A new generation of decision-makers, referred to as “Next Gen” SMBs, is emerging as small and medium-sized organizations change. These people, who are characterized as being between the ages of 18 and 35, are changing business processes because they are receptive to new ideas, have a preference for both traditional and digital banking, and heavily rely on social media for their education.
In order to provide the appropriate tools, resources, and banking experiences, financial institutions must have a thorough awareness of the distinct demands and features of this market. A recent survey’s key findings highlight how these decision-makers are bringing about change and what financial institutions can do to help them expand.
Embracing innovation
The eagerness of Next Gen to try out new tools and technology is among their most notable traits. Next Gen is in an exploratory stage, in contrast to earlier generations that may have developed routines and preferred tools. 41% of these decision-makers are currently utilizing six to nine banking innovations, compared to just 24% of previous generations, per recent data from Visa’s report, Next Gen Small Business Owners: Understanding the Banking Preferences of Gen Z and Young, Millennial SMB Owners. This receptivity to new ideas reveals a significant change in the SMB environment. They are open to incorporate a range of tools and solutions to suit their needs and are actively looking for what works best for them.
Compared to more seasoned SMB decision-makers, who often adopt more conservative company strategies, Next Gens are noticeably more likely to take chances (+8%). This inclination to take risks results in increased use of cutting-edge and novel technologies. The most widely used innovation is e-invoicing, which 56% of Next Gen use.
Significant discrepancies exist in the use of other cutting-edge technologies: Next Gen uses biometrics (+15%), virtual cards (+18%), and tap to phone (+15%) more frequently. These technologies, which provide safe and scalable financial solutions, are essential for modernizing business operations.
Additionally, Next Gen uses a variety of financial tools more frequently, such as online marketplaces for SMB loans (+9%), supplier payment management (+7%), cash flow/money management (+7%), spend management tools (+7%), and online SMB lender or credit resources (+7%).
Value in-person banking experiences
Next Gen still has a great appreciation for the conventional in-person banking experience, even though they lean toward digital innovation. Notably, 68% of these decision-makers continue to use traditional banks for their principal business accounts. They still do a greater percentage of their banking in person, even though they do around two-thirds of their banking online. This dual strategy shows that, even if people are receptive to fintech companies and digital-only financial institutions, the reliability and trust of a physical bank branch are still very important.
Building trust and personal relationships, getting tailored advice, and doing intricate banking procedures in person are all valued by Next Gen. More Next Gens want regular check-ins for help, suggesting that they value proactive communication. They are able to efficiently manage their funds thanks to the combination of traditional and digital banking.
Lower confidence in business insights
The confidence that Next Gens have in business insights is a significant obstacle. According to the findings, only 43% of them place as much importance on tools that properly interface with their current financial systems as 57% do on high-quality, bespoke solutions. However, this emphasis on customisation and quality has resulted in fragmented data and less coherent conclusions.
Nearly 25% of Next Gens say they have trouble deriving useful business insights. Making well-informed judgments may be hampered by this fragmentation, indicating the need for more comprehensive and integrated solutions. Next Gens may make data-driven decisions, streamline operations, and spot growth prospects with the use of tools that offer insightful data on spending trends, cash flow, and consumer behavior.
Using social channels for education
Social media has emerged as a crucial tool for Next Gens in our interconnected environment. More than any other source, a noteworthy 41% of them get their banking information from social media. This trend emphasizes how social media platforms serve as an essential teaching tool in addition to being a platform for client involvement and promotion. As learning becomes more dynamic and accessible, Next Gens are using these platforms to remain up to date on the newest banking and financial tools.
Due to their increased use of social media and existing sales networks, Next Gens generate a higher percentage of their revenue from overseas sales. While previous generations preferred their own direct-to-consumer websites, they are more likely to sell online using social networking platforms, online shop platforms, and specialty platforms.