Millennials and Gen-Z Ethical Banking Behaviour in Malaysia

Millennials (born between 1981 and 1996) and generation Z (born between 1997 and 2012, also known as Gen-Z) make up more than half the world’s population (Deloitte, 2020). Together they form the largest demographic globally. Both generations are categorised as being technology savvy, well educated and entrepreneurial (DeVaney, 2015), accounting for most of the global workforce with the former at their prime earning years. According to Morgan Stanley report in 2019, 95% of millennials are interested in sustainable investing or want to tailor their investments to their values. Another survey in 2018 indicated that 87% of high net worth (HNW) millennials considered a company's ethical, sustainable and governance (ESG) track record as an essential investment decision consideration. The inclination of these generations towards sustainable and ethical investing is very much understandable as millennials and Gen-Z are tackling their concerns by taking socially conscious actions to protect the planet and shine a spotlight on societal issues. Millennials said protecting the environment was their top concern, followed by health care and disease prevention, unemployment and income inequality/distribution of wealth (Deloitte, 2020). Preference towards ethical banking reflects a desire for their money not just to earn a return but to align with their values and contribute to the social good. Therefore, instead of being conceptualised as a niche market, Millennials and Gen-Z should be treated as submarkets that differ in their levels of awareness of ethical issues, consider discrete motives when making financial decisions and are willing to engage in cause-related banking to varying degrees. Connecting with these customers with different banking behaviour and preference is a critical part of any bank’s entry-point marketing strategy. In doing so, it is important to understand factors influencing ethical banking behaviour among millennials and Gen-Z. Following the ethical decision-making model by Bayer et al. (Journal of Business Economics 89:655–697, 2019) and Rest (Moral development: advances in research and theory, Praeger, 1986), this study incorporated constructs, namely, religious value, technology-related factors and ethical obligations. This study frames its analysis based on a sample of 500 millennials and Gen-Z banking customers to provide evidence for Malaysian market. The expected findings suggest that millennials and Gen-Z in Malaysia felt that their intentions to engage in ethical banking are motivated by the perceptions of their own capabilities, attitudes and perceptions of other people close to them. Based on these findings, it is recommended that banks should refocus their attention on the banking needs of these generations of customers to gain a better understanding of what influences their behaviours. Retail banking executives and marketers need to adjust their approaches, products and messaging to keep pace with unique behaviour of these generations. Banks can make use of the findings to improve their marketing strategies for customised ethical products and services offered to leverage on this significant segment of populations, thus increasing profitability.