1095. Insights: Is financial services failing Gen Z?

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1:10Hello, and welcome to FinTech Insider Insights. I'm Kate Moody, Customer Strategy Director at 11FS. Gen Z is often portrayed as a generation that needs to get better with money. We're talking about the generation born from the late 1990s into the early 2010s, many of whom are now navigating their first major financial decisions. But the picture is much more complicated than that. New research from ZBD found that 99 % of Gen Z respondents say financial education is important. The highly engaged digital payments expect rewards from the products they use, and 68 % still say they trust traditional banks.

1:45But wanting to understand money doesn't necessarily mean knowing how everything works. Separate research from Credit Spring found significant gaps in younger adults' understanding of credit, while 68 % of Gen Z respondents in ZBD's research say they often feel stressed about managing their finances. And all of this is happening against a very different economic backdrop, with younger people buying homes later, carrying more student debt, and increasingly relying on family support to reach major financial milestones. So, on this week's episode of FinTech Insider, we're asking, Does Gen Z really have a financial literacy problem or does financial services have a Gen Z problem?

2:20To help us unpack it, I'm joined by a great panel of guests. First up, we've got Neil Cadigatour, co-founder and CEO of Credit Spring. Neil, welcome to the show. Could you please introduce yourself to our listeners? Tell us a bit about Credit Spring, please. Yeah, hello. I'm Neil Cadigatour. Thanks for having me. So Credit Spring, we are in the corner for the backbone of Britain, key workers, the underpaid but important parts of society. And our goal is to help them get back onto their financial feet and stay there. And we do that by offering a series of similar but different memberships. And the memberships offer people support in the short term in the form of no interest short term loans.

3:01And we surround them with long term support in the form of financial education, benefits finders and credit building tools. Awesome. Well, thank you very much for taking the time to join us today and looking forward to hearing your perspectives. Also joining us is Zainab Guzai, risk analyst at DRW. Zainab, you're also our representative of Gen Z on the show for today. I mean, apologies for revealing your age. Our producer is very naughty. Would you mind telling us a little bit about yourself, please, and DRW? Hi, Kate. I'm Zainab. I work as a risk analyst at DRW. What I do there is I work with mathematical models and we try to quantify financial uncertainty and assess probability to future events so that our investors can make better judgments when they're investing their money.

3:48Also, you can get naughty with me. I don't mind it. That's all. Awesome. Well, yes. Thank you so much for joining us. and we have a welcome back to the podcast for Deanna Camel-Simon, Associate Director at Fair For All Finance. Deanna, great to have you back on the show. Would you mind again reminding our listeners about who you are and what you do and maybe a bit about Fair For All Finance as well, please? Thanks, Kate, and thank you to Fintech Insider for having me back. I work for Fair For All Finance. We are a not-for-profit organization that was set up by the government in 2019 and our mission is to boost financial inclusion in England and we're specifically focused on thinking about how can we get financial services to create products and services that fit the lives of kind of everyday consumers and thinking about things like inclusion, financial and financial well-being.

4:40Awesome, well yeah likewise thank you very much for taking the time to join us today and let's jump in. Okay so much for us to cover today let's maybe start with the bigger picture, how different is the financial life Gen Z is entering compared with previous generations? Gen Z is often characterized as being financially experienced, maybe even financially illiterate. That seems very harsh to me, but Zainab, what's your take? Well, I would disagree with this characterization. I'll challenge the question itself. When we say financially illiterate. What we mean by that is Gen Z scores badly on a test that was written for a different generation's financial life.

5:21And that's a very different thing. When we look at personal finance surveys and how they assess financial literacy, they usually focus on age categories, which are earnings, consuming, saving, investing, borrowing, managing debt, ensuring and comprehending risk. And the biggest gaps between Gen Z and the older generations are in investing, insuring, and comprehending risk, which are things you learned through experience and exposure, not from a textbook. So you can't expect a 22-year-old to score the same as a 62-year-old on insurance literacy when they have had 40 fever years of experience being insured.

