Last month we shared data which showed that Generation Z - people born from roughly 1997 onwards - has seen the biggest decline in loan offers of any generation in 2023 so far.

The question is, why might that be? It’s not a wide trend across generations, because Baby Boomers, Gen X, and Millennials have all seen loan offers increase. Why has Gen Z, the UK’s biggest cohort, experienced the opposite trend?  

What we do know for sure is that this represents a massive lost opportunity for UK credit providers, but what can they do to turn the situation around?

To answer that question, we created a LinkedIn poll for our team and other industry followers. We wanted to know what might be done to help drive financial inclusion among Gen Zers. Here's the results:

Product Innovation 5%
Financial Education 42% 
More Risk Appetite 32%
New Decisioning Data 21%

As you can see, the results were quite evenly split, though we were surprised to see Product Innovation positioned as the least important factor. Gen Z is by far the most “digitally native” generation, and innovation in technology has often been the entry point for younger people into established finance products, particularly in the world of banking.  But it is clear that to drive financial inclusion in this generation, we need to dig deeper.

So we asked respondents to go into more detail about their choices.

Monevo Group Marketing Director Danny Mahon said:  “Fundamentally, the reason Gen Z consumers do not obtain as many offers as other generations is that lenders do not have a strong enough credit profile on them to make decisions. The majority are not homeowners, and many do not even have a credit card. A leap of faith needs to happen to allow these consumers to gain traction earlier in their lifetime. Other decisioning data is vital to this, utilising open banking and rental data, but ultimately, without the appetite for risk, it will be harder for credit providers to build a positive impression with these consumers until later in their lives.”

Decisioning Data was the answer chosen by Haithem Hilal, Head of Data and Analytics at Monevo, who commented: “A high proportion of Gen Z will have no or thin credit files and as a result may struggle to obtain credit as they pose an unknown risk for lenders. Those lenders that innovate by utilising new decisioning data, such as open banking or rental data for example, alongside traditional credit reference data, can identify those consumers that fall within their risk appetite and so can continue lending responsibly and improve financial inclusion.”

However, Financial Education attracted the biggest proportion of the vote with 42% of respondents opting for this choice. Mark Johnson, Commercial Director for Acquired, explained why this might be: ’’The Gen Z cohort can take steps to build their credit and demonstrate their creditworthiness. This includes making on-time payments for existing student loans and ensuring they avoid opening too many accounts at once. 

“While those in Gen Z face unique challenges when it comes to accessing loans and credit, there are also opportunities for them to build their credit and establish financial stability early on in their lives. Education and awareness is key to this, as well as the ability to access innovative credit providers supported by an ecosystem aimed at reducing friction. This includes tailored payment options, dynamic data reach and decisioning capability.’’