Fintech ETF Is Right Avenue to Gen Z Banking, Spending Trends

Thanks in large part to Millennials, more market participants are becoming aware of investing along demographic lines. With Gen Z coming into their own, demographic investing is all the more relevant.

Some exchange traded funds target specific demographics, and some of those are dedicated to Millennial themes, and investors don’t have to stretch to tap into Gen Z-related themes. On that front, fintech exchange traded funds, including the ARK Fintech Innovation ETF (NYSEARCA: ARKF), are accommodating.

“Millennials ushered in the era of financial technology as we know it by embracing payment apps like Venmo and investing platforms like Robinhood and Acorns. But Gen Z grew up immersed in that technology—and they won’t be attracted by ease and novelty the way earlier generations were. They don’t want products that are designed for masses of users. Instead, they are looking for highly personalized experiences,” reports Svati Kirsten Narula for the Wall Street Journal.

While customizing financial services isn’t a concept that many old banks indulge, it can be argued that some fintech companies at least attempt to bring more of a personal touch to often-faceless financial transactions.

Moreover, fintech companies, including some ARKF components, are proving adept at demographic-specific marketing. Gen Z is aware of that, and it appears to be resonating with that age group.

“Fintech companies are rushing to fill those needs with curated and individualized products—for instance, payment systems that collect data about users in real time and let them know how their financial habits compare to those of their peers. Fintech firms are also marketing themselves creatively, zeroing in on Gen Z’s concerns, such as the climate and social consciousness, by offering specialized products that appeal to those needs,” according to the Wall Street Journal.

Examples of ARKF member firms that check some or all of the aforementioned boxes include Block (NYSE:SQ), PayPal (NASDAQ:PYPL), and Twitter (NYSE:TWTR). That trio combines for nearly 12% of the ETF’s roster.

Other examples of ARKF holdings with distinct Millennial and Gen Z vibes include Robinhood (NASDAQ:HOOD) and DraftKings (NASDAQ:DKNG), which combine for 6.5% of the actively managed ETF’s weight.

Adding to the long-term demographic case for ARKF is the indication that Gen Z strongly prefers fintech companies to traditional banks.

“So far, the efforts are starting to win over the young generation. A June 2021 survey by EY found that 51% of Gen Z consumers name a fintech company as their most trusted financial brand, while only 23% name a national bank,” notes the Journal.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.