(Sponsored Content) Are Today’s Mortgage Servicers Ready for Gen Z?
Neil Williams is Director of Consumer Finance with ACI Worldwide, Naples, Fla. He is an accomplished sales and business development executive with more than 25 years’ experience in financial services. In leadership roles at ACI, First Data and other fintechs, Neil has specialized in digital solutions, online banking, alternative payments and strategic alliances. With a vision and focus on emerging technologies, Neil works closely with clients and partners, developing solutions for mutual revenue growth. He has an extensive background leading teams to deliver comprehensive payment solutions for Fortune 500 companies in banking, consumer credit, insurance, telecom, and other industry verticals.
Generation Z is beginning to enter the housing market and pay mortgages of their own. In order to prepare, servicers must address their unique needs.
Millennials have dominated the housing market in recent years. This group was responsible for more new mortgages in 2018 than any other generation, with a share of 42 percent, compared to 40 percent for Generation X and 17 percent for baby boomers. As Generation Z begins to pay mortgages of their own, the housing market needs to prepare. This group, ages 18 to 24, is the first to have utilized technology at a very young age, from smartphones to connected smart home devices and more. In fact, Gen Z’s early affinity for mobile technology increases their ability to absorb new information and allows independence – key traits when thinking about the likelihood of looking ahead to buying a home and preparing for a mortgage.
As Gen Z begins buying homes in the coming years, and subsequently paying a mortgage each month, how can servicers prepare for their unique needs?
Gen Z Compared to Other Generations
For mortgage servicers to sufficiently evolve and adapt to Gen Z’s needs, it is important to understand how this group stacks up against generations prior. From payment method and channel to notification method and customer service preference, mobile technology is leading the pack for Gen Z.
According to the ACI Speedpay® Pulse, Gen Z (13.9 percent) is more likely than Gen X (12.6 percent) and baby boomers (3.0 percent) to make one-time bill payments via a mobile app, with Gen Z stating efficiency (75 percent), convenience (68.3 percent), and simplicity (57.8 percent) as the top reasons why. What’s more, Gen Z is more likely than other generations to utilize mobile wallet payment methods (34.9 percent), with 13.1 percent of those stating that they use this payment method daily. In contrast, only 9.2 percent of baby boomers utilize the mobile wallet payment method, with 1.3 percent doing so daily.
The data also shines a light on Gen Z’s preferences for mortgage payment methods in particular. Traditional paper checks as a form of payment is headed out the window — especially for younger generations — with just 3.6 percent of Gen Z (in comparison to 29 percent of baby boomers) preferring checks for one-time mortgage payments. In fact, when it comes to making these payments, Gen Z is significantly more likely to use a debit card (49.6 percent) compared to baby boomers (10.7 percent), who are more likely than all other generations to utilize checking account deductions (53.4 percent).
Addressing Gen Z’s Preferences
For servicers looking to adapt to consumer needs, it’s best to understand the types of technological advances expected by Gen Z. Ask the following questions to prepare for Gen Z’s emergence in the housing market:
1. Who is the demographic?
By having a clear picture of the target demographic (in this case, Gen Z), servicers will be able to anticipate their needs. Servicers may gain insight into consumers’ interests by utilizing research. They must stay familiar with current popular billing and payment channels, methods and notifications, and what they may be in the next five years.
2. Where can we implement mobile options?
It is crystal clear that the time to jump on the mobile payments bandwagon is now. With mobile payments on the rise, servicers need to adopt mobile offerings or risk missed payment opportunities.
3. How can we serve all customers while preparing for Gen Z?
Gen Z should have the attention of today’s housing market – but that doesn’t mean neglecting other generations who are also paying a mortgage. This means offering payment options for baby boomers who may prefer low-tech billing and payment alongside more high-tech options for younger groups. To improve the customer experience, servicers need to constantly educate all customers about new payment technologies.
4. Are we continuing to evolve?
When it comes to billing and payment methods, technology is always changing. We’ve seen it in recent years with the transition from checks to debit cards. And while servicers need to constantly focus on meeting the needs of current customers, it’s important to think beyond the now and into the future. It’s necessary for servicers to think about what kinds of new payment methods will come into play and how they can adapt.
Today’s housing market will see a spike in Gen Z customers in the coming years. It’s important for servicers to understand the needs of this group in order to best adapt when it comes to methods and channels for mortgage payments. In asking themselves the above questions, servicers can hopefully walk away with a clear picture of how they can evolve for this new generation of home buyers.
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