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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.

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.

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.

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

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.

Since MPs pointed out incumbents鈥� failure to pass along higher interest rates to customers, at least 4 neobanks have upped their rates.

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.

A smaller percentage of Gen Zers and millennials considered digital and neobanks as their primary FI in 2024 than in 2023. And half of the banking customers who opened new checking accounts in 2024 already had at least two other checking accounts. This could mean customers are opening new accounts to sample specific digital tools鈥攂ut never fully switch to them.

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.

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.

Competition from Neobanks and Fintechs: European banks see neobanks as their biggest competitors. To counter this, many traditional banks are investing in fintech startups and building their own digital banks.

The service advances Block鈥檚 goal of 鈥渂anking our base鈥� and could drive Cash App adoption.

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.