Traditional Banks Struggle with Loyalty as Gen Z opts for Influencers over Financial Institutions instead

Digital wallets and influencers, preferred by Generation Z, take precedence over conventional banks in their financial affairs, with a primary focus on mobile devices.

, and Administrator

2025 September 18 . 11:53 AM

2 min read

Traditional banks confront a fidelity dilemma as Generation Z opts for social media figures instead... — Traditional banks confront a fidelity dilemma as Generation Z opts for social media figures instead of financial institutions

Traditional Banks Struggle with Loyalty as Gen Z opts for Influencers over Financial Institutions instead

Mastercard, in collaboration with research companies Appinio and Play The Hype, recently published a report on the financial habits of Generation Z, those aged 14 to 18. The study revealed insightful trends about the spending behaviour and preferences of this generation.

One of the most significant findings is the growing preference for digital wallets and peer-to-peer transfers, which could potentially lead to a gradual decline in the use of traditional us bank systems. The risk for traditional banks is that irrelevance could accelerate quickly in a generation defined by speed.

Gen Z consumers are demonstrating a more disciplined approach to savings compared to their elders. They are allocating their resources through various channels and intermediaries, with digital wallets increasingly serving as places to park cash. This trend is blurring the line between wallet apps and bank accounts for Gen Z.

The digital-first approach of Gen Z extends to their spending habits as well. They rely heavily on debit for spending, favouring it over credit cards or traditional checks. This preference is partly cultural, given that they have grown up during the Great Recession and are coming of age during a global pandemic, and partly technological, as it integrates seamlessly with mobile wallets and payment apps.

Influencers on platforms like TikTok, Instagram, and YouTube are becoming a significant source of financial advice for Gen Z. Despite not being licensed fiduciaries, these influencers are trusted by Gen Z. Influencers' advice, while not always accurate, is perceived as authentic and relatable. A staggering 81% of Gen Z are swayed by influencer recommendations, nearly triple the rate of boomers.

Amazon is becoming the default store for goods and services among Gen Z consumers. One-click payments and built-in buy now, pay later (BNPL) partnerships on Amazon reinforce the primacy of digital channels.

Interestingly, only a fraction of Gen Z's savings ends up in bank accounts. Digital wallets account for 13% of Gen Z's savings, and crypto attracts 6.3% despite its volatility. This shift in savings patterns could potentially disrupt the traditional banking model, which depends on deposits.

Banks may face a decline in share of mind and wallet as Gen Z's financial lives revolve around frictionless, rewarding digital systems. As Gen Z continues to grow and assert its economic power, traditional banks will need to adapt to these new trends or risk being left behind.