Generation Z, born between 1997 and 2012, is poised to reshape the financial sector. As they come of age, their financial behaviour reveals important trends that could drive the future of banking, investing, and payments.
A recent report by Bernstein analysts delves into the habits of this emerging generation, which will play a pivotal role as their financial influence grows, according to a recent DL News report.
Who is the Generation Z & How Are They Shaping Finance?
Gen Z, currently aged between 12 and 27, is redefining the financial landscape. The way they manage their money will shape the future of financial platforms.
The report by Bernstein analysts suggests that their preferences for decentralized finance and digital currencies could lead to a shift away from traditional banking models.
The way that Gen Z and Millennials manage home money is evolving into a more defined financial management strategy. These younger generations see the current banking system as antiquated, costly, and slow, in contrast to earlier generations.
Many members of Generation Z prefer assets that are not controlled by big financial organisations or governments, according to a survey conducted by prominent cryptocurrency exchange Coinbase.
Their inclination to manage finances “on-chain” as opposed to using conventional online platforms is one noteworthy development. Applications for DeFi and stablecoins are appealing to Generation Z more. Their interactions with financial services are changing as a result of these preferences.
The Rise of Stablecoins and Decentralized Finance
Gen Z has swiftly come to favour stablecoins as a tool. Approximately 27 million wallets are used each month to make on-chain stablecoin payments, according to Bernstein’s research.
Decentralised systems are very appealing to this tech-savvy age since they allow users to move $1,000 across borders for less than one cent, thanks to advancements in blockchain technology.
Stablecoins denominated in US dollars are presently in circulation on the blockchain, valued at around $160 billion. According to the paper, as artificial intelligence (AI) advances, new stablecoin payment models will be made possible by AI agents, offering even more effective means of managing transactions.
Although institutional investors have historically avoided cryptocurrency, this may change as the influence of the younger generation increases. Because of Gen Z’s intense interest in cryptocurrencies, institutions may need to reconsider their position.
Businesses getting more involved in the cryptocurrency space include Robinhood, Stripe, PayPal, and Revolut.
For instance, Robinhood notes that 60% of its assets are held by clients under 43, suggesting that younger investors are progressively gravitating towards digital assets. These businesses are putting themselves in a position to meet the increasing demand from Millennial and Gen Z investors as the cryptocurrency market enters a new cycle.
Trump’s Crypto Proposal and Renewed Interest
In another development, Donald Trump, the former US president, has also shown interest in digital assets. During a recent interview, Trump proposed utilising Bitcoin or a “crypto cheque” as a means of resolving the nation’s $35 trillion mounting debt. His suggestion emphasises how influential it is to be ahead of the curve in the world of digital banking and highlights the increasing interest in cryptocurrency, especially among politicians.
Also read: Donald Trump’s Next Big Step For Crypto, Announces World Liberty Financial
The financial services industry is expected to be impacted by Gen Z’s demand for decentralised, transparent, and affordable services as they continue to enter the workforce.
Stablecoins, decentralised finance, and blockchain technology may replace current financial management systems.
The transition from traditional banking to decentralised platforms is already happening, and as more financial services firms become aware of the need for cryptocurrency, the market will keep changing.