Gen Z & Financial Trust: The Opportunity Ahead 📈💡

So when we look at the data, only 8% of Gen Zers have complete trust in financial institutions, which shows that it's pretty low and there's a lot of work to be done. But on the other side, data also shows that this generation is more motivated than ever to learn from millennials' mistakes and be better themselves. So I would say they're currently clueless, but very motivated to do better. So there's a massive, massive opportunity here.

I appreciate the way you framed that, learning, Katrin, from the millennial mistakes. You're talking to the Gandalf of millennials right here. Um, I was born in, in 1981. And, you know, Elizabeth, I want to get your take on this as well because you're coming from this millennial generation. Uh, what's your take on this when it comes to some of the challenges and struggles that, that, that you're seeing and hearing about from a Gen Z perspective? Because once again, your, your worldview has been different. And, and Katrin, I like the way we're wanting to learn from the millennial mistakes. What's your take on this, Elizabeth?

Yeah, I think there's a lot to kind of unpack from what Katrin said. So at TrueStage Ventures, which you may also have known us formerly as CMFG Ventures, we've recently rebranded. We are really working to connect credit unions with fintech solutions to help them better serve their members and kind of address the needs of current and future generations, especially as demographics are changing. And I think one of the most underserved populations when it comes to financial services is Gen Z. You know, they are young, and I think oftentimes, like, the most recent generation gets the least respect from business leaders and executives, and, and yet they're coming into their own financially. They're graduating from college, they're getting their first jobs, they're getting their first apartments, they're saving up for large expenses and trying to pay down student debt. So there's a lot of major financial decisions that are facing Gen Z right now, and they just don't have the resources or the knowledge to be able to kind of address those decisions intelligently. And on the other hand, credit unions who we work with are seeing, you know, and recognizing that in order to stay relevant and to kind of maintain and grow their membership going forward, Gen Z are the users that they're really going to have to start to pay attention to and be able to offer services that are relevant to them, that speak to them, that meet them where they are. And so that's why we're so excited to partner with Katrin and a company like Fritsch because We very much believe in investing in entrepreneurs who have experienced the problems that they're trying to solve. And so I think a Gen Z founder is absolutely the person who's best positioned to address those problems that Gen Z is facing right now.

Katrin Kaurovov, I want to come back over to you because you said something that I think is very important for someone who is watching or someone who is listening to this, particularly coming from a community financial brand like a credit union. You know, when we look at, Gen Z, you mentioned trust, and around, um, 44% of Gen Z who responded to a survey, they, they trust national brands, but 15% only trust local financial brands. And you even mentioned the number 8% as well, which I've seen that report too. Why the gap, uh, Katrin, when it comes to this lack of trust from a Gen Z perspective? What's driving that?

Yeah, well, happy to frame both the problem and solution here. So I would say like trust is a huge issue for Gen Z. And the reason being is that financial institutions and Gen Z are just right now living in two totally different worlds, right? Like a lot of people working at financial institutions have never spoken to Gen Z about money. They've never had those direct conversations. They haven't really looked at the data. They haven't looked what's out there. So even first, the language that they're using around money is often too confusing and complicated for Gen Z. So it doesn't resonate at all with them. And to bring a very concrete example, for example, you know, if you talk about like credit utilization or like even building a credit score, it feels for Gen Z something they don't really care about. But if you address it to Gen Z in a way where it's like, hey, do you want to land your dream job? Or do you want to get your dream car? That's very exciting for them, right? Life goal makes them very, very motivated. And for Gen Z, they like to tie those financial goals more to their dreams and their life goals rather than money being a goal on its own, which is a huge place where I feel financial institutions go wrong. But all in all, I feel the big disconnect is that financial institutions are still trying to acquire and engage Gen Z in a way that, that worked for previous generations. But Gen Z is a completely different animal. First, right? We're much more focused on our life goals and dreams, and money is just like a tool that gets us there.

Yeah.

