Generational and Cultural Divides in Financial Responsibility

Preferences and demands across generations are changing. Older and younger consumers have different views about who’s responsible for ensuring that people don’t get into debt, how comfortable they are in sharing their financial data, and how important the environment is in decision-making.

After surveying over 7,000 consumer globally, we have identified key behavioural differences across generations:

• Debt Responsibility: Who should ensure people don't fall into debt?
• The Role of Data: How comfortable are they with sharing their personal information?
• Banks and Lenders: Supporting Financial Stability and Inclusion

The answers collected show a clear generational and cultural divide, that poses a unique challenge for banks and insurance companies in meeting the diverse customer needs today. On one hand, they must tailor their offer and ways of communication to involve younger customers while, on the other hand, they have to ensure their services remain accessible to older customers too.

In this dynamic environment, technology, agility, and responsiveness are crucial for financial providers.

Debt Responsibility: Who Should Ensure People Don't Fall Into Debt?  

The majority - nearly three-quarters - of consumers worldwide believe that the individual person is the one responsible for ensuring they don’t fall into unsustainable levels of debt – with this opinion most strongly held by Austrians and Americans.

However, nearly half also believe it’s the bank or lender’s responsibility.

Interestingly there appears to be a generational divide when looking at responsibility for personal debt levels. Generation Z is more likely than others to believe that the responsibility should fall on family or friends.

We also saw a similar theme across the following age groups of 25-34 (45%), 35-44 (47%), 45-54 (48%) and over 55s (52%) who said that banks or lenders are responsible for making sure individuals don’t fall into unsustainable levels of debt. By contrast, just 35% of 18-24 year olds agreed with this.

Similarly, CRIF’s research highlighted several cultural divides between Americans and Europeans. Specifically, half of Europeans compared to just a third of Americans believe banks and lenders are responsible for ensuring that individuals don’t fall into unsustainable levels of debt.

Consumers in America emphasise the responsibility of family members too, with 25% saying that families play a role, compared to just 14% in the UK and 18% across Europe in general.

The Role of Data: How comfortable are they with sharing their personal information?

Real-time and comprehensive customer data helps financial institutions make smart decisions, identify opportunities and address potential risks in offering customers suitable and relevant products.

Innovations like open banking enable consumers to share their financial information securely, accessing more favourable conditions or hyper-personalised services.

Half of consumers worldwide are willing to share data if it means accessing financial products at a cheaper rate, if it helped with improving their credit score or if it helped with being offered more relevant products and services. Generally speaking, younger generations are more willing to share their information than their older counterparts.

Looking at what the market offers, today there are example of personal finance-focused FinTechs that offer innovative credit products and services, such as subscription-based interest-free loans, which are easier for consumers to understand and compare. There are also example of tier one UK banks that are also launching financial education programmes to help people build their financial knowledge and confidence. This is to balance the demand with the offer of new financial services.

The Role of Banks and Lenders

While individuals bear some responsibility for managing debt, banks and lenders play a crucial role in educating customers and promoting responsible lending. The vast majority of consumers worldwide believe that banks and lenders should conduct full credit check before providing services to prevent financial difficulties. This sentiment is echoed across Europe (81%) and the USA (78%).

Additionally, 71% of consumers believe financial institutions need to do more to support individuals with unmanageable debt, and 82% think banks and insurers should offer products suited to specific financial difficulties, such as loans with flexible repayment options.

Supporting Financial Stability

It is clear that financial providers are key in supporting consumers in managing their finances, particularly about credit and debt.

By understanding shifting consumer sentiments across generations and focusing on consumer perceptions and desired solutions, banks and insurance companies can effectively assist individuals in managing credit responsibly and achieving financial stability. This includes offering tailored products and services, whether that be insurance-focused or credit-focused, and building inclusive products that appeal to all consumers, regardless of age or economic background.

Enhancing Financial Inclusion

Implementing innovative solutions and open banking services provide customers with a transparent and comprehensive view of their financial situation, ensuring informed decision-making, better financial planning, and early intervention to prevent debt escalation.

Moreover, offering financial education programmes is crucial for fostering long-term financial literacy and equip individuals with the knowledge and skills necessary to manage their finances effectively, avoid debt traps, and build a secure financial future.

Financial inclusion and responsible lending play an important part in enhancing customer satisfaction and improving loyalty in an increasingly competitive environment.