Should traditional banks be afraid, as Gen Z might be the first generation to skip banks entirely, favoring fintech, neobanks, and mobile-first money tools?
Introduction
Gen Z might be the first generation to skip banks entirely. That’s not hyperbole, it’s a seismic shift in how financial trust, tools, and choices are evolving in the hands of young digital natives.
While previous generations opened checking accounts as rites of passage, Gen Z is sidestepping traditional banking altogether. They’re not just avoiding bank branches, they’re building financial lives without legacy institutions.
Why does this matter? Because Gen Z’s financial behavior signals the future of money management. Already, over 60% of Gen Z prefer using fintech apps over visiting a bank, with mobile wallets, crypto platforms, and budgeting tools dominating their home screens.
Neobanks, Buy Now Pay Later (BNPL) services, and peer-to-peer payment apps aren’t fringe options for this cohort, they’re central.
The move away from legacy banks isn’t accidental. It’s driven by deep distrust of traditional finance, digital-first habits formed since childhood, and the rising availability of intuitive, app-based alternatives.
If Gen Z might be the first generation to skip banks entirely, it’s because they no longer see banks as essential. They see them as optional, and often, obsolete.
This article reveals why this trend is unfolding, the tools and attitudes enabling it, and what it means for the future of finance.
Gen Z’s Financial Landscape in 2025: Who They Are and What They Want
Gen Z—those born between the mid-1990s and early 2010s- now makes up about 20% of the U.S. population, wielding over $360 billion in spending power. But beyond size and income, what makes this group stand out is how fundamentally different their financial behaviors are compared to previous generations.
They’re digital natives who expect money management to be as seamless and accessible as streaming a show or posting a story.
This is the generation that grew up watching banks bail out while apps cashed in. Nearly 71% of Gen Zers already have at least one fintech account, and 68% prefer these modern alternatives over traditional banks for core financial services.
Their reasons? Efficiency, control, and convenience, values not typically associated with legacy institutions.
Mobile-only is now the norm. In the past month alone, 99% of Gen Z engaged in mobile banking, and 50% manage their entire financial life through smartphones—no branches, no desktops, no paper trails.
It’s clear: Gen Z might be the first generation to skip banks entirely because their financial worldview was shaped by speed, transparency, and digital control.
Distrust of Traditional Banks: Why Gen Z Is Walking Away
It’s not just that Gen Z prefers digital tools; it’s that they actively distrust traditional banking. Only about 32% of them globally express trust in banks, compared to over half of older adults.
That trust gap is widening with each clunky login, overdraft fee, or multi-day hold on funds.
This generation is also highly sensitive to inefficiencies. Roughly 83% report feeling frustrated by traditional banking processes, especially slow transactions, long wait times, and rigid customer service systems. For a group used to instant everything, friction equals failure.
What’s more, Gen Z is highly mobile, not just on devices, but in loyalty. They’re two to three times more likely to switch banks than their parents and up to four times more likely than their grandparents.
If legacy banks don’t evolve, they may be left behind, because Gen Z might be the first generation to skip banks entirely, not out of rebellion, but because they’ve outgrown them.
What Gen Z Loves and Banks Don’t Always Provide
Gen Z doesn’t want banking; they want a financial experience. They expect onboarding in under five minutes, real-time notifications, app-first customer service, and user interfaces that mirror the social platforms they grew up with. Financial tools should be as intuitive as swiping on a story.
They also care deeply about values. Personalization, sustainability, and alignment with social and environmental causes are no longer perks; they’re expected.
Features like customizable savings goals, app-based spending insights, and subscription tracking are must-haves.
Legacy banks, built for bureaucracy, struggle to deliver the immediacy and empathy this generation demands.
This gap in expectations is why Gen Z might be the first generation to skip banks entirely. They aren’t abandoning money management, they’re redefining it on their own terms.
Fintech Ecosystem: What’s Replacing Banks
Neobanks and digital-only providers have exploded in popularity among Gen Z, experiencing a 37% year-over-year growth in users in 2025.
Today, 61% of Gen Z in the U.S. actively use a neobank, platforms with no branches, minimal fees, and interfaces that feel more like social media apps than financial institutions.
But it doesn’t stop there. Buy Now, Pay Later (BNPL) services are becoming standard. Around 68% of Gen Z have used a BNPL tool in the past year, making it one of the most popular credit alternatives for everyday purchases.
With high adoption among younger borrowers, BNPL lets them sidestep traditional credit cards and the banking infrastructure that supports them.
Gen Z’s toolkit is diverse: investing is done through streamlined fintech apps, peer-to-peer payments are the norm, and crypto wallets and digital budgeting tools have found solid footing.
The modern financial journey doesn’t start at a bank; it starts in an app store. This is why Gen Z might be the first generation to skip banks entirely: the alternatives not only exist, they work better for their needs.
Financial Behavior Trends That Undermine Banking
Interestingly, Gen Z’s financial behavior isn’t uniformly digital. Some trends reveal a blend of old and new, such as the rise of “cash stuffing” and envelope-style budgeting.
