Banking and the Generations: If You’re Not Serving Younger Generations, You’re Losing

As younger generations become an increasingly influential force in the financial services sector, their preferences are reshaping the way banks and credit unions must operate. To be frank, if you’re not focused on the needs and desires of younger generations, you’re missing a massive and ever-expanding market.

Understanding what these young, tech-focused consumers want is essential to ensuring lasting relationships and staying competitive. From mobile banking to seamless payment options and personalized experiences, younger customers are no longer satisfied with traditional offerings.

In this newsletter, we’ll explore key trends driving this change, backed by the latest statistics, and offer insights on how financial institutions can meet the expectations of today’s younger consumers. Let’s talk about it.

Your Younger Customers Will Do the Marketing for You

Younger generations are more open than ever to discussing their financial experiences with their networks, and this means that every interaction they have with your institution can be shared—positively or negatively.

If their experience is good, they’ll let their friends and followers know. But if it’s bad, the world will hear about it just as quickly. This generation values transparency, and their willingness to share means you have a powerful opportunity to benefit from a loyal customer base, as long as you provide a seamless and positive experience.

Key Statistics:

• 86.5% of Americans are comfortable discussing finances with friends at least sometimes.
• 68.5% of Americans trust their family and friends for financial advice.
• 93.3% of Gen Z are open to talking to their friends about finances, with 33.3% doing so frequently.
• 91.4% of Millennials and 85.8% of Gen X also talk to their friends about money, though less often than Gen Z.
• A third of Gen Z and Millennials believe financial advice from social media (e.g., TikTok, Instagram) is trustworthy.

Payments Are King for Younger Generations

For younger consumers, speed and convenience in payments are a non-negotiable expectation. With automatic bill payments and mobile payment apps at their fingertips, they value simplicity and ease. If your financial institution isn’t delivering seamless, mobile-centric payment solutions, younger customers won’t hesitate to look elsewhere.

Key Statistics:

• 44% of Gen Z use banking services primarily for payments, 28% for traditional banking, and 14% for credit cards.
• 38% of Millennials use banking services primarily for payments, 34% for traditional banking, and 12% for credit cards.
• 58% of Millennials perform finance-related tasks on a mobile app at least once a day.
• 63% of Millennials have 3 or more finance-related mobile apps on their phones.
• 47% of Gen Z have 1-2 finance-related mobile apps on their phones.
• Among Gen Z and Millennials, payment apps are the most used finance-related mobile apps.
• In contrast, Gen X and Baby Boomers primarily use banking apps.

What They Want from Financial Institutions

Younger consumers expect their banks and credit unions to go beyond basic banking services. Personalization, convenience, and security are at the top of their list. Gen Z, in particular, demands higher levels of tailored services, while also valuing robust security measures such as multi-factor authentication when accessing their accounts. These customers want to feel understood and secure when managing their finances, and they expect an experience that’s as intuitive and seamless as any app they use daily.

Key Statistics:

• 54% of Gen Z expect higher levels of personalization from their banks.
• 64% of Gen Z prefer multi-factor authentication for added security.
• 19% of Gen Z want completely paperless account statements.
• 23% of Millennials prioritize being able to open accounts online.
• 30% of Millennials want to see highly customizable alerts.

Want to learn more about the short window of time financial institutions have to win the business of the younger generations? Click here.

They’re More Willing Than Ever to Switch Providers

Younger generations, particularly Gen Z, are less loyal to financial institutions than previous generations. If they don’t find what they’re looking for, they’re not afraid to make a change. With mobile-first offerings and digital-centric services being top priorities, Gen Z is twice as likely to switch financial institutions in search of more convenient, tech-forward options. If your institution is not innovating at the pace they expect, you risk losing them to more agile competitors.

Key Statistics:

• 42% of Gen Z who bank with credit unions switched their relationship in the past year.
• 60% of Gen Z's switches were to institutions offering more mobile-centric banking.
• Gen Z is 2.5 times more likely to leave their current financial institution if services are difficult to use or unavailable.

The Industry Knows, but Action is Lagging

While most financial institutions recognize the need to adapt to younger consumers' preferences, very few have actually implemented strategies or programs to make meaningful changes. As a result, while 95% of credit unions say that serving Gen Z is a priority, the reality is that many are still slow to adapt to the mobile-first, highly personalized, and frictionless experiences younger generations demand. Institutions that act quickly and make real, customer-centric changes will be the ones that thrive.

In fact, financial institutions are struggling to push forward any efforts to modernize at all. Learn more about the digital transformation, or rather, stagnation, here.

It’s time for FIs to modernize. We’re here to help.