The demographic composition of current and prospective customer bases
is changing. And, most financial providers recognize that. Consumers
are becoming more ethnically diverse. Younger consumers have different
financial behaviors and preferences than older generations. Both of
these factors have an impact on how firms approach and measure
customer diversity initiatives, as well as plan for the future. Let’s
take a deeper look at these changes.
The U.S. population is shifting to “majority minority”
The U.S. population is in the midst of a significant ethnic
shift. Today’s population is majority white. Yet, it is expected
that between 2040 and 2050, the population will shift to “majority
minority.” Between 2040 and 2050 49% of the population is expected
to be white. (1)
This transition in diversity is currently seen in younger
generations. It will soon be seen amongst the working class:
- The Gen Z population is approximately 55% white and
45% minority. Boomers are 75% white and 25% minority. (2)
- For the 66% of the working population that is part of the
working class (working people without a college degree), the
minority to majority transition is expected to take place by
Younger consumers have different financial behaviors than
Today, consumers have more options available to help assist
with their financial needs. Younger consumers often have
relationships with many financial firms. A recent survey revealed
that 57% of Boomers are likely to do their banking with just one
institution. This is compared to 40% of Gen Z consumers. (4)
On top of that, younger consumers are less loyal than
previous generations. Over 60% of Millennials and Gen Z consumers
said they would switch financial institutions for a better mobile
app or digital experience. This compares to 22% of Boomers. (4)
What do these demographic shifts mean for lenders?
Financial service firms and lenders are focused on
understanding customer diversity and generational trends. Some
organizations have implemented specific goals to promote a diverse
customer-base. They then compare these goals to internal, industry,
or market benchmarks. Other firms are just getting started in
setting up a framework for understanding customer diversity.
Lenders are right to get ahead of the game. As the
population shifts, consumers will alter their financial services
needs and expectations. 20 to 30 years from now may seem like a long
time - but younger, ethnically diverse consumers that are starting
out their financial relationships will by then likely be in need of
a whole range of financial services that they don’t hold today.
Financial marketers and diversity officers need to pay attention.
They need to plan for these upcoming demographic shifts.
The real challenge is accessing relevant diversity and
generational lending data
To assess diversity goals and stay on top of customer
expectations, lenders need access to current and detailed
demographic data. Demographic data includes insights on ethnic and
generational segments of their lending customers. Yet much of the
available data is dated or not useful. For example, data by
tradeline and geography can be hard to find.
To overcome this dearth of useful demographic data for
lending customers, financial institutions can take advantage of an
online application that allows them to gain insight on the ethnicity
and generational makeup of their lending customer-base. This
interactive visualization tool – fueled by U.S. consumer credit
data, a comprehensive ethnicity dataset, and additional demographics
– can help lenders answer tough questions, such as:
- What is the ethnic and generational breakdown of new
and current lending customers?
- How is my firm
performing compared to peers in terms of capturing an ethnically
and generationally diverse set of new lending customers?
- What is my firm’s share of lending customers by ethnic and
- How do ethnic and generational
breakdowns differ across tradelines and geography?
does my share and distribution of lending customer demographic
segments change over time
Better understand customer diversity to benchmark
performance and plan for the future
With access to recent and detailed diversity and
generational insights, firms can better gauge performance against
lending diversity goals and benchmark against competitors. Plus,
they can inform marketing campaigns to boost diversity and
generational inclusion by identifying underrepresented or
under-penetrated customer segments and geographies.
Also, they can layer in the financial profile of ethnic and
generational segments in terms of credit risk, affluence, financial
durability, and other metrics to better understand customers’ likely
ability to meet financial obligations.
Embracing diversity initiatives and instituting programs to
enhance customer diversity can be a differentiator for financial
services firms that are seeking to attract younger audiences. While
just 16% of Boomers said they would switch financial institutions
based on their commitment to Diversity, Equity, and Inclusion (DEI)
initiatives, more than half of Gen Z and Millennials said they would
By expanding insights on customer diversity and generational
differences across lending products, firms can enhance their
framework. This allows them to assess their diversity performance and
better respond to the needs and expectations of a diverse customer-base.
For more details about how to leverage our Diversity
1. U.S. Census, Brookings Institution
Current Population Survey 2020
4. BAI Survey, The
Financial Brand, April 2022