Digital Banks Win With Younger and Lower-Income Consumers

Digital bank users are not simply early adopters of new payment methods. They represent a distinct slice of the U.S. banking population, shaped by age, income, education and daily payment habits in ways that set them apart from customers of traditional banks.

That portrait comes through clearly in “Pay by Bank Deep Dive: Digital Bank Users Are Ready to Switch,” a January PYMNTS Intelligence report produced with Trustly. Based on a U.S. Census-balanced survey of 2,071 consumers, the study examines interest in Pay by Bank payments. Beneath the surface, it also shows how digital banks are attracting customers who live much of their financial lives on mobile devices and rely on digital wallets rather than plastic cards.

Digital banks now serve as the primary financial institution for 13.8% of U.S. consumers, slightly ahead of local banks and not far behind regional banks and credit unions.

National banks still dominate, but fewer than half of consumers say a national bank is their main provider. The rise of digital banks is not evenly distributed across the population. It is driven by younger adults, lower-income households and people without college degrees who appear to value convenience and mobile-first access over branch networks.

Millennials form the core of this group. More than half of digital bank users are millennials or members of Generation Z, compared with 45% of banking customers overall. Bridge millennials, those straddling older millennials and younger Gen X, are also overrepresented.

At the other end of the age spectrum, baby boomers and seniors make up just 17% of digital bank users, far below their share of the overall banking population.

Income and education patterns reinforce that divide. More than half of digital bank users earn less than $50,000 a year, compared with about three in 10 consumers across all financial institutions. Consumers without college degrees account for 86% of digital bank users. That gap persists even when younger age groups are removed from the analysis.

Three data points illustrate how sharply digital bank users differ from the average consumer:

52% of digital bank users earn less than $50,000 annually, versus 31% across all bank customers.

45% of digital bank users prefer digital wallets as their main way to pay, more than double the share among national bank customers.

56% of digital bank users are millennials or Gen Z, compared with 45% of the overall banking population.

Behaviorally, digital bank users stand out most in how they pay. Nearly half say they prefer digital wallets, and wallets lead across most spending categories, including retail, subscriptions and ridesharing. Even in categories where debit cards remain strong, such as groceries and bills, wallets rival or exceed card usage among digital bank customers. This pattern reflects comfort with logging in, authorizing payments and managing accounts through apps rather than cards or cash.

These habits help explain why digital bank users show a strong willingness to adopt Pay by Bank. They already favor payment flows that resemble direct-from-bank authorization. When offered discounts and buyer protection, they say they would shift up to 35% of their transactions to Pay by Bank, with especially high interest in bill payments and account-to-account transfers.

Yet the report also shows that digital bank users are not fundamentally different in what motivates them. Like other consumers, they respond most strongly to immediate cash benefits and clear protections. Convenience alone is not enough.

Digital bank users may look different on paper: younger, lower income and more mobile. However, their behavior tells the full story: they pay with wallets; they manage money through apps; they are ready to switch.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.