operations experience in the banking, technology, and consulting services industries. As the Director of Client Service for CSI’s Velocity team, he oversees a team of client service managers in delivering and optimizing Velocity solutions. He works closely with not only his team and the clients, but all Velocity product owners and steering committees. Since Charles’ responsibilities touch on all aspects of CSI’s Velocity products and their deliveries, he works closely with the sales team as a subject matter expert and builds the financial performance models utilized in the sales process to set expectations with the prospective client. He holds a Bachelor of Business Administration degree from Texas State University and lives in Austin, TX with his wife and two daughters.