6:04and also what those tests or surveys when we talk about financial literacy, what they do not measure is the financial knowledge Gen Z actually uses every day. They don't test whether you understand how BNPL works. They don't test whether you can navigate peer-to-peer payment apps or evaluate a cryptocurrency investment or compare subscription models or understand dynamic pricing. I'm pretty sure Gen Z has better skills to decide when to leave a party so that we get a better Uber fare and don't get punished by surge pricing. So those are the financial literacy skills of 2026 and no standardized test measures them.

6:51So basically we're being graded on an old syllabus. And that's where my take is usually when people claim Gen Z is financially illiterate. Yeah, no, I think there's a ton of really important points there. Deanna, when you think about this kind of bigger picture for this generation, what is it that stands out to you? Yeah, absolutely. I think a really important point that I guess Zainab was making is that also we should be cognizant of the fact that the Gen Z group are not a monolithic group. There are lots of different ways that people behave with finances and that's true across different financial spectrum.

7:29What we do see at Fairfield Finance, and as an organisation that's kind of focused on really making sure that people who are being excluded from financial services, who are being underrepresented, are seeing their voices heard, is that the data does seem to suggest that, at least in self-reporting, lots of people that would fit in the category of Gen Z are reporting lower confidence with managing money, feeling that they're not getting access to products and services, and that their experiences versus other age group and demographic groups seem to be suggesting a greater sense of exclusion. But I think the point on literacy versus capability is a really important one because testing your knowledge of something versus actually being able to apply it to very different things.

8:16And that's, again, something that Zain had touched a little bit about. We probably need to get a little bit deeper, but I won't hold the mic. Yeah, absolutely. I'm sure we're going to cover all of these issues as we go through the conversation. I mean, we also asked our audience exactly what they saw as the biggest barrier to Gen Z feeling financially secure. So we kind of gave them the option of the cost of living, not earning enough, lack of financial knowledge and financial products not being built for them. And actually the winner, you know, 57 % of the vote was the rising cost of living. Neil, probably seems a good point to bring you in.

8:46Was that result a surprise to you that actually, this is new for all the points that Zaynab and Deanna have made, this is a generation that has different starting points, but also there is just this massive issue in that they just have a fundamentally challenging financial environment, right? No, absolutely. I'd say like everyone talks about the lack of financial education and I thought Zainab made a really good point. But when I think of that or while we're here, it's more about the confidence and ability to handle the traditional financial products. So everyone thinks mortgages, overdraft, credit and that sort of stuff versus actually all the tools that are out there today.

9:20that the younger folks are much better at using it. But the still traditional products, I think, are still what drive most of the finance and are really important. And there is a huge lack of education there. But, and I would say the challenges for young people today are actually harder, higher cost of living, higher interest rates. So the cost of getting stuff wrong is higher. So not having that education is important, but let's be honest, that's not the real problem that everyone's in such trouble. It's things are more expensive. People aren't paid enough. You know, these are the structural problems.

9:52Without a doubt, if you're more financially savvy than one person or another, you'll be able to manage these challenges better. But let's think about the real problems. And it's this challenge. And I think, you know, it's like a multi-pronged approach, right? We can't just pay people more. That would be great. Can't make costs lower. So how can we look at all of it together? But education helps. And then finally, I would say it's not just let's tell young people how to understand these products. Let's re-explain these products or change the product so they can get it, right? So, you know, one of the pieces, the stats from our research was almost half of young folks don't even understand what APR is, right?

10:32And that's been historically the benchmark to evaluate credit. and then even over half don't know if you miss a payment that affects your credit record. So we can still fix those things, but it's also part of lenders, banks, etc. to explain these things a lot better, I think. Yeah, no, absolutely. I mean, as I said, obviously, Neil's talking about there being financial products that are just established parts of the financial system. I mean, how do you look at this? Do you think that Gen ZR should need to adapt to existing financial products or do you feel like we need to have new financial products for a new generation?

11:10I think the existing products need more transparency at the point of use and also more flexibility for our non-linear lives. I think those are the main concepts that would benefit Gen Z because my parents accepted opaque pricing because they had to and they had one bank, one branch manager and the terms were terms. But my generation can compare shops in real time just using AI also. So the financial services industry hasn't caught up with that. Also, flexibility matters a lot because our lives aren't linear. We might freelance, relocate to Thailand or go back to study. Products designed around a steady income stream, a single employer and a predictable 40-year career don't really reflect our reality.

