In today’s fast-paced financial services landscape, Generation Z (Gen Z) has emerged as a pivotal demographic. Born between the mid-1990s and early 2010s, this digital-native generation is reshaping customer expectations in banking and loyalty programs. With their distinct characteristics and preferences, Gen Z is not just influencing the banking landscape but also dictating new rules for engagement and loyalty in the financial sector.

Generation Z is poised to reshape the global banking landscape, and no place will feel the impact quite like Asia. The region is home to nearly 60% of the world’s Gen Zers according to the United Nations, and a strong growth outlook stands to enhance their spending and investing power. Raised entirely in the digital era, Gen Z’s expectations from banking are revolutionizing the industry.

With 83% of Gen Z dissatisfied with traditional banking, the need for transformation is clear. Banks must innovate their loyalty programs, understanding Gen Z’s values and preferences, and employing appropriate technological tools. 

We identified 2 opportunities for banks as they redesign their loyalty programs for the Gen Z consumer:

1. The Power of Personalization done well

Gen Z, growing up in an information-rich era, conducts extensive research before making decisions, leading to a fluid brand loyalty. They are more likely than any other generation to switch brands for better alternatives or when their expectations are not met.

Despite their propensity to engage with brands offering loyalty programs, their active participation in such programs has declined. This decline is attributed to poor program strategy and design, as well as an inability to create value for members. Gen Z abandons programs when it takes too long to earn points and redeems rewards less than any other generation.

While 66% want personalized recommendations, particularly in-store, less than 39% have purchased something that was recommended to them by a brand in the past six months, and only 15% feel that brands personalize experiences well for them.

This represents a significant opportunity for banks, as Gen Z is willing to share their data in exchange for personalized experiences. Banks must invest in technology that captures and segments customer data to communicate in meaningful ways.

Based on a study by Gartner, almost 60% of Gen Z engage in video or mobile games weekly. Incorporating gamification into loyalty programs can significantly boost their engagement.

2. The Rise of the Subscription Economy amongst Gen Z

In the bustling landscape of modern commerce, the subscription economy is rapidly gaining momentum, especially among Generation Z. WSL Strategic Retail’s eye-opening consumer research reveals a striking trend: Gen Z is leading the charge in embracing product subscriptions. They’re 10% more likely than the general population to sign up for these services, often choosing to connect directly with brands, bypassing traditional retail intermediaries.

This shift isn’t just a passing fad; it’s a signal of a deeper change in consumer behavior. Gen Z’s preference for direct engagement with brands presents a golden opportunity for banks. Imagine bespoke rewards bundles and loyalty subscriptions tailored to lifestyle brands or niches that resonate with this demographic’s unique tastes and interests.

But there’s more to this story. According to retail consultant Clarus Commerce, a staggering 70% of Gen Z shoppers are members of at least one paid rewards program. This statistic isn’t just a number—it’s a testament to Gen Z’s expectations of value and premium service in exchange for their loyalty and investment. This is a significant departure from previous generations, notably the baby boomers, of whom only 57% are part of such programs.

What does this mean for banks and businesses? It’s a clear call to rethink strategies, to innovate, and to align with the values and expectations of a generation that’s reshaping both the banking and retail world. The subscription economy isn’t just about recurring payments; it’s about building lasting relationships with a generation that values authenticity, personalization, and meaningful engagement. Welcome to the new era of banking and commerce, where Gen Z is not just a customer base, but a driving force for transformative change.

As banks strive to align with Gen Z’s preferences, Pulse iD stands ready with innovative loyalty solutions. Our expertise in personalization, gamification, and digital integration makes us an ideal partner for banks seeking to engage the digital-first Generation Z.

Contact Pulse iD today to transform your bank’s loyalty program and resonate with the tech-savvy, value-driven Generation Z.