Secondly, Gen Z is the most social generation out there, um, and peer reviews are extremely important, which is why Fridge is all about making money social. Users can see what type of products and services are users just like them using, and like, what did they think of that? Like, they want to have that honesty and transparency of knowing, like, what did their friends like, like what kind of, you know, banks worked for their friends, what type of investment tools worked for their friends. And lastly, Gen Z has an immensely short attention span. So anything you want to get across to the TikTok generation, you got to get that message across in, you know, 3, 4 seconds. And I think, you know, a lot of the language used right now by financial institutions or even like product flows or like marketing messaging, it's just too long and like you'll long lose them before they even like will get through the marketing campaign. And so what As a solution at Fridge, we actually work and have a B2B side as well, where Fridge serves as a bridge between Gen Z and financial institutions. And we, we can almost think of us as like a way to, you know, translate and get those two generations to talk in the same language, whether it's like through data or like tailored product offerings or like targeted marketing campaigns. So we can offer a variety of services to make that conversation a little more easier for both parties.

I like the way you're talking about this as a, as a translation to get these different generations talking, because, you know, growth comes from communication, um, and communication is a key to building trust. Uh, one of the things I wrote about in Banking on Digital Growth is trust is the glue that, that holds all positive relationships together. Every positive relationship, though, starts with, with respect. Help me when I have a need, not when you have a need. And I like the way you frame that this money is a tool to get us to a better future state, to help us achieve our goals growth, if you will. But, but coming back to a, a misunderstanding, IBM, uh, did a study. They found that 9 in 10 bankers believe they understand the needs of Gen Z account holders. On the other hand, 1 out of every 3 of people in the Gen Z community, they don't believe that, that traditional financial brands understand their needs. So it's this matter of perspective, and I want to get your take on this, Katrin. Where is Gen Z going to learn about money? You mentioned TikTok, which I think is really critical and important to consider here. Uh, why TikTok? Um, why Instagram? Why not even Google for that matter?

Yeah, so to kind of also frame like the situation where Gen Z is right now, right? They're in the middle of so much noise when it comes to information. Like first they're bombed by different financial institutions and fintech ads and especially when it comes to financial institution ads, they feel like they're not relevant for them at all. Then we have all those influencers and like money, money coaches, money advisors, however you want to call financial influencers on TikTok and Instagram. But the problem is that like a big portion of Gen Zers don't also trust them because they know a lot of the content is sponsored. So that's why Gen Z cares most about their peer reviews. Like, what are people exactly like them doing? And like, for example, that's why on our platform, users can anonymously see what are some of the solutions that work for people just like them. So I would say there's right now a massive lack of trust because they know so much of the noise and advertisements out there are sponsored. So they don't really know what actually works or like what's the truth. And they're pretty sick of all the filters and like kind of all the fluff that's on top of it. And Gen Z doesn't really want to even set financial goals. They just want to make a decision, right? Like when they're opening a new credit card, or they're starting to invest, they just want someone else to figure it out for them in the quickest way possible. Ideally, you know, peer-rated so they know this thing actually works so they can move on with their lives. But that's very much how Gen Z thinks instead of, you know, setting goals, researching a lot, like, which was very like familiar to millennials. Like, you know, NerdWallet worked perfectly well for millennials because people love to read through articles. Like, Gen Z no longer has that patience. They want to get very quick information, which is why right now TikTok is one of the best options out there, but it still lacks the element of trust, right? Like when an influencer, you know, refers a bank, they're wondering like, is that influencer getting paid? Probably yes to refer that bank. So is that even the best option out there?

That's a great point. Elizabeth, I want to—

Sorry.

Yeah, I would love to just hop in here because just wanted to point out one of the things I think that's that's really so great, but also kind of old school about what Katrin and her team are doing is there is so much noise in the digital space and obviously they have a digital solution that's working really well, but they're also using kind of an age-old tactic of going on to college campuses to actually meet and engage with people in person and have a two-way dialogue. And I think that form of customer acquisition has been extremely effective for them and also extremely low cost when you compare that to, you know, the rising cost of digital acquisition as there are so many fintechs kind of chasing after the same demographic via the same channels. And so just doing kind of that old school in-person relationship building, I think, is a really effective, um, and not necessarily intuitive strategy to many of the Gen Z fintech companies these days.

But isn't that just a bit ironic? Because if you think that this is, oh, it's all digital, digital, digital, um, one of the things I'm a huge advocate for is the human experience in context of a digital experience, and it's about connecting with people. And truly, uh, Katrin, it sounds like you're, you're meeting people where they are in the physical world, but then bringing that relationship into the digital world to continue to deepen, to learn, to gain knowledge.