This analog habit has found new life on platforms like TikTok, where users stuff physical cash into labeled envelopes to manage expenses and avoid overspending. It’s a paradoxical return to tactile money management in a generation raised on screens.
That said, Gen Z still tends to avoid carrying large sums of cash due to fears of theft and loss. Yet on average, they carry more physical cash than older generations, highlighting a unique behavioral tension between digital preference and financial caution.
These contradictions don’t weaken the trend; they reinforce it. The traditional bank’s infrastructure simply doesn’t match the complexity and nuance of Gen Z’s behavior.
Gen Z might be the first generation to skip banks entirely because banks aren’t built to reflect how they think about money; flexibly, creatively, and independently.
Why Gen Z Might Actually Skip Banks Entirely
What happens when nearly every financial function, spending, saving, lending, investing, and budgeting, can be handled outside the banking system?
For Gen Z, that’s not a hypothetical; it’s the current reality. Fintech has evolved to meet nearly all of their needs with lower friction, faster speeds, and more control.
They see no need for physical branches, don’t write checks, and rarely use ATMs. Even their paychecks often arrive via direct deposit into a digital wallet or neobank account. As traditional banking infrastructure becomes less visible, it also becomes less necessary.
Their behavior isn’t rebellious, it’s practical. The trust gap, the clunky legacy systems, and the lack of personalization in traditional banks all push Gen Z toward alternatives that mirror their values.
Transparency, ethical branding, customizable features, and speed aren’t bonuses, they’re baseline expectations.
That’s why Gen Z might be the first generation to skip banks entirely: not because they’re anti-bank, but because the future of finance was built without one.
Challenges & Limits to a Fully Bank-Free Life
While Gen Z might be the first generation to skip banks entirely, that path isn’t without its obstacles. Traditional banks still play a crucial role in systemic stability, offering protections that fintech hasn’t fully replicated.
For instance, deposit insurance like FDIC coverage offers a safety net that most fintech apps lack. In crisis moments, whether natural disasters, power outages, or service disruptions, access to physical cash or a brick-and-mortar branch can mean the difference between chaos and continuity.
Another major limitation is education. Despite their tech fluency, only about 10% of Gen Z in Europe, for example, meets the benchmark for financial literacy.
Many young consumers engage with complex tools—BNPL, crypto, margin trading—without fully understanding the risks. Banks, for all their faults, are still positioned to offer structured financial education, compliance-tested advice, and long-term planning services.
Additionally, there are legal and structural barriers that fintech hasn’t fully disrupted. Mortgages, business loans, and compliance-heavy services still require engagement with licensed financial institutions.
Until regulation catches up or fintech becomes fully bank-integrated, a truly bank-free existence remains aspirational.
Even if Gen Z might be the first generation to skip banks entirely, the transition is layered, and legacy systems still hold pieces of the financial puzzle.
How Traditional Banks Can Compete—or Risk Becoming Irrelevant
For banks hoping to stay relevant, the message is clear: evolve or disappear. The roadmap starts with experience.
Gen Z demands ultra-fast onboarding, ideally under five minutes, along with intuitive app interfaces, real-time transaction alerts, and user journeys that require no instruction manual. If it takes more than a tap and a swipe, it’s already too slow.
But user experience isn’t enough. Gen Z also wants meaning behind their money. Ethical finance, ESG alignment, and clear data privacy policies matter more than ever.
Banks must not only operate transparently, but also reflect the values of a generation that prioritizes impact over institution.
Strategic partnerships are another must. Rather than compete with every rising fintech trend, banks can integrate.
Embedding features like BNPL, subscription management, robo-advisory tools, crypto wallets, and peer-to-peer payments into bank apps can offer the best of both worlds: trusted infrastructure with modern agility.
Gen Z might be the first generation to skip banks entirely, but it’s not inevitable. The question is whether banks will meet them halfway or remain tied to a model no longer built for the future.
Conclusion
Gen Z might be the first generation to skip banks entirely. This shift isn’t just about convenience; it’s powered by a generation raised on digital speed, transparency, and personalized control.
Their financial loyalties are shaped not by tradition, but by trust in fintech, frustration with legacy systems, and a native fluency in mobile-first living.
But banks aren’t obsolete yet. They still play a vital role in financial stability, regulation, and education.
However, unless they evolve quickly by delivering seamless digital experiences, aligning with Gen Z values, and integrating fintech functionality they risk becoming irrelevant to the very people shaping the future of finance.
Frequently Asked Questions (FAQs)
Why might Gen Z skip traditional banks entirely?
Because they prefer mobile-first, fast, transparent fintech platforms that better match their digital lifestyle and values.
What financial services is Gen Z using instead of banks?
Neobanks, peer-to-peer apps like Venmo or Cash App, BNPL tools like Klarna, and budgeting/investment fintech apps.
Is Gen Z’s distrust of banks unique?
Yes. Surveys show Gen Z has significantly less trust in traditional banks than millennials or Gen X.
Are there risks in skipping banks completely?
Yes. Fintechs often lack full regulatory protections like FDIC insurance, and some services still require traditional banking.
Can banks win Gen Z back?
Possibly. But only if they deliver fast, personalized, values-driven digital experiences that rival fintechs.