12:04I want a savings account that doesn't punish me for needing the money back. I want credit that understands gig economy. I want an investment product that I can start with 50 pounds. So I think those are really important points that financial products might not, financial services might not, might be missing for us. Yeah, no, I think there's some absolutely great stories in that. I mean, Diana, from what you're saying, obviously, yeah, what Zainab's talking about in terms of that non-linear lifestyle, we have started to see I believe you know that's a traditional sequence of life fade away and shift right like what impact are you seeing that have yes absolutely I think the playbook that had been laid out for how to do things and how to kind of progress be it financially or through the set milestones has changed massively what was true for the Gen X or kind of the boomer generations just looks completely differently for some of the millennials but also for the Gen Z generation and I think what's really important to acknowledge there is this focus on the fact that the financial services products that exist potentially just aren't fit for purpose anymore for the younger generation of consumers and what's really really important there is to not focus too much accountability on the consumer and think about how products need to change to fit what people need.

13:25what we've seen historically is that there's been a big focus on saying well people just need to be better financially educated or there needs to be greater financial capability and I think we can acknowledge that firstly education capability slightly different things as I was saying kind of being able to know how to use your money slightly different to knowing a definition of something but that alone doesn't resolve or absolve organizations of responsibility to provide products and services and to make sure that they actually include the people that are currently being excluded. And I think that's a really big part of the conversation around everybody needs to do their part and it might be that consumers need to do their part in terms of how can they help themselves be in a better financial place and organizations need to do their part in developing better, more flexible, transparent products that are designed for not just the perfect consumer who has a great salary, has a great job, but also for people who are out of work temporarily or who are students or who are doing an apprenticeship because that looks really differently now in the way that you look at the Gen Z population.

14:29Yeah, absolutely. Neil? Oh, yeah, I was going to agree with pretty much all of that. And a few things that both of you said, I think it comes down to transparency, right? Like we're talking about like this, oh, this is a generation, they don't understand everything. But it goes to what Zeynep was saying, is financial services have gotten so used to this opaque pricing everywhere, right? So then you could start charging people for all kinds of different things. And if you look at the business model for most financial services, lenders, particularly banks, it's all these, like if you applied that business model to anything else, it would make no sense.

15:03Imagine a restaurant where if you're stuck there for longer, you pay more. Or by the way, if you ordered the wrong thing, you get charged. It's like, but we've accepted this with financial services because it's so bloody confusing, right? excuse my language, but if we just made the, like the responsibility, because you can make a lot of money in this space, right? It's regulated, it's protected. So the responsibility to be a regulated actor in this space should be transparency, right? Everyone should be able to understand it. I mean, you know, with credit strength, that's why we've removed the interest rate completely, because we think it's too confusing.

15:36But it's like, if everyone had that responsibility, I think you'd see a lot, lot better decisions instead of this sort of, you know, let's play tricks on people and make more money. Yeah, no, absolutely. I mean, I would say, again, I'm not a member of Gen Z, sadly. I'm getting old and haggard now as a millennial. But I suppose I find this idea that Gen Z are less informed, it's just absolutely ludicrous. I think with the kind of torrent of information that I receive on social media about all of my life choices, mainly about how I'm failing my children and not parenting them properly and all that sort of stuff.

16:08I think of kind of the amount of information that is available. When I was in my early 20s, starting my professional career, I didn't have this tirade of judgment from social media about what I was doing, the choices I was making. Was I investing? Why aren't I investing? Am I saving? Am I saving for the right things? Have I got enough side hustles? I just find it really, really, really bizarre that people think this generation are not informed as you say now like the cost of doing the wrong thing are higher and also i think certainly from what i can see looking in from the outside it feels like this information is almost like inundated with advice and guidance that's not regulated that is sort of trying to kind of persuade them that they should or shouldn't be doing certain things um so now obviously you are in the but you're probably in this social media um space like is that how it fails or have I misunderstood?

