The data: Community institutions have been investing in mobile banking, social media marketing, and fintech-style features to win Gen Zers. 

It’s not working: Their share of Gen Zers' primary banking relationships has collapsed from 19% in 2023 to 9% in 2025, per ProSight Banking Outlook.

Why it matters: Neobanks' share of Gen Zers' primary banking relationships nearly doubled from 8.9% in 2024 to 17.2% in 2025, per an EMARKETER survey. 

Credit unions, meanwhile, fell from 11.9% to 7.3%. 

Gen Zers are also ready to find a new bank: More than 34% of them have decided to switch providers in the next year or are considering it, versus 20.7% of the overall population. 

Implications for community institutions: Keeping up digitally remains essential. The share of Gen Zers citing mobile banking capabilities as a main reason for switching banks rose from 27% in 2024 to 37% in 2025, per an EMARKETER survey.

But digital parity alone gives Gen Zers little reason to choose a community institution over a larger bank or neobank. Community institutions need to use technology to make their existing differentiator—their local presence and relationship-based service—more accessible to younger customers.

That could mean using digital channels to connect customers more easily with local employees, surfacing personalized support when financial needs become more complex, or using AI to handle routine interactions while preserving human service for higher-value needs. 

The goal isn't to out-neobank the neobanks. It's to deliver the digital convenience Gen Zers expect while giving them something digital-first competitors may struggle to replicate: a financial relationship rooted in their local community.

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