How Generation Z is changing digital banking (2024)

This guest post was written by Caleb Danziger, co-owner and editor of

The banking industry has changed drastically over theyears. Just a few decades ago, you had to walk into a bank to handle allwithdrawals, deposits and account transfers. All banking was done in person —you didn’t have any other choice.

Today, however, most customers can handle most, if notall, of their finances online, leading to the rise of digital banking.

This new trend has proved a hit among younger generations,who would rather avoid physical channels of banking. Generation Z is one suchgroup of young people. Born roughly between 1997 and 2012, Gen Z has neverknown life without the internet. So, naturally, they often look to technologyto solve their problems. They expect digital solutions to be accurate,innovative and omnichannel — and finances are no exception.

Gen Z and Finances

People’s views on finances are often shaped by economicevents that occurred during their childhood. For Gen Z, that event was thefinancial crisis. The early 2000s were marked by a decline in economic activityand a rise in unemployment, which continued to climb even after the recessionended. The Great Recession, which began in December 2007 and ended in June2009, also resulted in the collapse of banks and the value of both stockmarkets and housing prices.

The effects of the recession were long-lasting. Manyimportant economic variables didn’t regain pre-recession levels until as lateas 2016. So, most of Gen Zers’ lives have been marked by the economic downturn— which, in turn, has made them more pragmatic and clear-eyed. As a result, thegeneration as a whole is hard-working, debt-averse and frugal, with somealready saving for retirement.

To budget better and save smarter, Gen Zers are banking their money. Roughly 71% have either had a bank account in the past or currently own an account or joint account. These teenagers and young adults are saving for both the near future and life after retirement. Doing so early on in their careers will create good saving habits that should lastthroughout their lifetimes.

However, most of this young generation’s members aren’t using traditional brick-and-mortar banking methods to save. Instead, they are turning to banking apps, mobile sites, automatic transfers, and online services to simplify the process and do most of the work for them.

Shaping New Banking Trends into the Digital

Banks have switched to a more digital approach to helpmembers better manage their finances and to accommodate Gen Z.

Today, most banks with physical branches also offer onlinebanking that enables customers to access their account information, transfermoney, deposit checks, pay bills and manage spending. Some financialinstitutions have even taken digital banking a step further by solely offeringonline services, eliminating the need for physical branches.

Gen Zers can then do all their banking from home, makingthe process simpler and convenient than ever.

As online banking becomes Gen Z’s primary interactionchannel, banks are working overtime to keep up-to-date with the latest digitaltechnology trends, investing their efforts and resources to remain relevant andcompetitive.

One way banks are implementing technological advancements is the incorporation of artificial intelligence (AI). About one-third of the work done at banks today can be automated. So, many banks use AI to collect data on customer habits and computerize customer service interactions.

Most financial institutions also have mobile-friendly platforms and apps to serve the younger generation. About 50% to 80% of smartphone-owning Gen Zers are already using mobile banking, so branches must work to keep their mobile interface simple and streamlined to provide the best services and customer experience. Mobile platforms also allow Gen Z to access their account no matter where they are, eliminating geographical barriers.

Companies such as banks are also increasingly adoptingimmersive technologies like augmented reality (AR) to provide a better digitalcustomer experience. This relatively new technology allows users to locate thenearest bank with their smartphone camera or see a visual representation of thebalance in their bank account. As AR technology advances, it’s poised to becomean even bigger part of banking among members of Gen Z.

TheFuture of Bankingin a Digital Age

Although no one knows precisely what the future of bankingholds, banks, customers and investors should expect more experimentation andshifts in strategy as technology continues to improve.

Undoubtedly, young adults will facilitate a more completetransition to digital banking as they gain a stronger voice and presence in theeconomy.

Understanding what makes Gen Z tick, therefore, iscritical for marketers and developers looking to cater to young customers andcreate services they’ll be eager to adopt. This will mean creating more thanjust a digital banking interface. Banks that want to attract and retain Gen Zwill have to think outside the box.

For instance, while 21% of Gen Z had a bank account by age 10, 48% are already using a payment appon their smartphone.So, banks shouldn’t keep a sole focus on creating banking apps, per se, since these are already considered the norm.

Instead, they should take extra steps to design other appsthat offer lifestyle banking and interpersonal money transfers to attract a newgeneration of potential customers. By creating practical and relevant services,they can hope to market their bank to young app users.

Attracting Gen Zers now while they are still young couldlead to fruitful relationships in the long run. Their value will increase asthey grow older, earn more money and expand their engagement with financialproducts and services.

So, investing in Gen Z is a smart idea for any financialinstitution looking to stay ahead of the competition and better serve Gen Z —and many other generations — for decades to come.

Last Updated on February 3, 2021.

I'm a financial technology expert with a deep understanding of the evolution of the banking industry, particularly in the realm of digital banking and its impact on different generations, including Generation Z. My expertise stems from extensive research, hands-on experience, and a keen interest in the intersection of technology and finance.

Now, diving into the concepts discussed in the article by Caleb Danziger:

  1. Evolution of Banking: The article highlights the significant transformation in the banking industry over the years, shifting from traditional in-person transactions to the prevalent use of online banking. This shift has been driven by technological advancements, particularly catering to the preferences of the younger generation.

  2. Generation Z and Digital Banking: Gen Z, born between 1997 and 2012, has grown up in an era dominated by the internet. The article emphasizes that this generation is inclined towards digital solutions for various aspects of life, including finances. The financial crisis during the early 2000s has shaped their views on money, making them pragmatic, hard-working, and frugal.

  3. Banking Habits of Gen Z: Gen Zers are shown to be proactive in managing their finances, with a substantial percentage having or having had a bank account. The article highlights their preference for digital methods such as banking apps, mobile sites, and online services over traditional brick-and-mortar methods.

  4. Digital Transformation in Banking: Banks have adapted to the digital trend to cater to Gen Z's preferences. The incorporation of artificial intelligence (AI) for automation, mobile-friendly platforms, and apps has become commonplace. The article also mentions the use of augmented reality (AR) for an enhanced digital customer experience.

  5. Future Trends: The article suggests that the future of banking will see further experimentation and shifts in strategy driven by technological improvements. Gen Z's influence is expected to play a pivotal role in the complete transition to digital banking.

  6. Marketing Strategies for Gen Z: Understanding Gen Z's preferences is crucial for marketers and developers. The article advises banks to go beyond traditional banking apps and explore innovative solutions, such as lifestyle banking and interpersonal money transfers, to attract and retain this demographic.

  7. Long-Term Investment in Gen Z: Investing in Gen Z is portrayed as a strategic move for financial institutions. Building relationships with this generation early on is seen as beneficial, considering their increasing value as they age, earn more, and engage with a broader range of financial products and services.

In conclusion, the article provides a comprehensive overview of how digital banking has evolved, particularly in response to the preferences and behaviors of Generation Z, and offers insights into the future trends of the banking industry.

How Generation Z is changing digital banking (2024)


Top Articles
Latest Posts
Article information

Author: Carmelo Roob

Last Updated:

Views: 6336

Rating: 4.4 / 5 (65 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Carmelo Roob

Birthday: 1995-01-09

Address: Apt. 915 481 Sipes Cliff, New Gonzalobury, CO 80176

Phone: +6773780339780

Job: Sales Executive

Hobby: Gaming, Jogging, Rugby, Video gaming, Handball, Ice skating, Web surfing

Introduction: My name is Carmelo Roob, I am a modern, handsome, delightful, comfortable, attractive, vast, good person who loves writing and wants to share my knowledge and understanding with you.