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Why big banks are losing market share with younger generations: A report finds fintechs and neobanks have captured 47% of all new checking accounts opened in 2023, and that Gen Zers increasingly see them as their primary accounts.

Digital-only banks are also aligned with young consumers鈥� top financial priority of saving money, as they tend to offer higher savings rates than traditional FIs. Click to view our full forecast for US digital-only bank account openings. Consumers ages 65 and older offer the biggest growth runway for digital account opening.

The neobank has big credit card aspirations as it looks to become a one-stop shop for financial services, but its new programs may struggle to secure uptake.

At banks, insurance is back on the table: So-called 鈥渂ancassurance鈥� is becoming a thing again as neobanks bundle up and embed services for their customers鈥� convenience.

On today's episode, we break down everything there is to know about banking and the Gen Z demographic. In our 鈥淗eadlines鈥� segment, we discuss the article our analyst Tyler Brown published a few weeks ago about Greenlight, a neobank for kids, teens, and families. In 鈥淪tory by Numbers,鈥� the conversation revolves around why Gen Z is different from other generations and how banks need to cater to their mobile preferences. And in 鈥淔or Argument鈥檚 Sake,鈥� host Rob Rubin takes the position that in 10 years, there will be fewer than 500 consumer banks. Tune in to the conversation between Rubin and analysts Tyler Brown and Tiffani Montez.

On this special bonus episode of "The Banking & Payments Show," we take a step back from the Silicon Valley Bank debacle to explore what鈥檚 on the horizon for the banking industry. In our "Trouble and Opportunity" segment, we examine the lasting effects from the banking failure (e.g., more regulation) and consider the trends that may arise from this crisis (e.g., more neobanks). Tune in to the conversation between host Rob Rubin and our analyst Tiffani Montez to hear what the path forward will be after the meltdown.

In 2023, 92.3% of the 5.2 million accounts opened digitally will be with incumbent banks. Even Gen Zers鈥攖he main source of account opening growth鈥攚ill largely opt for trusted institutions. Neobanks will be left in the dust, especially as fintechs and Big Tech siphon away customers.

Amid rising fintech and neobank competition, traditional financial institutions are investing in their rivals.

Millennials are willing to switch banks: Even though most currently bank with large institutions, nearly half are open to switching to a credit union, online-only bank, or community bank鈥攊f their needs aren鈥檛 being met. Win millennials, win Gen Zers too: For millennials and Gen Z, digital banking and personalization aren鈥檛 just nice-to-haves鈥攖hey鈥檙e a must.

The neobank launched the Ultra card, which offers travel, lifestyle, and investment perks. But stiff competition will pose a challenge.

Monzo Split also helps the neobank reach new customers when users share links among friends and family, building brand awareness and potentially attracting new customers. We forecast Monzo鈥檚 bank account holders will total 5.8 million this year, growing 7.6% YoY and accounting for 12.6% of all UK digital banking users.

M&As offer a shortcut to get one: Small business lending platform SmartBiz acquired Centrust Bank to become a chartered institution, and neobank Revolut is now considering a similar path to secure a US banking license quickly.

In the UK, neobank Revolut has been experimenting with a media network model, having hired the former head of ecommerce partnerships at TikTok UK to head up the initiative. Global players are coming on board, too. PayPal is set to roll out its ad network in the UK, with ads first visible to customers in July 2025.

And when asked which providers they鈥檇 be likeliest to buy from based solely on brand trust, Gen Xers chose Apple, Venmo, and neobanks at a much higher rate than their older peers did. Baby boomers are banks鈥� most loyal customers. Baby boomers, currently ages 60 to 78, are seeking stability and dependability in their financial lives.

Gen Zers in Great Britain are more likely to switch to a neobank, for example, per June 2024 YouGov data. And digital wallet use is much more pronounced among this cohort鈥�27% of 18- to 29-year-olds in the UK use digital wallets daily, and 33% use them weekly鈥攖he most of any age group, per January 2024 YouGov polling for Brite Payments. Interest and adoption of AI is particularly high among Gen Z.

Structure rewards and perks around high-value Gen Z spending categories (e.g., food delivery, subscriptions, and travel) to compete with fintechs and challenger banks. Introduce engaging, intuitive interfaces, savings challenges, and interactive budgeting tools that encourage financial literacy and responsible spending habits. And banks must continue to build trust with Gen Zers.

Reeling from 2024鈥檚 challenges, financial institutions must embrace bold strategies in 2025 to future-proof their businesses in a landscape plagued by economic, competitive, and regulatory pressures.

A growing number of startups are specializing in serving this market, including neobanks Alpian (Switzerland), Monument Bank (UK), and Onyx Private (US). Incumbents like HSBC, CIBC, and JPMorgan Chase have also launched mass affluent products. Alternative data is the key to identifying mass affluent consumers.

Our exclusive survey data reveals what鈥檚 shaping US banking consumers鈥� customer journeys today. Banks can use these five charts to identify opportunities to improve customer acquisition and retention.

Neobanks like Revolut target a younger demographic, which typically gives them lower-balance customers than larger institutions. This characteristic could predispose neobank customers to be attracted to deals and discounts, causing them to act on ads at a higher rate. Weaknesses. Neobanks are often not customers鈥� primary provider, leading to lower customer engagement than traditional FIs.

US banking digital ad spending growth will rebound dramatically in 2024, but tougher times lie ahead. Understanding the nuances of consumer behavior will be essential to boosting ad impressions.