Gen Z’s Digital Expectations Force Banks Into Innovation Overdrive

The most digitally-native cohort is rapidly reshaping the financial services landscape. With their purchasing power projected to reach $12 trillion in just five years and a staggering $84 trillion in assets by 2045, GenZ represents an undeniable force for banks worldwide. However, their unique behaviors — from preferring non-traditional providers to demanding real-time payouts and aligning with socially conscious businesses — present both a challenge and an opportunity for banks and credit unions alike.

Recently, PYMNTS convened a panel of industry leaders to unpack the intricacies of attracting, retaining and growing relationships with this pivotal generation. Panelists included Bond Grady, Senior Vice President, Chief Retail and Lending Officer at Travis Credit Union; Chris Halaschek, Chief Innovation Officer at Greenlight; Kelli Keough, EVP and Group Business Unit Leader for Spend, Invest, Protect and Save at SoFi; Gavin Michael, CEO at Varo Bank; and Arijit Roy, Senior Executive Vice President, Head of Consumer and Business Banking Products at US Bank. The conversation yielded a wealth of actionable insights, from redefining marketing strategies to innovating product design. Building upon our previous discussion, here are 10 compelling ideas for FIs looking to win the hearts and minds of Gen Z, enriched with direct observations from the experts:

Leverage Parental Influence for Early Engagement: While Gen Z is hyper-independent, they often look to their parents for financial guidance, presenting a crucial opportunity for FIs to establish relationships early. Chris Halaschek of financial education platform Greenlight highlighted the strategic importance of engaging parents to reach younger Gen Z members. “We think of Gen Z as being really hyper independent, especially in those earlier years when just approaching financial products is still a big hurdle for them. Typically they will look inward to their parents for that type of guidance. We like to think of it as financial trust being passed down to the younger audience.”

Reimagine Marketing Channels and Trusted Voices: Gen Z consumes media fundamentally differently, shunning traditional linear TV for platforms like Instagram and YouTube Shorts. Winning their attention requires meeting them where they are and speaking through voices they trust, often within their immediate circles. Interestingly, direct mail can also be effective due to its perceived credibility and targeted nature. “The most interesting insight that we found is this is a generation that consumes marketing very differently,” said US Bank’s Arijit Roy. “This is a generation that spends a lot of time on Insta, a lot of time on YouTube shorts, and the ability for us to find them in places where they are and speak to them with voices that they trust is fundamentally changing the game.”

Prioritize Seamless Digital-Native Experiences: For Gen Z, banking isn’t a chore they “go do” — it’s an integrated part of their digitally-immersed lives. FIs must offer fast, simple and friction-free mobile experiences that align with their on-demand expectations. Gavin Michael of Varo Bank articulated this. “Gen Z isn’t just digital-first,” he told the audience. “They’re digital-native. Our app is the bank. Everything happens on mobile. It’s fast, it’s simple, it’s instant, it’s friction-free.”

Innovate with Bundled, Integrated Product Offerings: Gen Z seeks convenience and holistic solutions. FIs should move beyond siloed products to offer integrated suites that simplify financial management and encourage deeper engagement. “It’s a combination credit card, savings and checking product that allows the Gen Z cohort to apply for the product a single time instead of going through multiple underwriting paths,” said Roy. “You must have the ability to create a deepened offering that allows you to be relevant again to a Gen Z that is hoping to get a credit card, but also the ability to save and also the ability to take rewards that you earn and put into a savings account.”

Implement Gamification and Instant Validation: This generation thrives on immediate feedback and validation. Incorporating gamified elements and real-time rewards can build positive financial habits and drive engagement. Halaschek mentioned “engaging financial literacy games that truly help them learn, but not as a chore through reading law material, but in an interactive experience.”

Provide Access to Diverse Wealth-Building Opportunities: Gen Z expects access to investment products traditionally reserved for the wealthy, seeking ways to diversify and grow their assets. FIs should make sophisticated options accessible and easy to understand. Kelli Keough of SoFi explained, “They expect to be able to have access to the products that the wealthy have, and don’t understand why that’s not available in a digital format. We’ve been able to create classes of investments that have low minimums, easy access, integration into the digital experience, and a lot of education around them so that people understand what it is that they’re investing in.”

Champion Financial Literacy and Education: Given their exposure to financial turmoil, Gen Z deeply values financial education. FIs that provide relevant, accessible and engaging learning opportunities can build lasting trust. Bond Grady highlighted Travis Credit Union’s efforts: “Those activities that we do, like local financial education in high schools for Gen Z, get to them at a time and place that’s relevant with material that’s relevant to them,” he told the panel. “It helps to leverage that local, timely, in-your-face engagement with Gen Z that they might not otherwise get. But we’re also still learning that they still really value and need — especially in topics as critical as financial literacy — financial education.”

Integrate Digital with Strategic Physical Touchpoints: While digital-native, Gen Z is omnichannel. FIs should not entirely abandon physical presence but rather integrate it strategically to complement digital convenience and address specific needs like cash deposits or localized community support. Michael shared Varo’s innovative approach: “We’re a digital-only bank,” he said. “But we have an unconventional partnership with CVS where our customers can walk into a CVS with cash and deposit for free. So, we’ve been able to take the best of a pure digital experience and then couple with a physical presence through a partnership. It’s a little bit innovative, little bit different and it’s driving a different sort of behavior.”

Offer Flexible, Cashflow-Based Lending Solutions: Traditional credit products are less appealing to Gen Z, who are more interested in “buy now, pay later” (BNPL) and credit-builder loans. Banks must adapt their underwriting to focus on cashflow and provide immediate, flexible access to funds. Michael detailed Varo’s approach: “We built Varo Advance, which gives them short-term cash, but we also built a line of credit product, which gives them longer-term access to credit. And we didn’t build these as legacy credit products. They’re built for how Gen Z borrows. We underwrite the products based on cashflow.”

Anticipate and Adapt to Evolving Financial Journeys: To be a “bank for life,” FIs must understand that Gen Z’s financial needs will evolve as they age. This requires proactive anticipation and a continuous adaptation of product portfolios and guidance. Keough emphasized that Gen Z will “write the rules,” and “our obligation then is to be able to help them on that journey, have the right products and services, and grow with them.” She added, “We have a lot of data that we can look at their spend patterns … and identify those next steps that are unique and personal to them on their journey.” Roy echoed this, noting that while Gen Z “may well kill cash … these are folks that will one day likely still own homes … our ability to be relevant for the next 180 years is to adapt with them.”

Winning Gen Z’s loyalty requires banks to redefine their approach, moving beyond traditional models to embrace a mindset of relevance on Gen Z’s terms. As this powerful cohort matures, the institutions that truly understand and adapt to their needs will not only attract them but foster relationships that stand the test of time.