17:02No, there is definitely an overwhelm of information and we do learn investment also through TikTok and then when we're trying to manage this information and deduce what is beneficial and what is correct we do that talking to our friends, talking to our parents talking to our advisors but we also use AI in those terms to understand the terms and the structure better but AI is not a vetted investment agency. It doesn't have any fiduciary responsibilities and that's also a very dangerous position to be in. Yeah, no, absolutely. Yeah. It's really interesting to hear you mention this point, Zena, because I was just reading an article, well, a post that the FCA shared, the Financial Conduct Authority, which was talking about exactly that, that almost 44 % of people mistakenly believe that AI-generated financial information is fully regulated or they can be constituted as financial advice.

18:02And that data sort of is specifically focused on people between 18 to 40, many of whom said that they would trust AI tools over things that they hear on the radio or that they read on trusted news channels. And that's quite an interesting shift in the way that people are interacting with using kind of AI tools, something that we're sort of thinking a lot about at Fairful Finance is how do you ensure to bring together that kind of human touch but also digital support tools to help people provide kind of some guidance on how they might manage their finances and actually that was one of the pieces of feedback we got in a consultation we did with over 40 organisations around what they think financial capability support could look like and the key things that we learned from that consultation is that a lot of the charities that work in the sector and other organizations that work in the sector do think that there is a kind of a gap of support for people between 16 to 25 especially if they're not going into employment or university there is this gap in terms of what's happening in terms of the financial capability support that they are getting and also that more can be done to kind of bridge the gap and the tools that are available.

19:23And so we've launched or are due to launch a 15 million pound fund with new funding that we received from the UK government to support on that work. So that will be happening kind of over the next few months. But it was really interesting to get that feedback from multiple organizations about what are some of the gaps, what's working well, what's not working well. And again, just acknowledge that the point I was making earlier about Gen Z being a really diverse group. There are lots of people who are going into employment, traditional careers that allow them to work remotely and are higher earners.

20:00And there are lots of people who aren't doing that, who have fallen to that one million people who are not in employment or education or training. And those are the people that are potentially kind of falling through the cracks, even though I kind of hate using that phrase, but I guess it's to represent that there are people who are maybe not being envisioned in some of the data that we're seeing. Yeah, I mean, I'm interested to think about as well, it's really great to hear that that sort of funding is becoming available. I'd be really interested to kind of see how this space changes in terms like who are the people, the places, the organisations that this generation wants to be able to turn to for advice and for support.

20:40Obviously, again, a lot of the high-level analysis of this generation talks about, it's all about influencers, it's all about brand permission and brand trust. I mean, I think I saw a survey horribly out of date now from 2025 from YouGov that was saying that Gen Z are much more likely, this was in the US, to really value companies having sort of a moral message and it was scored kind of much higher than other generations, really kind of valuing companies that stand for something and talk about that and justify that and make that clear and what they do and how they behave. So I'm interested to see how that plays out in filling this gap.

21:20Who are the companies that are actually going to be able to credibly step into this space with a moral message that the products and the services that stand behind that actually hold true to? So, yeah, Neil, obviously, I guess a key part for this will be in the lending space, right? Like, you know, being able to kind of take a product to market that is truly ethical under the lens of an audience that are asking the questions and wanting to see the evidence is a much harder challenge, right? Oh, absolutely. I mean, I think the whole industry needs to change a lot. Going back to what I said is the temptations to make money in sort of a predatory way.

21:56But at the same time, there's a huge amount of trust to be rebuilt. And, you know, we're in the space where credit swing, we're lending, you know, like I said, key workers. It's the average salary. People have very little savings. And the reality is it's a sector that most investors don't want to touch. People are scared of still because of all the bad history. So it's quite a hard job. But I think we need more and more people to enter this space. You know, I'm extremely biased here. But, you know, when I look at the investor community and everything else, they're all investing. Like, how can I help rich people save more money is like a great way is an easy thing to raise money for.

