The news: More Gen Zers and millennials are turning to fintechs for investing and wealth-building, according to a new report from Cornerstone Advisors and InvestFi. This comes despite most younger consumers still maintaining primary relationships with traditional financial institutions (FIs).

Zoom in: The report found that nearly two-thirds of Gen Z and millennial investors (ages 18–45) moved money out of deposit accounts in the past year to fund investment activity.

• 43% said they transferred funds to invest in stocks and ETFs, the most-cited reason.
• Crypto is contributing to the trend, with 34% saying they moved money to invest in cryptocurrency.
• 39% of credit union members with a fintech investment account keep at least half of their investable assets in that account, up from 30% in 2024.

Why it matters: The strongest fintechs are growing fast, becoming profitable, and moving into banks’ most lucrative pools—including payments, wealth management, capital markets, and lending. 

Banks and credit unions aren’t at risk of consumers closing their deposit accounts outright, but they are losing a growing share of consumers' financial activity and assets. As fintechs make it easier to move seamlessly between spending, saving, and investing, they gain more opportunities to deepen engagement and expand into adjacent financial products.

Implications for FIs: Fintech competition is spurring FI investment in tools that make wealth-building more accessible to everyday consumers. For example, Charles Schwab recently expanded AI-generated investment advice beyond its highest-net-worth clients.

As AI lowers the cost of delivering investing tools and advice, consumers will increasingly expect wealth-building capabilities to be embedded into their everyday banking experiences. FIs that can't deliver a seamless experience will find it harder to remain the primary destination for customers' financial lives.

This content is part of EMARKETER’s subscription Briefings, where we pair daily updates with data and analysis from forecasts and research reports. Our Briefings prepare you to start your day informed, to provide critical insights in an important meeting, and to understand the context of what’s happening in your industry. Non-clients can click here to get a demo of our full platform and coverage.