As Generation Z enters the credit market in record numbers, they're bringing expectations that old collections strategies simply can't meet. Born into a world of instant connection and raised on smartphones, this generation doesn't just prefer digital-first experiences - they demand them.

But here's the challenge: Gen Z isn't just another demographic to add to your customer segmentation. They represent a fundamental shift in how customers want to interact with financial services, especially during tough times like being in debt. They expect clear information, instant communication, and real value - not outdated methods that feel more like harassment than help.

With 12.7 million Gen Z customers in the UK alone, ignoring their preferences isn't just unwise, it's bad for business. The question isn't whether you need to change your collections approach, but whether you're ready to meet them where they are, on their terms, before your competitors do.

The old ways are no longer effective. Here's what you need to know to create a new approach.

Understanding Gen Z

• Born: between 1997 and 2012
• UK population: 12.7 million
• Global presence: Makes up a third of the global population
• Digital natives: The first truly digital-native generation; 98% own a smartphone
  
  • 91% think credit monitoring is important
  • 50% spend their entire monthly income on living expenses
    
    Source: Sustainable Growth for Lenders (TransUnion, 2023)

Get to know your Gen Z customers

Value-driven, quick to switch, digital-first

Growing up as digital natives, Gen Z expects instant access to information. They use apps and online services to constantly check their financial situation and expect valuable insights, advice and offers that empower them and reduce worry. This is crucial when they experience a debt issue. If you can’t deliver, they’re happy to switch providers instantly.

Real-time data guides their choices

Gen Z uses real-time data as a safety net. They frequently check messages, bank balances, seek advice and look for better prices and offers. As a credit provider, you’ll need to keep them informed to help them avoid nasty surprises like unexpected overdraft fees or Direct Debit failures. If they’re heading into debt, they will expect you to notify them quickly and advise them of the options. They will be keen to protect their credit rating. A solid pre-arrears strategy will pay off.

Digital-natives but…

It’s impossible to overemphasise Gen Z’s preference for digital channels.

Gen Z's disinterest in phone calls is clear: many don't even have the phone icon on their home screen or keep 'Do Not Disturb' active 24/7. In fact, a 2024 Uswitch survey shows 23% of 18 to 34-year-olds never answer their phone. Yet as a group, when things are really difficult, they still look for human interaction. So, don’t get rid of your contact centre just yet. Gen Z is willing to call or talk in person – but only when it’s absolutely necessary, on their terms, and in their favour, not yours.

When looking at Gen Z channel preferences, you’ll need to think beyond just email and SMS.  The 2024 Social Media Content Strategy Report found that TikTok is their favourite channel for product discovery, closely followed by Instagram. The report also indicated they are also most likely to use TikTok and Instagram for news updates, and Instagram specifically for customer care. It’s unlikely Gen Z customers will visit your website to look for a support page or a phone number. You’ll need to be proactive on social media, ensuring help and information are easily available where they feel comfortable.

Bad actors, influencers and the fight for Gen Z attention

The power of influencers presents both a challenge and an opportunity for debt collection and debt advice. A quick look at TikTok shows that ‘advice’ is instant and everywhere, but it’s not always from informed or responsible people. Sometimes it comes from bad actors – trolls, fake accounts, bots or agitators.

Advice about being in debt attracts some of these bad actors. The competition for attention means you will need to think about making money management issues easy to understand, relevant and compelling - delivered by people who can relate to the generation and motivate them. 

According to the Financial Conduct Authority, 62% of 18 to 29-year-olds follow social media influencers.
74% trust their advice, and 9 in 10 young followers have been encouraged to change their financial behaviour.

The next move is yours

As your Gen Z customers increasingly come into contact with collections, they will expect instant, convenient digital service as a minimum. They will want easily available information and advice on managing money, forewarning of problems and incredibly personalised, real-time communications on the channels they use daily. If they need to call you, they’ll expect your team to know everything about their situation and every interaction they’ve already had (on every channel).  They look for genuine interest and value in them as customers, and they have a lifetime of business to offer your organisation in return.

Are you ready to evolve your collections approach for this important generation?  Learn more about how Flexys can transform your collections strategy - for every generation.