22:32But if we're talking about lending money to lower income, no one wants to touch it. And then I actually think this is the area that needs way more help. You know, thank God for folks like Fair For All and stuff who are in this space. But it's like if we could make actually investing and helping this sector and you can still turn a profit, you can do it in a correct way. You can still help people. you could almost make it you can turn it upside down and say this is a place we have to be involved in but there is a big reputational thing there there's a bad history there and all that and the industry needs to get over that yeah and absolutely um i mean i've thought i think before we kind of close out this section start to think ahead to what the future looks like i mean is there anything that we've not covered in conversation so far that you think is important to flag about this generation how they're thinking how they're looking at the world of money I think when you mentioned who we turn to learn or for advice, I think there was one thing that was very important for at least for my financial understanding as well, which was teaching without lecturing.

23:33And that really came into my life while I was using apps, actually. And we can look at Monzo. Like we can, you can wear, so for example, in Monzo, you can use their salary sorting feature, which is like your pay automatically gets splits across bills, pots, saving money. And it's not marketed as financial education. It's a product feature. So I think mixing those, combining those product features with financial lectures and without having that lecture part, but the inherent essence of what financial knowledge is supposed to be. I think those are the points where we need the innovation, where how we can combine Gen Z with the financial services much more efficiently.

24:24Because the product feature teaches budgeting by doing it for you until the behavior becomes an instinct. And then you can see your real-time expenditures. You can see how much you're saving automatically. And that's like the new syllabus in action instead of the old syllabus and how we're failing to understand finance. So no one had to sit through a model called introduction to budgeting. It was just like a part of our, just an extension of our daily expenditure and introduction to work. So I think these kind of nudges are the important parts that we can actually get better at. Okay, awesome.

25:07Well, we've already had some great discussions so far on how Gen Z is entering financial services, some of the different economic circumstances, behaviors, expectations, and what seems to be working so far. After the break, we're going to turn that question around. If Gen Z's financial lives have changed, and they obviously have, how much does financial services need to change to keep up with them? We'll be right back.

25:37practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. Listen to the heartbeat. Chevy is called the heartbeat of America for a reason. With SUVs made to move with your rhythm. The versatile Equinox tackles your entire day The spacious Traverse fits your crew and your whole weekend And Trax brings style with value you can count on All infused with tech that has your back So your drive always hits the right chord Chevrolet, together let's drive

26:29Welcome back to Fintech Insider Where we're exploring Gen Z's relationship with money and whether financial services is keeping up. Okay, I mean, let's just get the big thing out in the air first. We talked a little bit about AI in the first half of the show. It's impossible, so it's terrible for any conversation about fintech if I talk about AI nowadays. But there does seem to be an interesting contradiction here. So Lloyd's Banking Group found that 76 % of 18 to 24-year-olds have used AI for personal finance. So that makes them the UK's most enthusiastic adopters of AI for personal finance. but only 64 % feel confident about using their finances with digital tools compared to 85 % feeling confident when you look at 65 to 74-year-olds.

27:08So, Zeynep, what do you think is broken here? We've got higher confidence for older generations. In theory, should be less digitally savvy. There's something broken, right? Yes. The data on this is genuinely alarming. and that discrepancy between financial fluency versus tech fluency, they go in opposite directions as from what we expect. And as Diana previously pointed out, the FCA flagged literally like five days ago or so, that 56 % of AI tools, like 56 % of their participants in the survey, They were using AI tools for investing and they trusted AI more than TV, radio, press and so. And AI is not regulated.

28:09The user, 44 % of the users wrong to believe that the AI generated financial information is regulated, but they do not have any fiduciary duty. And when you look closer at those surveys, what they're self-reporting, the use cases are broader than what people assume. Many people use AI for goal setting, action plans, budgeting, expense management, and so on. But there is a use case that I think is more revealing than all the others. and three and four AI users say it lets them ask the financial questions that they're too embarrassed to ask other people. And that's huge. It tells you that the barrier to financial understanding for young people isn't laziness or disinterest, it's the social shame.

29:01Nobody wants to admit that they don't know what APR means. Nobody wants to call a bank and say, I don't understand my pension statement, but you can just use an AI chatbot and it does not judge you. And that's the old syllabus showing up again in a new way. The traditional model says, go sit in a financial education class or read a pamphlet or go talk to your advisor. And Gen Z's model is, ask Chachi PT at midnight privately while you're so embarrassed to talk to your friends. The motivation to learn is there, but the infrastructure to support it safely, it's not. And we have to break that social stigma.