The news: Fintech isn’t just a budgeting tool—it’s becoming a partner in Gen Z’s resilience, offering short-term relief and long-term pathways, according to Plaid’s The Fintech Effect report.
By the numbers: Gen Zers are feeling the economic crunch and adjusting their spending and saving habits in hopes of still achieving their financial goals. But that’s not all they’re doing, according to the study:
- 61% of Gen Z respondents say fintech helps them weather economic challenges.
- 20% of consumers have turned to fintech lending apps for extra cash, double the rate of 2020.
- 19% have sought financial education through their apps.
In addition, 45% of Gen Zers own crypto, signaling they’re very willing to experiment with non-traditional finance in hopes of staying on track financially. And many turn to crypto apps for these investments.
What this means for banks: We knew that fintech use was on the rise and that Gen Zers even prefer these digital competitors to traditional banks. And while this doesn’t necessarily mean Gen Zers consider fintechs their primary institutions, it reinforces why financial institutions (FIs) must either work with fintechs to deliver more complete suites of personalized, financial products and services or prioritize developing them in-house.
For Gen Z, seamless connectivity to achieve this more comprehensive suite isn’t a perk—it’s an expectation. Plaid’s report revealed 77% of consumers insist their banks be able to connect to the apps they use, and 66% would consider switching banks if that weren’t possible. That means despite the regulatory uncertainty ahead, open banking is table stakes. And if FIs can’t enable safe, instant data sharing with fintechs, they risk losing Gen Z customers to those that do.
Our take: These findings underscore the importance of viewing fintechs as potential partners in delivering the best experiences and products to customers, rather than competitors. And it raises the question of whether charging fintechs fees for customer data access could backfire and drive fintechs—and therefore customers—to competitors.