They account for 40% of consumers worldwide and will represent 31% of the workforce by 2030. With current purchasing power standing at $450 billion and expected to reach $12 trillion within five years, Generation Z — the demographic born between 1997 and 2012 — is reshaping how banks and FinTechs attract and retain customers.
This digitally-native group prefers FinTech platforms over traditional banks. According to recent PYMNTS research, 54% of Gen Z individuals rely primarily on non-traditional financial service providers, valuing real-time payouts and companies aligning with their social values. Now, financial institutions, from FinTechs to large banks and credit unions, find themselves recalibrating strategies to appeal to Gen Z as a short-term as well as long-term strategy.
“They want products aligned with their values, aligned with their lifestyle, and they want to be digitally present,” said Gavin Michael, CEO of digital-only Varo Bank, during a recent panel discussion with PYMNTS CEO Karen Webster.
For Varo, serving Gen Z involves flexibility and transparency through products like Varo Advance, which offers short-term cash advances, and an artificial intelligence (AI)-powered line of credit.
“We’re underwriting these products based on cash flow, not traditional credit histories,” Michael added, emphasizing tailored solutions that match Gen Z’s lifestyle demands.
Similarly, Arijit Roy, executive vice president and head of consumer and business banking products at U.S. Bank, described the necessity of reshaping traditional marketing approaches to connect effectively.
“This generation consumes marketing very differently,” Roy said. “They don’t watch linear TV. They’re on Insta and YouTube shorts.”
The bank has adapted by emphasizing targeted, personalized communication and product bundling, such as their Bank Smartly initiative, which combines checking, savings and credit cards into a single streamlined application.
Roy further highlighted how Gen Z appreciates immediate validation, mentioning a specific feature that has significantly increased customer engagement: “A simple feature that we found to drive a lot of relevance is a text alert that asks if they want to apply some of the rewards they just earned to the purchase they’re making at the point of sale.”
The Credit Union Angle
Travis Credit Union, according to Grady Bond, senior vice president and chief retail and lending officer, addresses another challenge: brand awareness and overcoming Gen Z’s misconceptions about credit unions.
“There’s a general awareness issue,” Bond said. “We need to bridge the gap between who can join and what we can do for them once they’re members.” To combat these misconceptions, Travis Credit Union is emphasizing its digital capabilities and low-fee structures to appeal to Gen Z’s cost-conscious mindset.
Bond stressed the importance of omnichannel engagement: “They may go digital first, but they are omnichannel users. There is an opportunity to leverage our local advantage.”
Meanwhile, SoFi has observed Gen Z’s sophisticated investment expectations, offering access to alternative investments and private company shares, traditionally limited to wealthier clients.
Kelli Keough, executive vice president at SoFi, emphasized her company’s focus on making investment opportunities accessible through low-minimum digital experiences, coupled with significant financial education to empower informed investment decisions.
“Gen Z expects access to the products wealthy investors have, and they don’t understand why it’s not available digitally,” Keough said.
Education for Gen Z is critical. Chris Halaschek, chief innovation officer at Greenlight, pointed out a unique opportunity in targeting families.
“Financial trust is inherited,” Halaschek told PYMNTS.
Greenlight’s platform engages young users through interactive financial literacy tools and chores-based earning, thereby creating early, lasting relationships.
“We really think of it as the bank that wins the parent has the best opportunity at winning the kids,” Halaschek added.
Get, Keep and Grow
Acquisition and retention strategies must also evolve to match Gen Z’s digital-first, convenience-driven expectations. At SoFi, direct deposit incentives play a critical role.
“Members signing up for direct deposit are our most engaged and highest retention,” Keough highlighted, noting the power of bundling products to deepen customer relationships. “We see, for example, that 32% of new products were opened by existing SoFi members.”
For U.S. Bank, engagement comes from instant gratification through immediate rewards redemption, a feature Roy said has transformed top-of-wallet behavior.
Varo leverages continuous underwriting and advanced machine learning to keep products like their cash advance and line of credit integrated into daily financial management.
“We underwrite our customers daily,” Michael said. “We constantly revise their lines to fit their cash flow needs.”
Even traditional marketing, such as direct mail, remains surprisingly effective for engaging Gen Z. “Direct mail does break through because there’s so much digital clutter,” Keough said, with Roy agreeing that personalized mail conveys a sense of credibility.
Key Gen Z Metrics
Panelists also shared key performance indicators (KPIs) used to track their success with Gen Z customers. Greenlight measures specific engagement metrics such as chores completed and allowance earned, tailoring their assessment based on age segments. Bond noted that Travis Credit Union primarily monitors the proportion of new Gen Z members in their overall member mix.
Varo focuses on “product progression,” said Michael, tracking how customers deepen relationships by adopting multiple products.
SoFi, according to Keough, prioritizes “unaided brand awareness,” using broad visibility initiatives such as partnerships with sports events and celebrities like Taylor Swift and Beyonce.
U.S. Bank measures checking account engagement, digital activity and account balance stability to gauge Gen Z’s integration with their banking services, Roy said.
When discussing how to become Gen Z’s “bank for life,” panelists emphasized the need for continuous adaptation and anticipation of evolving financial needs.
Michael from Varo said: “We want to deepen the engagement in the habit loop we’re building. If our customers start with an advance, we want to see them graduate to additional products.”
Keough echoed this sentiment, emphasizing personalized financial journeys: “Our obligation is to help them find that next step because that’s not always apparent for them.”
Bond highlighted trust as crucial, asserting that “we can’t view them as just a means to an ROI. We must genuinely improve their financial lives to earn their loyalty.”
Halaschek described Greenlight’s approach as facilitating smooth transitions to partnering banks as users mature.
Roy concluded, emphasizing breadth and adaptability: “To remain relevant, we must evolve with them, ensuring our breadth of products meets their future needs.”
“Gen Z writes the rules,” Keough summarized. “Our job is to help them achieve their ambitions.”
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