#Payment Technology

Gen Z banking: how banks must adapt

Expert Opinion
7 Mins.

Gen Z is coming of age. While the youngest members of this generation, born between 1997 and 2012, are barely starting secondary education, the eldest have long since entered the workforce. As Gen Z’s spending power increases in the coming years, it is essential that banks understand what makes this generation tick and how best to meet its needs.

According to research by IBM, 88% of bank managers believe they understand the needs of Gen Z account holders; however, only 34% of those customers would agree1. This disparity suggests a disconnect that banks will need to address to secure and retain Gen Z’s loyalty in the future.

Gen Z is the fastest-growing population group worldwide. Although not yet the dominant generation economically speaking – Millennials still make up the largest customer demographic, while Baby Boomers possess the most purchasing power2 – Gen Z’s potential cannot be ignored. Indeed, neobanks and fintechs, in particular, are already making inroads to target this fast-growing consumer group.

Portrait of a young woman holding a credit card in front of a laptop for online shopping

Understanding Gen Z’s needs

As a generation, Gen Z is characterized by its digital savviness. Unlike previous generations, who were born into an analog era and either grew up during a period of rapid technological advancement or adapted to it later in life, Gen Z is the first fully digital-native generation. As digital is fully embedded into their daily lives, this should be an important consideration when designing financial products and services. However, banks should not assume that Gen Z’s digital-first lifestyle means they want only digital solutions. Indeed, many young consumers still rely primarily on bank branches for services like opening accounts and resolving disputes and claims of fraudulent activity. Another perspective is that branches can be viewed as an extension of mobile banking services, as there are some banking activities that customers still cannot conduct on mobile. The key is combining the best of both to meet every need.

This generation is not only technologically proficient, but also strongly committed to sustainability. This sense of moral duty can be a decisive factor in their purchasing decisions. As banking becomes an integral part of customers’ lifestyles, it is crucial for banks to align with the sustainability commitments of their customers. However, it's not just about echoing the same sustainability messages. Banks must also take a step further by offering a range of sustainability-related products and services that customers can engage with throughout their relationship with the bank.

Finally, although still at the beginning of their professional lives, Gen Zers have serious concerns about their financial future. Almost half (47%) of the working population of Gen Z respondents in a Deloitte survey cited their long-term financial futures as a main cause of stress in 2022, with over a quarter (26%) lacking confidence that they will be able to retire comfortably3. Considering this perception of financial uncertainty, it is perhaps no surprise Gen Zers are highly motivated to save money and learn about banking and finance from a young age. Their more sophisticated awareness of financial management, compared with older generations at the same age, also presents new business opportunities to banks

Let’s take a look at some ways banks can draw inspiration from Gen Z to offer better payment and banking experiences.

Adapting to Gen Z’s digital lifestyle

Traditional banks may be in direct competition with fintech for Gen Z customers, but that doesn’t mean the two can’t learn from each other’s successes. Neobanks have thrived in recent years, partly due to their popularity among Gen Z and Millennial customers – more than half of the UK-based neobank Monzo’s customers are 34 or younger4. These numbers alone should make banks eager to find out why.

Fintech meets Gen Z’s need for convenience and accessibility with its wide range of services and digital-first approach. Unlike regular banking apps that only offer services such as account management and long-term savings, neobank apps provide a full digital wallet experience. They are equipped with features such as saving pots and budgeting tools, as well as e-commerce and third-party integrations that enable direct-to-brand shopping experiences and access to products such as insurance.

If banks can successfully leverage technology to cater to Gen Z’s diverse needs, they have a good chance of strengthening their position. According to a survey carried out by IBM, 55% of Gen Z banking customers still trust traditional banks more than fintech alternatives (11%) when it comes to dealing with serious issues like fraud5, which demonstrates the continued appeal of banks as trusted financial institutions.

Facts & Figures about Gen Z


believe their bank meets their needs


are stressed about their long-term financial futures


believe banks should provide more advice on budgeting, spending habits, paying off debts, and loans


would change banks if they felt their provider fell short on ethics and environmental sustainability

Customer-centric approach to banking and payments

Gen Zers have diverse needs and a greater desire for personalization than previous generations. Technology can help banks meet these needs. Exciting AI use cases are emerging that will help banks increase the personalization of their services and offerings6. However, as they strive to provide improved digital solutions, banks should not neglect the physical banking experience.

As previously mentioned, the bank branch is still the go-to option for Gen Z bankers when it comes to opening accounts and resolving fraud disputes. Likewise, when their digital inquiries for other banking issues fall short. It reflects on a gap that the banks need to fulfill in order to provide a more seamless, phygital banking experience for all. Indeed, frustrations with the shortcomings of digital customer service options is a pain point felt across all generations, which highlights the fact that human customers will always need some degree of human support. The optimal solution to meet all customer needs is for banks to offer a phygital banking experience that combines the best of both: using digital tools to add genuine value to the physical banking experience. For example, by offering customers the option to schedule branch visits through their mobile banking app.

Physical and digital payment solutions work together to make every customer’s payment experience better. While over 65% of the customers reported they still preferred cards, adding a digital touch to both cards and issuances is crucial to ensure speed, convenience, and simplicity of payments7. By 2026, the total value of virtual card transactions is expected to reach 6.8 trillion dollars, making virtual cards linked to physical cards a global payment phenomenon 8.

