While in part this can be attributed to younger consumers just starting financial journeys, Valerie Greer, executive vice president and chief commercial officer at Alliance Data, said it also shows the group’s determination to be financially responsible. Currently, Alliance Data’s findings showed that 27 percent of Gen Z’s and Millennial’s overall credit knowledge is “good but not great.”
Nearly 30 percent of Gen Z told the company they felt they didn’t have a good understanding of credit at all and 10 percent said they would describe themselves as being “clueless” when it comes to credit.
“Gen Z and younger Millennials are just starting out and do not have access to the variety of payment types available to other generations, but they are becoming more and more savvy and eager to understand and educate themselves regarding other forms of payments and how they can begin thinking about securing their financial future,” Greer told WWD.
Both Gen Z and Millennials reported they were interested in learning more about traditional and alternative payment options. And one out of 10 consumers said they wanted to understand how these options could help with their financial futures. The top payment method both generations said they were curious about is mobile payments, with Millennials slightly more interested in learning than Gen Z.
Notably, buy now, pay later had equal interest from both Gen Z and Millennial consumers. Alliance Data said this sows the power in giving customers choice in payment options, saying that providing flexible payment options in the shopping journey can help the experience be more personalized.
“Consumers who are new to credit or budget conscious gravitate toward buy now, pay later options and see these products as an appealing way to budget and manage cash flow,” Greer said. “In the end, customers want choice in their payment options and a seamless experience that enables them to unlock their buying power and spend with their favorite brands when and where they want. It’s key for brands to offer access to a variety of payment options and offer an easy, seamless experience that’s personalized for the customer throughout the shopping journey.”
At the same time, Greer told WWD, “about a third of Millennials and Gen Z are curious to learn more about store or co-brand credit cards, signaling that they are interested in educating themselves on how credit works and the benefits of different payment types.”
To learn more about finances and payment options, Millennial respondents were found to be more likely to actively educate themselves with 36 percent saying they prefer learning through online classes, 42 percent saying they prefer to read on their own and 24 percent saying they look to learn from Facebook. Gen Z respondents were more likely than Millennials to obtain the information via YouTube, TikTok, Instagram and Snapchat.
With so many consumers actively looking to learn more, Alliance Data said there is an opportunity for established brands to leverage digital platforms to provide financial advice. The content should work to lower barriers to entry and enable access to all.
While digital platforms, like Alliance Data and Bread’s Enhanced Digital Suite, can identify where a customer is within the shopping journey and serve up tailored content that provides them the information needed to make educated decisions on financing options, Greer said there are ways outside of providing information on payment offerings during the shopping journey. To do this, she said, “brands could consider teaming up with their payment solutions providers to help educate younger consumers on responsibly managing finances and building and using credit.”