Engaging and retaining younger consumers such as Millennials and Gen Z is becoming a top priority for financial institutions (FIs) and retailers around the world as these generations come to capture greater purchasing power. A recent study found that Gen Z consumers in the United States alone now control more than $150 billion in collective purchasing power, making capturing their attention critically important for banks, merchants, or retailers. ‘other similar companies today.
Meeting the needs and expectations of these digital first generations – who often anticipate fast and personalized online experiences – becomes especially critical for entities in Latin America, as the region’s online banking and payments ecosystem becomes quickly more saturated. Younger consumers in the region are increasingly turning to contactless or virtual tools to do more of their daily shopping, with a recent study finding that 37% of Brazilian Gen Z consumers now use mobile wallets for their transactions.
In the last Digitization of Payments in Latin America PlaybookPYMNTS examines how the payment and banking needs of Latin American Millennials and Gen Z consumers are changing and why keeping pace with these changes is critical for banks and merchants in the region.
Around the payments space in Latin America
Understanding how to engage and retain millennial and Gen Z consumers is becoming increasingly critical for financial institutions in Latin America, especially as the region’s digital financial ecosystem becomes increasingly saturated. . Consumers in these younger demographics still largely turn to traditional financial institutions to meet their current banking needs, with a recent report finding that 77% of Millennials and Gen Z consumers in the region currently do business with such institutions, while 28% indicated that they use neobanks. Yet there are countries where this trend appears to have reversed, such as Brazil, where more than half of the country’s millennials and Gen Z consumers now rely on digital banks to meet their financial needs. It is therefore essential for FIs of all sizes to determine how to capture and retain the attention of these young consumers.
Young consumers’ adoption of online banking channels and solutions is also driving wider use of these tools across Latin America. More and more consumers in the region are experimenting with emerging payment methods such as mobile wallets or QR codes rather than cash – for example, a recent study found that 94% of Peruvians now have access to payment methods other than cash. The study also revealed that 40% of payments in the country are now made via contactless methods, indicating that they are rapidly becoming part of the traditional payment environment. Banks and other key financial players need to act quickly to ensure they can offer such methods.
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How Millennials and Gen Z consumers are shaping the future of digital banking in Latin America
Emerging payment methods, including digital and mobile wallets, have rapidly become more popular since the onset of the global health crisis. For example, Latin American millennials and Gen Z consumers are more likely than ever to use their phones to perform financial tasks. This growing availability and comfort with digital-first banking channels and tools means that FIs in the regions must work quickly to ensure they can meet the growing expectations of young consumers or risk losing their businesses, Neudson Freitas, responsible for the success of small and medium-sized business clients for Bank of Brazilsaid in a recent PYMNTS interview.
To learn more about how Millennials and Gen Z consumers are driving the future of Latin American banking and how its financial institutions can prepare, check out the Playbook story.
How Merchants Are Responding to the Payment Preferences of Latin American Millennials and Gen Z Consumers
Contactless payment tools and other digital payment tools have seen particularly rapid growth in the Latin America region, a trend driven by Millennials and Gen Z consumers seeking payment experiences simple and effortless. Forty-six percent of Brazilian millennials are now paying for their goods or services with digital wallets, for example. This indicates a growing need for banks in the regions – but also, and above all, for their merchants – to keep in mind the payment needs and desires of these generations in order to remain competitive.
To learn more about why meeting the preferences of Millennials and Gen Z is critical for Latin American marketers, check out the PYMNTS intelligence from the Playbook.
About the playbook
the Digitization of Payments in Latin America Playbookproduced in collaboration with Kushkiexamines the latest developments in digital payments in Latin America, including how payment service providers can meet consumer demands and gain a foothold in the region.