Why does Gen Apha engage with banking apps?

Résumé 0

Generation Alpha, which includes individuals born between 2013 and 2025 and currently under 13 years old, is projected to be the largest demographic group in the world by 2025. This group is estimated to include approximately 2 billion potential consumers (Carter, 2016; McCrindle & Fell, 2020; Arora & Jha, 2020). As these young consumers gain financial independence and spending power, financial institutions are seeking to attract and retain them over the long term. However, this presents a challenge, as these institutions first need to understand their behavior and identify the differences between them and their predecessors, particularly regarding their motivations and expectations in using banking services. Despite their increasing financial inclusion as new banking consumers, little research has been conducted to explore Gen Alphas’ financial behavior and motivations to use digital banking (Buszko et al., 2020). This study aims to bridge that gap and draws on the Uses and Gratification theory (Katz et al., 1973) to identify the factors that motivate Gen Alpha to engage with banking apps. We conducted two studies to achieve this objective. The first study involved a focus group of seven young users of banking apps and investigated their habits with banking apps and the benefits they received from using such apps. The second study was a survey that included 250 users of banking apps aged 10-13 to identify the benefits that drive their engagement with banking apps. The results of the study show that the decision of Gen Alpha to engage with banking apps is strongly influenced by the perceived usefulness of the app, financial incentives (discounts and cashback), cognitive gratifications (knowledge and information acquired), as well as social (social interactions), and personal gratifications (status and social recognition). However, hedonic gratifications have little impact on their engagement. This study enriches the literature on generational cohorts in banking and Gen Alpha literature by exploring Gen Alpha’s behavior as banking consumers. It also provides recommendations for financial institutions to fulfill the expectations of Gen Alpha. Empowering Gen Alpha and providing them with personalized and interactive experiences are significant actions likely to engage them in the long term.