May 2nd, 2023, Rishad Dsouza
As the first generation to grow up entirely in the digital age, Gen Z has the potential to shape the future of finance, banking, and investments. This generation is fast maturing – a third (34%) of its adult members in the UK have already entered the workforce, either in full-time or part-time capacity. This number is certain to swell over the coming years as more Gen Zers finish up with education – the share of adult Gen Z Britons currently studying full-time stands at 48%.
As an increasing portion of them becomes ready to enter the workforce, it is prudent for financial institutions, banks, and insurance companies to get an insight into their preferences.
In this article, built around YouGov Profiles, which continuously captures data on hundreds of unique variables, we take a closer look at some key attitudes and behaviours of the adult members of Gen Z when it comes to finance, banking, and investments.
What types of instruments do they own and what are they looking to add over the next 12 months?
Expectedly, given that only a third of them hold jobs, Gen Z members are less likely than Britons on the whole to currently own investment and saving instruments such as individual savings accounts (23% vs 35%), stocks and shares (2% vs 7%), Premium Bonds (4% vs 15%) and life insurance (5% vs 29%).
But these gaps are set to narrow over the coming years as more Gen Zers become full-time employees and look for ways to deposit and invest their funds. This is highlighted by the fact that Gen Z members indicate a higher likelihood of undertaking a variety of financial actions related to popular investment products over the next 12 months.
Gen Z members are six percentage points likelier than all Brits to open a savings account (including cash ISA) over the next year (20% vs 14%). They are also more than twice as likely to open a new bank account in their name (17% vs 7%), and twice as likely to take out a credit card (14% vs 7%).
How do they research insurance and which policies do they hold?
Insurance ownership among Gen Z lags quite substantially. Only a seventh of them say they own a motor insurance policy compared to half of all Britons (15% vs 52%). Rates are similarly quite low for travel insurance (3% vs 14%) and joint home/buildings and contents insurance (8% vs 43%). This low adoption rate can be partially explained by the fact that Gen Z members are more than twice as likely as all Britons to think that “insurance is for unlucky people” (24% vs 11%).
Like with investments, it is reasonable to expect that these gaps in insurance ownership will narrow over time, as members of the generation mature further. Brands that drill home the importance of owning insurance could stand to build brand equity among this cohort. But how can insurance brands effectively reach this audience? Data on how they research insurance products might offer a clue.
Two-fifths of them say they refer to price comparison websites to conduct insurance research (42%). They are markedly more likely than all Brits to rely on advice from friends and family when it comes to purchasing insurance (32% vs 18%). Websites of insurers/brokers they know (16%) is also a popular medium of insurance research for Gen Z in Britain.
Other financial attitudes
Gen Z Brits are more likely than the overall population to say they plan to save more next year (77% vs 59%), but there is a scope for these funds to be channelled into less traditional investment outlets such as cryptocurrencies and stock markets.
Afterall, Gen Z members are more than twice as likely as all Brits to say they’d be “willing to give up their bank accounts and use cryptocurrency instead” (20% vs 8%). On a similar note, they are twice as likely as all Brits to say cryptocurrencies are the future of online transactions (35% vs 19%).
More than a quarter of them also say they like to take risks in the stock market (27% vs 16%). This increased openness towards instruments such as stocks and cryptocurrencies haven’t translated into increased ownership rates of those instruments yet (unlike in the US), but this could change over the coming years.
While the potential for growth within this cohort is exponential, it is important for finance and insurance brands to offer clarity in their marketing. Matters of finance can befuddle this young demographic. Three-fifths of them (60%) say financial matters confuse them compared to only 37% of all Brits.
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Methodology: YouGov Profiles is based on continuously collected data and rolling surveys, rather than from a single limited questionnaire. Profiles data is nationally representative and weighted by age, gender, education, region, and race. Learn more about Profiles.