How eCash can help banks and neobanks win over Gen Z customersOct 18, 2022
Gen Zers don't know a world without digital payment technologies. Yet, cash is still a critical part of their everyday lives. eCash is an opportunity for banks and neobanks to boost these young customers' financial literacy, empower them, and earn their loyalty.
The eldest are only 25, and the youngest are just turning 10. But Generation Z — or Zoomers, as they've come to be more commonly known — are already a powerful commercial force.
At 2.5 billion — 26% of the world's population — there are more Gen Zers than any other generation. And by 2030, they'll make up 40% of all consumers in the U.S. alone.
Because Gen Z has never known or can barely remember a world where digital technologies weren't ubiquitous, it's tempting for banks and, more particularly, neobanks, to target these customers by highlighting their digital-first credentials.
But while it's true that Gen Zers spend a sizable chunk of their time — and, consequently, their money — online, cash still plays a central role in their lives. So, by adding eCash to their capabilities, banks and neobanks can make themselves more appealing to this ever more powerful customer segment.
The first step towards financial freedom
While we live in an increasingly cashless society, most children continue to be introduced to money and learn about its value through cash.
Gen Zers may have grown up watching their parents pay with contactless, online wallets, and other digital methods. But their first sources of income — those exciting visits from the Tooth Fairy, and gifts from Santa, grandparents, and other relatives — are still most often paid in cash.
Even for older Gen Zers, most of the money they have access to is in cash.
Around 90% of U.S. parents and 78% of U.K. parents pay their children's pocket money in cash.
Similarly, a growing number of Gen Zers who have after-school jobs (or even full-time jobs) work in the gig economy. And, here again, many of their salaries are paid, at least partly, in cash.
Paying cash online
Needless to say, kids and young people want to spend their money online: on eCommerce apps, games, streaming platforms, and other digital services. Unfortunately, rapid digitalization means converting cash into a digital payment method is becoming trickier.
Over the past few years, there's been an increase in banking products targeted at Gen Z and their younger siblings Generation Alpha, including a number of specialized neobanks.
The problem is that neobanks are online-only, bank branches are disappearing — a study predicts they could become extinct by 2034 — and ATM footprints are shrinking.
The upshot is that many Gen Zers, especially younger ones, are getting the worst of both worlds.
They're ready, willing, and able to spend money online. But they often can't do so simply because they can't find a close enough ATM or bank branch where they can deposit their cash. As a result, they're being excluded from the online economy and missing out on important money management lessons.
Bridging the digital divide, with eCash
Despite the fact that many young consumers are most familiar with and reliant on cash, traditional banks are unlikely to reverse course and start increasing their physical footprint. Nor can we expect neobanks to start opening bricks-and-mortar branches.
But the good news is that they don't have to. Adding eCash to their capabilities would enable these younger consumers to start paying online in cash easily, conveniently, and risk-free.
When the customer wants to top up their account or withdraw cash, they can do so simply by choosing eCash as the top up or withdrawal method in their banking app. This generates a barcode they scan at one of thousands of payment locations and finalize their transactions.
Convenience aside, eCash can also become a powerful financial education tool.
Because these young consumers can only spend the amount they've topped up with, eCash can teach them valuable money management lessons, while giving their parents the peace of mind that they won't rack up huge credit card or debit card bills online.
This is a compelling benefit at any time, but especially now that the rising cost of living is forcing people to be more mindful about their spending.
More to the point, eCash can also become the springboard for wider services.
In-app features could teach these consumers how to save and invest. And banks and neobanks could even use eCash paypoints to host events around financial health and education — an opportunity to position themselves as trusted advisors.
It's never too early to appeal to the next generation
While Gen Zers are, without a doubt, the most digitally savvy generation to date, this doesn't mean cash is unimportant or irrelevant to them.
For the vast majority, cash is their introduction to money, their first step towards financial independence, and the only way they can pay for online goods and services, sometimes even after they've joined the world of employment.
So, seeing as Gen Zers are a large, increasingly powerful consumer demographic, banks and neobanks who don't make it easy to deposit cash do so at their own peril.
More importantly, Gen Z values choice and tailor-made experiences, and caring more than any other generation about their financial health.
By making it possible for these discerning customers to easily deposit cash and empowering them to make better money choices from an early age, banks and neobanks can position themselves as the obvious choice once they're old enough to require more valuable banking services.