Young People Don't Vote - Until They Do
Traditionally, younger people didn't vote nearly as much as their elders. Today, they've changed their behavior. It’s critical for banks & fintechs to pivot to identify & address their unmet needs.
Photo by Ernie Journeys on Unsplash
Back in 2020, I started writing about the importance of hidden tribes for financial institutions (and digital banking vendors) so that they could better deliver services that address their customers’ unmet needs. I wrote:
The big problem with chasing the youth vote: data shows that young people don't vote; old people do. According to Wilson, the largest number young people voted in 1988 when just 18.1% of those 18-30 voted (Wilson, p. 122) Focus on Who Votes
In 2023, my analysis about pursuing younger customers no longer applies.
Why? Times changed. Young people changed their behavior. (FYI: Millenials and Gen X are not the youngest people)
Why does it no longer apply? Young people changed their behavior, their voting behavior. They aren’t following the pattern of younger generations (ie their parents and grandparents) before them.
So, my analysis is tied to voting data now, is it? Yes, but no.
Meta moment: I use a wide variety of sources my research, analysis, insight, advice . The analysis I started this newsletter with was driven by my reading a book about US politics. I recently wrote a piece that uses Norway’s model for driving EV usage as a framework that financial institutions should use for their digital transformation strategies. I listen to podcasts like Modern War Institute and One True Podcast because I like getting out of my comfort zone & enjoy learning from new points of view. More analysis just comes from thinking, drafting, reading, talking, synthesizing and more thinking. /end meta moment
After the US 2022 elections, I learned about data that so clearly disproves - and disrupts - a point that I used as the basis of my analysis. I want to address this data, give it light.
Did every 16, 17 and 18 year old during the late 1960s grow long hair and become a hippie? No, but some did. Gen Z behaviors, beliefs and actions are changing & matter in ways that they may not have in years past. That change is showing up in their demographic voting patterns.
It’s important for FIs, digital banking vendors, and yes, analysts, to be able pivot.
Hidden tribes are still critical to identifying unmet needs
What about the rest of my analysis about the value of hidden tribes, etc? I stand by it. Banks cannot rely on traditional demographics alone to attract new customers, innovate and increase profitability.
In fact, Citizen Bank of Edmond and Nymbus’ announcement of ROGER, new digital bank specifically for new military recruits is an example of a bank doing the work of identifying a hidden tribe within Gen Z.
Whenever we went to one of the training bases, they said 75% of their recruits come to the training site without having a bank set up. So even though the recruiter has given them direct deposit forms and counsel them on what they would need to bring to the recruit to the duty station that they're first going to attend basic training, 75% of them have to be bused to a local bank, to be able to open an account because they're unbanked. And so it's just whenever you're looking at military service in that age group, I think the lack of sophistication, I can really only speak to my own experience and just that worldly knowledge that somebody may take advantage of you, you think that everyone has great intentions and that these are individuals that entering the service that obviously are seeking a high degree of integrity and ethics, and they may make that assumption that everyone around them or anyone serving the military would have those same intentions. Source: Why Jill Castilla is developing a digital bank for military members.
And, yes, working with a vendor that can support the needs of this hidden tribe beyond the traditional banking and payments transactions is critical for launching a challenger bank targeting this hidden tribe or simply developing products and services for them. As Penny Crosman points out, military members and their families face more fraudulent scams and lose more money to them than non-military.
According to a recent AARP survey, service members, veterans and their families, are nearly 40% more likely to lose money to scams and fraud than the civilian population. Military bases are often surrounded by pawn shops, payday lenders, and used car dealerships. The New York Times recently reported that at Fort Campbell in Kentucky, 40% of the soldiers have at least one predatory loan. Source: Why Jill Castilla is developing a digital bank for military members
This data about fraud and scams is particularly interesting. It points to a hidden tribe within your customer base who need at least two things:
Tools for identifying and dealing with fraud and other scam schemes.
Access to credit. I wrote about this topic recently in a different context.
You don’t need to have a bank - or a digital banking solution - for members of the military to create services for this or other hidden tribes. But you do have to ask questions:
How many active or veteran military customers do we have? Do we even know?
How many of our military customers have been affected by fraud or scams? Can we generate that data?
Military have specific needs that you must understand but the rest of your consumer and SMB customers could also benefit from services that address both of these issues.
Young Customers Still Have Young Brains
If I believe that Gen Z, et al are worth pursuing, what should bankers and vendors do? Despite their changing behaviors and beliefs, Gen Z, A, C still have young, developing brains. I still believe that financial institutions and banking vendors must approach financial services for teenagers and young adults differently than they do for older adults. I did a deep dive analysis on whether they need different services and why: Challenger Banks for Teens: A 4 Part Guide
Bankers who take the time to identify the hidden tribes within Gen Z and A (and across those demographics) and between Gen Z, A and the rest of the Gen labels, likely will uncover even more opportunities for disruption and profitability.
My Writing on Gen Z
I pulled together a list of previous newsletter issues that specifically talk about Gen Z and younger customers.
Who writes PivotAssets?
I’m an independent analyst, strategic advisor & consultant (& a former Gartner analyst). I’ve worked in and covered the banking industry for over 2 decades. I write about
digital banking in this newsletter - not to confirm what you know (and you are plenty smart!) but to give you a fresh perspective & analysis on the transformation that is —and isn’t happening - in the industry.
How can I help you?
I’m also available for inquiry and strategy sessions via Third Eye Advisory.
I moderated a great panel of folks for a conversation on innovation. We cut through the hype and share practical advice for making your digital transformation efforts pay off. We definitely talked about the importance of small innovations.
How can banks be truly low friction? They must address friction everywhere. Otherwise innovation & digital transformation will elude them. In this report I identified the characteristic of a low friction bank and why legacy core banking and architectures don’t support it.
What can the Kardashians teach your financial institution about partnerships and innovation? How can working with empathic fintechs help you identify niche groups (aka hidden tribes) and innovate. All this and more in this this ebook that you can download at Praxent or Nymbus.
Adopt an Agile Digital Banking Platform: How bankers must have an agile digital banking platform to support both global and local trends and requirements to help them identify new niche markets that will drive innovation, create new value and increase profitability. In this report I identified a set of capabilities that a digital banking platform must have that will help take banks into a competitive future and urges banks to select a digital banking partner who shares their innovation, vision and support for new value creation.
How Your Financial Institution Can Leverage Niche Markets for Next-Level Growth: New thinking on old models brings new ways for banks and credit unions to deliver new products and services to new niche customer markets. I moderated a vibrant discussion about this & more with Jeffery Kendall, Chairman and CEO, Nymbus and Tim Hamilton, CEO of Praxent.
Yes, I worked with clients on these ebooks and webinars. They may ask you for information before you can download or watch them.