Banking relationships often start earlier than most people realize—and they tend to last longer than expected. Roughly half of young consumers will stick with their bank into adulthood, and many never switch.

This puts banks’ focus squarely on Gen Z, where the youngest members of the cohort are in their early teenage years and the oldest are already facing significant financial decisions. Still, many financial institutions have struggled to connect with this digital-first demographic.

In a recent PaymentsJournal podcast, Fiserv’s Tina Shirley, VP of Product Management and Josh Mesaros, Inside Sales Executive, as well as Ben Danner, Senior Debit Analyst at Javelin Strategy & Research, discussed payments experiences across generational lines and the areas where banks fall short.

What they uncovered was that when financial institutions improve payment experiences to better engage Gen Z, they also positively impact consumers across the board.

The Gamut of Mobile Banking Experiences

For most consumers, the best mobile experience isn’t the flashiest one—it’s the one that works seamlessly every time.

While many banks focus on creating sleek new user interfaces, customers’ highest expectation for online and mobile banking apps is simply that they work—especially for everyday interactions like viewing checking account balances and reviewing credit card transactions.

Over the years, many of these features have become taken for granted, but they represent a significant improvement over are far superior to the alternative.

“I think back to when online bill pay was new for me, it was kind of a life-changing offering,” Shirley said. “Rather than writing a check and having to go get stamps and remember to mail a check, moving to online bill pay changed my routine from being annoying and inconvenient to just a couple of clicks to pay my bill.”

Although many mobile banking activities have become ingrained behaviors, new technologies have driven significant shifts in other areas. This is especially true for Gen Z and millennial consumers.

“The biggest one for me would be Zelle^®,” Mesanos said. “I live with a bunch of buddies and every month I have my payment set and scheduled where on the first of the month I pay my roommate, who then pays all of our rent to our landlord at once. It is also very convenient when going out to dinner and for my yearly dues to my hockey team. Zelle^®‘s just a must have for me.”

The Fragmentation of Financial Apps

Although Zelle^® is a powerful tool, there is no monopoly in fintech—a reality that underscores one of the biggest challenges facing banks and credit unions as they compete for relevance among Gen Z.

The market is now crowded with digitally native fintechs and neobanks, many of which have made early inroads with users.

While many of the companies were created to addresses specific banking niches, several fintechs have since expanded their offerings to rival traditional banks. Companies like Venmo and Cash App can accept deposits, facilitate investments, and issue debit cards.

However, while these services may be bank-like, they are not equivalent to full-service banking offerings.

“Some of these third-party payment platforms—for example, Venmo—are not insured,” Mesanos said. “I once had a buddy in college that had a bunch of money sitting in his Venmo account because he didn’t want his parents to access that and see how much he had. But that not being insured scares me because you never know what’s going to happen.”

Another issue with fintechs is that many operate as walled gardens, where users must join a platform to participate in its ecosystem. To accommodate these varied scenarios, customers often download multiple apps. This can quickly lead to financial fragmentation, where users hold balances across several platforms with no holistic way to manage them.

“You might have a Gen Z customer bouncing around between all these different fintech apps and multiple banking apps, to the point where they have 10 to 15 apps on their phone that are just for banking and payments,” Danner said.

“One single app that can do all of those different things would be huge because there is app fatigue in a way,” he said.

Unifying the Banking Experience

As consumers increasingly juggle multiple financial apps, banks have an opportunity to differentiate themselves by becoming the central hub for user’s financial lives.

Unfortunately, many banks and credit unions are still behind the curve on the fundamentals.

“I’ve banked with several small banks and credit unions that didn’t have a whole lot of features built into their mobile experience,” Danner said. “When we talk about these things that are table stakes at the large issuer—like budget tools, spend management controls, instant everything—some of the smaller banks and credit unions I’ve been with don’t have any of those tools in their app.”

This lack of scope and functionality further contributes to fragmentation, as users often must rely on multiple apps to accomplish a single objective. Integrating these experiences is a critical first step, but an attractive mobile banking solution goes far beyond functionality alone.

Perhaps more than any other generation, Gen Z consumers are accustomed to optionality. Instead of cable or satellite, they expect to curate their own mix of streaming services from a collection of options.

However, this abundance of choice can also be overwhelming. As a result, many younger adults place a premium on guidance, especially when it comes to major life decisions. Unfortunately, too many banks still rely on one-size-fits-all messaging for a generation that expects tailored experiences.

“I’m getting retirement notifications or notifications like, ‘Here is a $400 promo to open a small business account,’” Mesanos said. “It would be helpful if there was a ‘For You’ category where I could learn about mortgages or car loans, something that’s more relevant to my generation.”

Personalizing Offers Via AI

Banks now have more tools than ever to deliver personalized guidance at scale—and Gen Z consumers increasingly expect that level of customization.

Institutions have substantial access to consumer data through onboarding information, transaction history, and product interactions.

They also have artificial intelligence and other customization tools at their disposal, which can generate personalized recommendations with minimal staff involvement. These tools can be deployed at critical moments, while the customer is actively engaged with the bank’s app.

Unfortunately, many banks and credit unions have continued to operate as usual—and the limitations are becoming increasingly apparent.

“Truth be told, I don’t feel much pain, but I do feel like my bank is serving up the same experience that it did 10 years ago, or more,” Shirley said. “My journey has changed; my bank still has tools that are relevant, but maybe in a different way than they used to be. It’s continuing to invest in the technology that enables the experience that customers or members expect.”

The Winning Combination for Gen Z

For younger consumers navigating fragmented financial lives, the institutions gaining traction are often the ones that can simplify the experience while still making it feel personal.

This blend of personalization, education, and AI has resonated strongly with younger adults.

A centralized banking experience can cut through the noise for a generation inundated with financial advice from social media and accustomed to managing money across multiple banks and fintech platforms.

However, becoming a central hub doesn’t mean a financial institution must be the sole provider of services. In many cases, consumers place greater value on institutions that can provide a holistic view of their financial lives, regardless of where their accounts or balances reside.

That broader experience must be paired with functionality, which is why Zelle^®