Tanvi’s Take: Gen Z Focused Fintech Requires Product Differentiation and Brand Identity to Succeed

5 min readNov 6, 2021

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Gen Z: the world is a-buzz with this new generation and insatiably curious about their behavior. It’s clear why: with an estimated $143B in spending power, Gen Z customers are a lofty prize for any company.

Nowhere is this a loftier prize than within financial services: as Gen Z comes of age there’s more the $268 billion at play in the US alone (67M Gen Z in the US and approx. $4,000 CLV of banking customers). The average US adult uses the same checking account for more than 14 years and in 2019, just 4% of consumers switched primary banks. Financial services are sticky, and it’s no wonder banks and fintech companies alike are eager to woo the next wave of consumers. We’re seeing huge adoption in the banking space with Greenlight, Current, and Step each reaching $900M–2B+ valuations — but there’s plenty more in fintech that can target Gen Z.

Let’s Talk Gen Z

There are multiple reports out there on Gen Z’s behavioral trends, but I’ll highlight the ones I think are most relevant to fintech. Call this my Gen Z fintech rubric…I’ll be looking for these features in any Gen Z focused fintech startup I see (and so should you!).
*Rubric sources listed at the bottom of the article.

More broadly, a big part of appealing to Gen Z is marketing, brand identity, and social media engagement.

In fact, I would argue that an undifferentiated product could win with Gen Z purely through marketing.

Lastly, I want to highlight that Gen Z is set to be the MOST multicultural generation ever.

This has huge implications for how product build and marketing should be approached (see more in my previous blog post on underserved consumers). Somehow, any discussion about Gen Z trends seems to skip this integral fact.

Case Study: Alinea

I recently had the pleasure of speaking with Eve Halimi, co-founder and co-CEO of Alinea: a Gen Z-focused investing company backed by YC. Alinea offers consumers access to stacks — themed bundles of stocks described as a “playlist” of stocks. These are essentially ETFs, but note the branding Halimi and her co-CEO Anam Lakhani intentionally use to make investing feel more approachable and fun to Gen Z.

Halimi and Lakhani founded Alinea with the goal of getting more women and minorities into investing. Coming back from their summer internships on Wall Street, they noticed the women in their class didn’t invest as much as the men (a time-old tale I can corroborate from my time at Deloitte). They decided to do something about it and founded Alinea.

The use of ETFs itself appeals to women: men tend to trade more frequently with the goal of seeking alpha and outperforming the market whereas women are interested in steady returns (hint: follow what the ladies do because their investments outperform mens’). Thus, an app like Alinea which encourages holding assets and diversifying risk across multiple stocks inherently appeals to women. I was excited to hear that 60% of their users are women!

Halimi went on to share that Gen Z sees investing as a form of self-expression and is tired of the lack of transparency they see in financial products today. “They care about more than just financial returns and want an impact,” Halimi explained, “We offer multiple impact-focused stacks including ESG and women-led company stacks.”

Their product vision includes the ability for consumers to create and share their own stacks, thus merging the social and creator trends in Gen Z’s behavior. Personalization of financial products in this way hits the sweet spot between robo-advising / actively managed portfolios and appeals to a generation that wants personalization as they learn about the investing space.

Learn more at https://alinea-invest.com/ and download their iOS app to try it out!

Ancillary Areas of Opportunity

Beyond creating financial products specifically for Gen Z consumers, there are a few segments within fintech that I think will do well given Gen Z’s behavioral trends. Here are three areas I’m monitoring, which also have their own market tailwinds making them attractive investment areas:

Alternative assets: there’s a wave of companies increasing access to alternative investments for individual consumers (e.g. Masterworks, Vinovest, Otis, Rally, etc.). And let’s not forget the recent NFT boom, which makes digital assets an investment. As investors grow more and more comfortable with alternative assets, powered by Gen Z’s desire for non-traditional financial investments, this space is expected to increase 18–25% by 2025.
Charitable giving in fintech: America is the most charitable nation in the world, and there is $11.8B to be made in just processing donations. Given Gen Z’s desire for impact, B2B APIs that enable companies to be more socially minded will do well. See more in my previous blog post about charitable giving in fintech.
Debt management: unfortunately, debt isn’t going anywhere. Americans hold $1.57 trillion in just student debt and Gen Z currently holds $16,043 on average in debt and is more likely to fall behind on BNPL payments. New ways to address debt continue to be a huge opportunity, particularly as they’re tailored to Gen Z’s specific behaviors.

Questions? Comments? Know a Gen Z-focused fintech company? I’d love to hear from you, please reach out directly or comment!

*Rubric Sources: