It seems that everywhere you look someone is talking about Millennials – they do things differently, they’re more socially informed, and they’re more digitally connected. Executives across all industries are trying to mold their strategies to meet the demands of this significant generation. The concept of retail is being redesigned, all messaging touchpoints are being modernized, and technology is being leveraged across the entire journey.
Indeed, Millennials are an influential generation with a different set of ideas as to how the world should work. But if society is growing at such a pace, what can we expect from their children, coined “Generation Alpha” by sociologist Mark McCrindle? Generation Alpha – babies born in 2010 and onwards – will be the most formally educated generation ever, will be the most technologically savvy, and globally the wealthiest in human history.
Approximately 2.5 million of these Gen Alphas are being born each week, and the first Alphas are already entering school. So why are businesses not more focused on these emerging influencers and the preceding Generation Z, who are already in school? The following three observations will provide insight into how to address the needs of these emerging generations, and who is already doing a good job of it.
The concept of online privacy will be drastically different than for Millennials
Generation Z and Alpha are getting a more heavy-handed education on protecting their identities online than Millennials and Generation X ever had. While Alphas are still too young to engage in social media, Millennials and Zeds are leaving platforms like Facebook, seeking out more ambiguous or private platforms like Instagram and Whisper. With cyber-bullying and identity theft driving this education in schools and from parents, upcoming Zeds and Alphas will need to know that banks are serious about protecting their identities.
That being said, as they grow up these youngsters will have had an almost constantly customized experience, and will expect this kind of personalization. If banks can ensure their customers’ security, they can increase the frequency and quantity of consumer information gathered and create exponentially more customized experiences based on that information. Facebook, having recognized this trend many years ago, is doing a particularly good job at this: they collect profile data, web browsing behavior, search queries, and other metrics in order to create a main feed that seems custom-tailored to each user. Ads are more targeted and specific, news stories are more relevant, and user-generated content is filtered and ordered in a way that highlights posts from users you are most communicative with or interested in (based on your online behaviors). Some might argue Facebook is almost TOO good at this, and media-savvy Zeds and Alphas might find a more subtle approach more appealing. But regardless, a personal experience will be the norm, and to effectively target Generation Alpha, having a robust CRM strategy that leverages behavioral and demographic information will be of utmost importance.
Generation Alphas will be technologically and socially connected, and will prefer to interact virtually instead of in-person
We are already seeing a dramatic shift in real-world social behavior brought on by technology – we prefer to text message or email instead of having phone or face-to-face conversations; we cross the street with our heads down and our attention on our phones instead of looking where we are going, and legislators are considering laws about “distracted walking.” We are entranced by the unlimited social potential that our smart devices offer us anytime, anywhere – imagine what future generations will be like! Generation Z and A will get their first hand-held devices long before their 10th birthdays – as much as this might make Grandma cringe, it’s the new reality. Many children now hand in their homework through online classroom portals like Edmodo and are using smart boards and iPads in class. Vast numbers of them will have grown up without cable TV or a landline. As a result, companies must recognize the corresponding shift in social behavior and adapt their own consumer-interfacing communications strategies to survive.
Companies must recognize the corresponding shift in social behavior and adapt their own consumer-interfacing communications strategies to survive
The current preference to resolve banking issues in the branch with an actual person will begin to shift toward virtual tellers that can be accessed remotely, or even text-based conversations like telecom Rogers Communications now offers. One thing is for certain: Generation Z and A will be more comfortable banking with a hand-held device than any previous generation, and less interested than their predecessors in banking in-person. In order to connect with consumers and grow loyalty, banks will need to go beyond their current models and offer seamless, integrated, intuitive online banking platforms, and consider reward programs and innovative financial advisory services.
Creating financial smarts in tough times
Millennials are noted as being an extraordinarily entrepreneurial generation, perhaps driven by the dwindling supply of “secure” jobs, or perhaps because “do what you love” could be their mantra. Regardless, the Generation X and Millennial parents of Zeds and Alphas will be less financially secure than their boomer parents. Many of them will not have saved sufficiently for retirement, many will not become home-owners, and will report a lower quality of life than their parents enjoyed. Growing up with financial uncertainty will cause Zeds and Alphas to be cautious, and to seek out financial information.
The good news is that banks are in a position to help Generation Z and A now, and it’s a win-win: financial wisdom will help Gen Z and A live better lives, and they will become a more stable bank consumer demographic for the future. Many banks are already on board. PNC Bank partnered with Sesame Street to create PNC Grow Up Great! with fun activities like Elmo’s For Me, for You, for Later. And Bank of Montreal’s Talk with Our Kids About Money initiative with the Canadian Foundation for Economic Education is an excellent resource for parents and their children. Toronto Dominion has the Family Allowance Test app, which on its own is useful but could be leveraged further through competitions for youth that promote financial health as a fun, educational game. Award-winning app Renegade Buggies does just that: kids have to race through a wild shopping experience, but only win if they get the best deal.
As Generation Alpha and their Zed predecessors grow up, this gamified way of learning will need to grow up with them. As social research firm McCrindle observes, “A shift in educational engagement is also occurring for Gen Alpha, changing from structural and auditory to engaging, visual, multimodal and hands-on methods of educating this emerging generation.” This shift has incredible implications not just for educating Generation Z and Alpha as children, but for adulthood financial steps, such as a first loan or mortgage. Educating them in the method described above will be more successful than using traditional methods. Indeed, Generation Alphas will learn and then absorb information in a much more specific way and it is imperative that businesses identify this and begin to plan their strategies accordingly.
Ultimately, while the media seems content to talk about the importance of Millennials, we expect the focus to shift toward Generation Z and A, since they may prove to be even more influential than their parents. They are the most diverse generation ever to have been born, and technology is not only intrinsic to them, but it has drastically changed the way people are learning. It is incredibly vital, then, for businesses to begin to discuss these generations when they sit down to plan their long-term strategies, and to begin reaching out to them now to ensure a financially healthy future for everyone.