With every new generation, the way they approach finance continues to evolve. Gen Z is the latest demographic of adult consumers entering the financial marketplace. Since the Gen Z population was born in a world already immersed in digital technology, they now become the next generation to become credit active—with a fintech industry already active around them. The relationship between Gen Z and fintech plays an important role in an ever-changing financial ecosystem.
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Who Is Gen Z?
While the endpoint for Gen Z is not as firm, Pew Research has defined the starting point for the age group as anyone born from 1997 onwards. Simply put, Gen Z is the first generation that doesn’t remember the time before the internet. They’ve grown up accustomed to the speed and ease of access to information that laptops, smart devices, and the overall (link: www.wired.co.uk/article/internet-of-things-what-is-explained-iot text: Internet of Things) have provided. For the same reasons, Gen Z is comfortable building relationships online with individuals and businesses alike.
The Power of Fintech
Fintech is defined by the products, services, and processes that have harnessed the digital landscape to shape the world of finance. Central to fintech is the use of algorithms and smart technology to increase the seamlessness and efficiency of consumer financial transactions. From moving financial services online to enhancing the ways creditors can market their products to customers, fintech has changed the way consumers apply for credit.
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Where Gen Z and Fintech Intersect
Combining a tech-savvy generation of consumers with an expanding digital financial ecosystem, Gen Z and fintech go hand in hand. Gen Z members spend a lot of their time online, where fintech lives and breathes. Of significant importance, a growing percentage of Gen Zers are becoming financially literate adults. In fact, 66% of American Gen Zers over the age of 18 are credit active.
The use of trended data in both FICO and VantageScore credit scoring models has made it easier for younger consumers, who don’t have lengthy credit histories, to build up their scores and become eligible for better financial products, including personal loans. Online lending is a big reason why personal loans are the fastest growing consumer lending product, drawing more and more digital-centric young people to apply. Gen Z members are almost (link: www.experian.com/blogs/insights/2019/11/powering-next-generation-consumers/ text: 40% more likely) to take out a fintech personal loan compared to a traditional version. Given the correlation between fintech’s online presence and Gen Z’s tech literacy, this makes sense.
The world of personal finance is in constant evolution, and younger generations are making the most of the innovations thanks to the accessibility of financial products online. Fintech is at the forefront of these changes, widening the possibilities of those looking for credit opportunities. For example, Gen Zers interested in personal loans can get matched with offers online based on their credit score, making it easier and faster to get considered for loans by top lenders than ever before.
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