Banking services isn’t the only area where Gen Z customers have high expectations. A majority (73%) believe banks should do more to provide advice on matters such as budgeting, spending habits, paying off debts, and taking out loans9. Educational services – delivered either with virtual assistants and online courses or with traditional consultations in brick-and-mortar branches – are a great opportunity for banks to position themselves as trusted advisors to their customers.

Finally, personalizing the payment and banking experience itself is another way for banks to set themselves apart from the crowd. Payment cards, as symbols of the bond between banks and consumers, reflect one’s lifestyle and identity. This is especially important for Gen Z customers, who value expressions of individuality. Solutions like Convego Create Consumer foster this by allowing customers to personalize not only their payment cards, but other payment devices as well, such as wearables and wallets, with their preferred image, avatar, or emojis.

Young woman uses her smartphone and credit card sitting outside on the stairs.

Demonstrating more commitment to sustainability

Creating a customer-centric banking and payment experience is only one part of the puzzle. When making purchasing decisions, Gen Zers are more eco-conscious than any previous generation. Banks that fail to take this into consideration risk being abandoned. In fact, 64% of Gen Zers surveyed by IBM indicated that they would switch their bank account if they felt their current provider fell short on ethics and environmental sustainability10.

The recent push towards sustainability has led many companies and organizations to establish ambitious net-zero targets for the coming decade. However, pledges alone are no longer enough. Customers from all generations, especially Gen Z, want to know exactly what is being done to meet those targets, with details on matters like supply chains. They want to be assured that not only is their data safe with banks, but so too is the environment11.

To align themselves with these values, banks must ensure ESG is properly embedded. Once again, the payment card can be used as a vehicle to promote this. Convego Beyond helps banks and card issuers develop eco-conscious payment card strategies and offer eco-innovative payment products.

Additionally, banks should seek to develop partnerships that foster a positive impact and demonstrate a true commitment to sustainability, such as Giesecke+Devrient’s partnership with Swedish fintech start-up Doconomy, which aims to enhance payment solutions with digital sustainability-oriented tools.

Learning from generation to generation

The secret to winning over Gen Z may be closer to home than one might think. Like previous generations, Gen Z’s banking journey often starts at their parent’s bank. Naturally, the older generation often plays a crucial role in shaping the financial literacy of young adults. Banks should harness this dynamic to win referrals and build loyalty among Gen Z customers. Failure to do so will likely see them seek alternative providers quickly.

The value of knowledge passing between generations also goes the other way. As digital natives, Gen Zers – and their Millennial predecessors – often play the role of “educator” for senior family members when it comes to adopting digital banking and mobile wallet apps. This creates a win-win situation for banks that can stay embedded within families from generation to generation.

Young woman is checking her bank account. She’s holding a smartphone with a mobile banking app.

Embracing social media trends

Social media is perhaps the most powerful and untapped resource available to banks seeking to attract and support young customers. Channels like TikTok are not only the top source for brand discovery and product research among Gen Z12, but they are also becoming an important educational tool. The rise in user-generated content delving into topics like investing, mortgages, and wealth building underscores Gen Z’s desire to educate themselves and take control of their financial future.

While social media is a great way to spread valuable information, it can also be awash with dangerous and unverified advice. This is where banks can step in as trusted financial institutions and provide Gen Z with the financial support it needs, in a language that resonates. By doing so, banks can build trust and position themselves as attractive banking partners.

For a digital-native generation, a seamless digital banking and payment experience will always be a high priority. However, for banks wanting to truly reach and engage a Gen Z audience, the digital experience is only one side of the story. In order to thrive, banks must complement their digital offering with sufficient physical services and align themselves with the values and needs of this up-and-coming generation.

Key takeaways

  • Gen Z is coming of age. Banks must adapt their banking and payment offerings to the needs of this generation to thrive in the future.
  • Gen Z is digital first, but banks should offer personalized and omnichannel solutions to meet every need and stay competitive
  • Social media is the best place to reach a Gen Z audience with “infotainment” content.
  1. IBM research highlights 'disconnect' between banks and Gen-Z, Fintech Magazine, 2022

  2. Retail reality: The truth about Gen Z purchasing power, The Future of Commerce, 2022

  3. The Deloitte Global 2022 Gen Z & Millennial Survey, Deloitte, 2022

  4. Who are our users: 2022 survey insights, Monzo, 2022

  5. IBM research highlights 'disconnect' between banks and Gen-Z, Fintech Magazine, 2022

  6. AI-bank of the future: Can banks meet the AI challenge?, McKinsey & Company, 2020

  7. The Visa Back To Business Study, 5th Edition, Visa, 2021

  8. Virtual Cards Statistics, Juniper Research [accessed on June 19, 2023]

  9. Finance & fintech: knowing your buyers and what they want, Global Web Index, 2022

  10. IBM research highlights 'disconnect' between banks and Gen-Z, Fintech Magazine, 2022

  11. How are younger generations choosing financial service providers?, Fintech Finance News, 2023

  12. Gen Z in 2023, Global Web Index, 2023

Published: 11/07/2023

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