Close the Gen Z ‘Relevancy Gap’ Now or Watch Them Leave
Digital-first customers expect AI-powered personalization, proactive financial guidance, and expanded financial wellness tools. Banks and credit unions who fail to deliver these services risk missing out on the coming $68-trillion generational wealth transfer.
By Jim Marous, Co-Publisher of The Financial Brand, CEO of the Digital Banking Report, and host of the Banking Transformed podcast
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Executive Summary
- 41% of all digital banking consumers would be more likely to change financial providers if another offered a 5-minute mobile or online account opening experience for deposit accounts. For younger generations, the figure is significantly higher (49%).
- Digital-first consumers think AI will have the most significant overall impact on customer service (70%) and security and fraud protection (69%) aspects of their digital banking experience.
- 50% of digital banking users are willing to switch providers for a better digital experience, with 31% having already done so.
- Only 38% of regional and community bank customers say their provider’s recommendations have become more relevant over the past year, compared to 53% for neobanks. Personalized guidance is an untapped differentiator, with few providers seen as offering advice that feels tailored.
As digital expectations accelerate and generational preferences diverge, a new study from Alkami and The Center for Generational Kinetics reveals warning signs that demand immediate attention from financial institutions of all sizes. The research, based on insights from 1,500 digital banking participants, reveals critical gaps between consumer expectations and the delivery of financial services that threaten current and future relationships between financial institutions and their customers.
A Relevance Crisis
One of the more concerning findings of the study is what researchers refer to as the “relevance gap”, defined as the disparity between what consumers expect from their financial institutions and what they actually receive. According to the research, regional and community financial institutions are losing ground rapidly, with only 38% of their account holders saying that product recommendations have become more relevant over the past year. This is significantly lower than megabanks (45%) and neobanks (53%), creating a 15-percentage-point gap that presents a serious threat to organic growth and loyalty.
The research confirms what we’ve long seen in the marketplace: the winners in banking will be those who act now to close the relevance gap between customer expectations and everyday experiences, according to Allison Cerra, Chief Marketing Officer at Alkami. The data highlights that consumers are becoming less willing to wait for their traditional financial institutions to catch up.
Jason Dorsey, president of The Center for Generational Kinetics and a leading researcher on generations, emphasizes that each generation is redefining what financial partnerships look like. At the Co:lab 2025 conference, sponsored by Alkami, Dorsey made a case that strategies built for previous generations may not fully resonate with the Gen Z generation unless they’re updated with intention. Dorsey’s extensive research consistently demonstrates that financial institutions must enhance their strategies by incorporating Gen Z’s mindset, which values speed, transparency, digital fluency, and a sense of shared purpose.
Digital is the Gateway to Primacy
While branches are far from obsolete, the digital channel can determine the strength of a customer’s relationship. The research found that 84% of digital banking users consider the quality of their digital experience a key factor when choosing a provider. More importantly, 50% of consumers are willing to switch financial providers for a better digital experience, with 31% already having done so.
This shift effectively redefines what constitutes a “primary” financial relationship. Traditional measures, like deposit size or account tenure, are being replaced by digital engagement metrics. The institution where consumers primarily use their mobile and online banking services is increasingly becoming their primary provider, regardless of historical relationships or physical proximity.
Dorsey’s research reinforces this trend, noting that Gen Z has a distinct relationship with technology compared to Millennials. Their definition of a bank is fundamentally different from that of other generations. They don’t even believe that a branch is necessary to be considered a bank. This shift in perspective isn’t limited to the youngest consumers either. It’s becoming widespread across all age groups, driven by convenience, functionality, and rising expectations.
Read more: What Gen Z Really Wants From Their Bank
The Five-Minute Imperative
One of the study’s most actionable insights centers on digital account opening. Not surprisingly, 41% of all digital banking users are more likely to switch financial providers if they can open a deposit account in five minutes or less via mobile or online banking. Among younger generations, this number increases to 49%, emphasizing the importance they place on seamless onboarding.
This frictionless digital first impression is no longer a “nice to have.” It is a critical growth lever, trust signal, and competitive differentiator.
This insight aligns with Dorsey’s broader research on generational expectations regarding speed and efficiency. His studies consistently show that younger generations have grown up in an environment of instant gratification, simplicity, and intuitive technologies. The five-minute threshold isn’t arbitrary; it represents the maximum tolerance for friction before consumers abandon the process altogether.
AI and Anticipatory Banking: The Next Level of Relevance
One of the most interesting takeaways from the Alkami report is the call for anticipatory banking. In this model, financial institutions don’t wait for customers to ask; they proactively deliver what customers need before they realize they need it.
The research finds that 46% of digital banking consumers are comfortable with AI processing their financial data if it improves their banking experience. This percentage rises to 57% among younger millennials. More significantly, 65% of U.S. digital banking consumers believe AI will dramatically change how they conduct business with their bank or credit union within five years, up from 61% last year.
Bottom line, consumers don’t just accept AI – they expect it to deliver real-time personalized insights, fraud protection, and proactive financial guidance. The institutions that move beyond pilot programs to deploy AI in live environments will establish competitive advantages that compound over time. Loyalty and engagement going forward will not be about more products. It will entail smarter delivery. Leveraging transaction data, life-stage signals, and AI to drive timely engagement will turn customer insights into customer action and institutions into indispensable partners.
Dig deeper:
- The Great Wealth Transfer: How Banks Win the Next Generation of Business Owners
- The Future of Financial Wellness: The Evolution of the Debbie App
- Contrary to Popular Belief, Gen Z is Suffocating in Today’s High-Cost World
The Intergenerational Wealth Transfer: A $68 Trillion Opportunity
Within the next 10-20 years, 37% of digital banking consumers in the U.S. expect to receive an inheritance. This represents what may be the most significant wealth transfer ever. This finding takes on additional significance when viewed through the lens of baby boomer business ownership, where baby boomers own 40% of small businesses, with fewer than one-third having formal exit plans.
At this year’s Alkami Co:lab conference, Dorsey provided key context for understanding these trends. His research shows that Generation Z is emerging as a “throwback generation,” already working, saving money, and determined not to end up like Millennials. Contrary to stereotypes, Gen Z exhibits fiscal conservatism that more closely resembles that of baby boomers than Millennials, with 35% of Gen Z planning to start saving for retirement in their 20s.
This offers banks and credit unions a unique opportunity. Those that position themselves as trusted guides for both wealth transfer givers and receivers will have the chance to capture not just assets, but can expand their role from transactional provider to lifelong advisor.
As the report notes, “The intergenerational wealth transfer represents a critical inflection point. Institutions that offer tailored products, digital tools, and personalized guidance will be well-positioned to grow relationships across generations and support families at every stage of the transition.”
A Generational Reckoning
Across generations, people are no longer looking for a traditional bank or credit union. They’re looking for a financial partner who understands their life stage, anticipates their needs, and engages with empathy. And that financial partner must be digital, data-informed, and must act with urgency, because consumers are switching faster than ever.
The trends identified in the Alkami research aren’t gradual shifts requiring eventual attention. They represent immediate threats and opportunities that demand decisive action across the entire financial organization. The institutions that take action will establish sustainable competitive advantages. Those who play “wait and see” will find themselves at a major competitive disadvantage in a market where switching barriers continue to diminish.
In an increasingly digital world, the quality of the digital experience and the level of digital maturity couldn’t be more critical. Now is the time to close the relevance gap. Not with more marketing or fancy slogans. But with more empathy and personalization, delivered at the speed of digital.
