As 2025 approaches, the dynamics of brand loyalty are undergoing significant changes, particularly in the banking, healthcare, and political sectors. Adam Reader of M&C Saatchi, speaking to The Drum, outlines how two powerful forces—the Great Wealth Transfer and Generation Z's declining loyalty to traditional brands—are converging to reshape these legacy-driven industries.
The Great Wealth Transfer involves over $68 trillion being passed down from baby boomers to younger generations, with financial institutions at the centre of this historic transition. Concurrently, Generation Z is emerging as a formidable market force, characterised by a brand-agnostic attitude and a values-driven mindset. The implications are profound; legacy brands can no longer rely on inherited loyalty and must actively work to earn the trust of a discerning younger generation.
Reader identifies four key trends that are expected to shape brand loyalty by 2025:
Bridging the Financial Literacy Gap: The Great Wealth Transfer has revealed a substantial lack of financial preparedness among affluent families. According to Bank of America Private Bank, nearly half of wealthy families do not have basic estate plans, while a Citizens Bank survey found that 72% of Americans feel unprepared for significant inheritances. Generation Z, facing both financial caution and a lack of financial education, presents an opportunity for financial institutions to provide valuable educational experiences. In 2025, banks and financial advisors will need to focus on interactive workshops and gamified tools designed to enhance financial literacy, fostering trust not only with inheritors but also with their parents.
The Rise of Fintech and Personalised Banking: Expectations for financial services have evolved with Generation Z, who demand digital-first, transparent, and personalised solutions. Open banking is transforming the financial landscape, enabling third-party providers to deliver tailored services. Fintech companies are already exploiting this change by offering customised experiences that incorporate gamification and loyalty programmes. Traditional banks are compelled to innovate in order to compete, embracing hyper-personalisation to capture the loyalty of Gen Z. This will involve real-time financial insights, gamified savings challenges, and rewards linked with social impact.
Grassroots Influence and Authentic Connections: While younger generations historically sought financial guidance from parents or advertising, Generation Z increasingly turns to social media. However, they display a growing scepticism towards paid influencers, with nearly 50% describing such partnerships as "insincere." As a result, they rely more on informal recommendations from peers or unpolished testimonials. Financial institutions must create human-centred experiences that promote direct connections through micro-communities and independent advisors. Strategies that highlight inclusive storytelling on social media are essential for building long-lasting relationships.
Ethical Finance as a Loyalty Driver: Generation Z’s values-driven perspective is reshaping the finance sector, leading to a heightened demand for brands to align with their ethical priorities. Environmental, Social, and Governance (ESG) investing has transitioned from a trend to a necessity. Institutions that overlook this pivotal shift risk alienating a generation that views money as a vehicle for positive change. To capture the loyalty of younger consumers, banks should focus on showcasing ESG-driven funds and offering transparent reporting on the impacts of investments.
The confluence of the Great Wealth Transfer and Generation Z's fluid relationship with brand loyalty signals a transition in how brands will need to earn allegiance. Legacy institutions are tasked with the challenge of fostering trust and understanding across generations through personalised strategies and values alignment. The ability to engage and build connections will ultimately position these organisations to thrive in a rapidly evolving business landscape, transforming potential challenges into opportunities for lasting loyalty.
Source: Noah Wire Services