The world is dependent on global finance working towards a fairer financial system for people, the environment and culture with a focus on sustainability, climate change and social justice. This July at The Fintech Times we are putting the spotlight on ethical finance/ethical banking, including environmentally and socially-conscious practices.
To survive and thrive, all businesses – and that includes banks and financial services providers – need to look to their younger and future clients for direction. Both millennials and Gen Z are heavily invested in technology but is ethical finance on their agenda?
We turn to The Fintech Times community to ask: how are millennials and Gen Z driving the increase in ethical banking?
Alex Manly is associate director of strategy for financial services, UK & Europe at content personalisation provider Movable Ink. In her role she works hand-in-hand with leading B2C fintech brands to formulate their digital marketing strategies.
She suggests ethical banking is predominantly driven by Gen Z and this directly correlates with their spending power.
Manly says: “Gen Z’s spending power is expected to surpass that of millennials’ in the next 10 years, with their wealth forecasted to grow by 400 per cent over the next decade. Forget customer-first; this newly dominant group won’t accept anything other than ethics-first.
“This shift is already happening and we’re starting to see products launched with the planet (and gen-z) in mind. This can particularly be seen in Europe with the likes of Bunq, which is targeting Gen Z with current accounts that link spend to planting trees; or Klarna, with its CO2 tracking app.”
For Chris Eastwood, co-founder and co-CEO at digital pensions provider Penfold – currently raising a Series A – millennial and Gen Z savers are the driving force behind the growing interest in ethical banking.
He comments: “They have repeatedly demonstrated that ethics influence their consumption habits more than any other generation and it’s no different when it comes to financial products.
“That said, it will be interesting to see whether the appetite for funds that incorporate ESG principles sustains during a tougher economic climate.”
As a generation educated by Google, Facebook and Amazon, millennials have reshaped the world and driven shifts in consumer behaviours and workplace norms, according to Laura Rettie, editor-in-chief of financial comparison website Finance.co.uk.
“Millennials and Gen Z Banks have had to engage with millennials through innovative technology. Generation Z grew up witnessing how the recession in 2008 impacted their parents. They’re watching millennials struggle with their student debts and how to afford a home.
“Some are entering the workforce fresh out of the pandemic and into a cost of living crisis. These experiences create a generation of risk-averse consumers hungry for proper financial education.
“Young people share idealistic views on social causes and are concerned with their financial wellbeing. Banks have to adapt to this new thirst for education, rethink their communication strategies, and provide simple, free guidance in ways they weren’t doing before.
“My fears are traditional high street banks won’t keep up – the damage has been done. Millennials are looking for something new, something fresh. Something that hasn’t already failed them”.
“Millennials and especially Gen Z are driving change,” says Dr Narisa Chauvidul-Aw, the CEO & founder of KogoPAY Group, a licensed mobile payment solution for both local and international payments.
“They are emerging as the generations of sustainability and are also found in studies to be more likely to make purchase decisions based on values and principles. They have purchasing power: it’s important to remember the older millennials who are now in their 40s are in the position to invest and influence society as well.
“This raised consciousness is apparent to us as we drive towards a more inclusive world so let’s not forget about the unbanked/underbanked who could be in their early or later stages in life and are struggling to open a bank account or trust banks to keep money safe. We want to make sure we are including everyone and build trust across the different generations.”