As Gen Z—a cohort born between the mid-to-late 1990s and early 2010s—comes of age, the financial services industry is increasingly shifting its focus from Millennials to this younger, more digitally native generation. Unlike Baby Boomers, who often relied on a single "primary bank" for multiple financial services, Gen Z is redefining the banking landscape. This generation does not stick to one single provider; instead, they tap into a broad ecosystem of financial services, often spanning across traditional banks, FinTechs, and Neobanks.
Dubbed “Generation Bank Switcher,” Gen Z’s loyalty to a single institution is tenuous. A recent report reveals that over 40% of U.S. Gen Z consumers changed their bank in the past year alone. This “fragmentation of banking” is even more pronounced in developing markets, where historically underserved populations have leapfrogged into financial inclusion through innovative FinTech solutions. For instance, in Kenya, M-Pesa, the mobile payment platform, helped drive banking penetration from 27% in 2006 to 75% by 2016.
This unbundling of financial services poses a formidable challenge to traditional banks accustomed to keeping everything from checking accounts to mortgages under one roof —a model favored by Baby Boomers. Compounding the issue, many consumers are more familiar with FinTech brands (69%) than the newer offerings from incumbent banks (59%). This leaves traditional financial institutions struggling to effectively communicate their innovations as they compete with a growing roster of agile competitors in the financial services space.
In the light of this fragmentation, how can banks stay relevant and preserve customer relationships? Payments—the most frequent touchpoint between banks and customers—offer an effective yet often underutilized channel for engagement. The humble debit or credit card, used multiple times daily, has untapped potential to reinforce customer loyalty, brand recognition and “customer mindshare.”
What steps can banks take to transform the card from a simple piece of plastic into a tool for meaningful customer engagement? One approach is personalization. Allowing customers to choose their card design—whether by printing a cherished photo, such as their grandchildren, on the card surface or opting for a sleek, clean, minimalist aesthetic by removing visible card credentials like the card number and expiration date (these details can instead be placed on the back or accessed via an app)—can create a stronger emotional connection.
Functionality and material can also set cards apart. Features like LEDs that light up during transactions or premium materials such as metal or even glass offer novelty and exclusivity. For a truly standout offer, banks can combine features and materials—for example a metal card with a built-in LED, elevating the customer experience even further.
For years, banks have focused on making their cards "top of wallet." In today’s fragmented financial landscape, the opportunity lies in going further—leveraging cards to make the bank and its brand "top of mind." Banks that seize this opportunity and transform everyday payment tools into symbols of engagement and innovation will position themselves as leaders in an unbundled financial services future. Only time will tell which institutions rise to the challenge.
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