In an increasingly complex and interconnected world, financial literacy has become an essential life skill for every generation, especially Generation Z. Born in 2000 and beyond, Generation Z is all grown up with the oldest Gen Zers now in their early twenties. While Gen Z is the youngest generation, it represents the second largest generation in the United States with a population of almost 70 million (Figure 1).

Figure 1: Percentage of U.S. Households by Generation Segment

Gen Z Surpasses Baby Boomers in Population Size

Source: Statista

The coming of age of Gen Z represents a tremendous opportunity for our industry to educate this population on essential financial topics on both sides of the sales counter—for your customers and for your employees. The focus of this article is on the Gen-Zers that are entering the workforce and may soon be working at our financial institutions. It’s even more important for Gen Z frontline employees at financial institutions to be equipped with the financial knowledge they need in order to effectively cross-sell our products and services.

Imagine this: you are a 22-year-old who has just landed a job as a teller at your local financial institution. You have gone through extensive training on core systems, transactions, and customer service. You are confident in your abilities to conduct transactional duties, yet when it comes to cross-selling you are unsure of the benefits of the products you are tasked to discuss and recommend to your customers.

Each generation has its own unique set of generational influences that shape their personal and professional lives. Gen Z saw their families navigate a recession in 2008 and more recently a global pandemic. They have seen firsthand the downside of not being financially prepared for an economic crisis. Credit is the foundation of financial well-being and the knowledge of how to build a strong credit history is an essential part of financial literacy. Understanding the difference between good debt and bad debt can be very confusing and now as a financial institution employee you are expected to try to cross-sell loan products to peers within your age group. This is where you, the financial institution, can step up your training program for employees. 

Figure 2: Primary Sources Where Gen Z Get Financial Advice (Percent of Gen Z Households)

Gen Zers Place Highest Value on Financial Advice From Family and Social Media Than Financial Institutions

Source: Raddon Research Insights, Gen Z and Their Parents 2022. Q: What are the primary sources where you get your information regarding personal finance today? (n=1,508)

Over half, (56%) of Gen Zers primarily seek financial advice from their parents and family first followed by just over one-third citing social media and online research, 35% and 34%, respectively (Figure 2). Looking at the chart above, financial institutions come second to last! That is not an ideal position for organizations that are expected to be the experts when it comes to all areas in the financial world. When a customer walks into their primary financial institution, your employees should be comfortable enough to ask questions and provide solutions. How can these twenty-something-year-old employees be expected to cross-sell items such as credit cards and auto loans if they themselves are not receiving education from the FI where they work?

When education begins with your employees, this financial literacy can spread to the young adults in your communities to help them become better prepared for their future. Something as simple as opening a credit card with a low credit limit, using the card wisely and paying off the card balance in full each month can help those entering adulthood build their credit rating and in turn qualify for that first apartment or first car loan. Explaining these aspects of credit is going to help employees and young consumers alike be able to reach their desired goals. 

According to a 2023 article from Insider, 29% of Gen Zers either do not have a credit score at all, or are unaware if they do. Understanding how to build credit and what a credit score means is just the beginning yet is such an important aspect of cross-selling and using credit products. On top of this 29% of Gen Z, Rocket Mortgage found that 72% of Gen Zers want to become homeowners within six years. Before being able to purchase a home, starting to build credit is going to be the foundation, and having employees fully understand this and educate their customers while cross-selling is going to not only help them reach their sales goals, but help a generation reach their life goals.

Figure 3: Percentage of Credit Card Users by Generation Segment

Regardless of Gen Z’s Knowledge of Credit Scores, They Are Still Utilizing Credit Cards

Source: Raddon Research Insights, Lending Insights 2022. Q: Do you or someone in your household have a credit card? (n=1,234)

What is interesting to note is that while we stated earlier that 29% of Gen Z does not have a credit score or they are unaware if they even have one, our research indicates that 83% of Gen Z has at least one credit card (Figure 3). Now how can this large of a percentage of Gen Z have a credit card, yet many do not understand if they even have a credit score? While cross-selling attempts or advice from family and friends seems to be working and these young adults are obtaining items to help build credit, the missing part here is the educational component. When talking to any customer about applying for a credit card, especially young adults who are just starting in the credit world, it is essential that your frontline staff are educated enough to fully explain not only the features of the credit card, but also how it works and how to use it so that it benefits their financial health.

Where Do We Go From Here?

How to we bridge the gap between cross-selling and education? It is simple, start with the education of employees. Here’s how you can do so:

• Create a training program of your institution’s products and services

   

• Educate employees involved in sales on all aspects of credit and how this impacts an individual’s financial health

   

• Ensure employees are equipped with the knowledge and skills to relay this information to customers interested in building credit

   

  Education is a continuing cycle. How can we expect our young adults to understand credit if they are not being educated on it in the first place?