Gen Z Conundrum: How to Help Young Adults Save While They Pay Off Debt
By Nicole Volpe, Contributor at The Financial Brand
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Executive Summary
- Gen Z faces unpredictable income and high living costs, so banks need products that offer liquidity without sacrifice – like “soft saving” options, reversible financial commitments, and rewards that can be accessed immediately rather than locked away.
- This generation has extremely low tolerance for banking complexity. Success requires one-tap transactions, sub-five-minute account opening, biometric authentication, and building financial actions into behaviors they’re already doing rather than creating new hoops to jump through.
- Gen Z already uses AI more than other generations and trusts it for decision-making. Banks have an opportunity to leapfrog fintech competitors by creating conversational AI interfaces that can handle routine transactions and provide personalized financial guidance in natural language.
Gen Z — born roughly between 1997 and 2012 and expected to constitute 30% of the global workforce by 2030 — is entering adulthood with financial pressures hitting from multiple directions. As student loan payments resume and rent costs reach historic highs, this generation is navigating a complex landscape of rising living costs and economic uncertainty.
In Deloitte’s 2025 Gen Z and Millennial Survey, some 40% said they’re worried about their ability to retire comfortably. A 2024 survey of 1,500 Gen Zers found that 41% run out of money nearly every month, only 22% feel financially stable, and many struggle to cover basic essentials like rent, food, and bills. They’ve seen the sharpest recent rise in paycheck-to-paycheck living compared with other generations.
At the same time, Gen Z’s intuitive and ingrained relationship with technology has shaped how they consume information, and interact socially and professionally, entrenching their expectation for fast and seamless digital experiences. Gen Z has never known a world without pervasive digital connectivity: Smartphones, social media, streaming, and video-centric platforms have been foundational parts of their daily lives from childhood onward — in contrast to Millennials, who grew up amid transitional media.
For financial institutions, this fact set poses a challenge. Banks and credit unions must design user experiences and financial products that acknowledge and serve Gen Z’s unique financial concerns while also meeting their high requirement for digital immediacy and ease of use. Doing so can empower these young adults to manage competing priorities with greater confidence and control, while ensuring your institution has a fighting chance of capturing and retaining them. Here are three product design pillars to keep in mind as you move forward.
Want more insights like this? Check out Kasasa’s intelligence hub: Low-Cost Deposit Strategies
Adaptive Products for Unpredictable Lives: Balance Liquidity and Rewards
Gen Z’s growing use of services like BNPL to smooth expenses has been a growing concern among regulators; it’s also a strong signal of their demand for flexibility. Bank and credit union strategists looking to build engagement and loyalty through rewards programs must adapt them to meet the Gen Z user’s overriding concerns about their balances and billing cycles.
One way to achieve this is by designing product experiences that offer “soft saving” mechanisms. The latter term has evolved to reflect Gen Z’s practice of prioritizing present well-being while still budgeting for medium- or long-term goals: in effect, a working compromise between a high-stress financial reality and a deeply-rooted commitment to quality of life. This might mean that cash-back settles immediately in checking, with an option to apply it to upcoming bills in one tap. Or users might be able to set aside a small amount on payday but under terms that are easily reversible. When displaying a rewards balance, an institution might default to “available now” cash rather than points — to remind the user of the backstop funds they have available.
Kasasa CEO Gabe Krajicek offered the example of the “take-back loan,” a product his company designed to respond to consumers’ fear of locking up liquidity. The product lets borrowers make extra payments to pay down debt faster, while still allowing them to withdraw those overpayments later if needed — so long as the balance doesn’t exceed the original amortization schedule.
Kasasa — a financial service provider that helps small banks and credit unions offer customers more competitive products — found that 55% of people had liquidity to pay off their debt faster than required. But they didn’t take advantage because they feared an unforeseeable future liquidity crunch. “What’s nice about it is it gives them the freedom to get out of debt with reckless abandon,” Krajicek said.
Another approach is to offer flexible, tailored rewards that adapt to individual preferences. Programs that let Gen Z choose between cash, points, experiences, or digital discounts resonate more strongly than rigid, one-size-fits-all models. Beyond utility, the ability to customize rewards carries a social signal: it affirms identity and lifestyle, showing young account holders that their bank recognizes and values who they are. For example, one user might apply rewards directly to a streaming subscription, while another might choose a discount on rideshare expenses or convert points into instant cash.
Dig deeper:
- What Smart Community Institutions Are Doing to Grow Deposits Right Now
- It’s Time to Rethink Non-Interest Income (Plus, Tested Tactics That Drive Growth)
- Navigating Uncertainty: Growth Strategies for Resilient Financial Institutions
Paths of Least Resistance: Emphasize Simplicity and Natural Default Behaviors
If there’s one thing traditional financial institutions have learned from fintech’s surge over the past two decades, it’s the power of simplicity. In fact, it’s a truism of e-commerce design that the path to engagement lies in providing a single compelling service — in retail financial services, this might mean buying stocks or making P2P payments — in a maximally easy and habit-forming way.
The situation has long frustrated traditional providers, whose long-established strength lies in diversified product lines. But today’s market trends may finally be tilting the field back in their favor. As younger generations, especially Gen Z, juggle increasingly complex financial needs — and consider different products to meet them — banks and credit unions have a chance to regain ground. (Many fintechs, meanwhile, are outgrowing their original value propositions and are diversifying to sustain engagement — but that’s another story.)
It’s still important for financial institutions to emulate fintechs, orchestrating hard-to-resist, habit-forming experiences at key relationship junctures. But they should also remain committed to positioning these “killer app” moments as parts of an extended engagement with their institution.
“If you ask them to do something that’s already on their path you can move the needle,” Krajicek said. “But if it’s not part of their routine, I’ve never seen it work.” For example, asking someone to swipe a debit card ten times to gain a benefit might be “on their path” but 50 times, not so much. Logging into online banking and setting up direct deposit might also qualify as routine behaviors.
The idea is to make such actions effortless and automatic. Gen Z’s tolerance for friction in banking is unusually low: A 2024 study of payments trends by EY reinforces this: Among Gen Z respondents, 39% said simply entering a PIN was a “pain point” compared with just 29% of other generations. (Interestingly, Gen Z also worries much less about data and privacy, with only 40% rating such concerns as extremely important, versus 65% of non-Gen Z respondents.)
Product designers must remain mindful of the cognitive load a Gen Z consumer bears, as their phones ping with notifications that range from urgent and important to insignificant and random. With this in mind, supporting design tactics might include:
- Defaults that lock in “set-and-forget” behaviors, or including for example surfacing direct deposit right away; and then presenting digital-wallet set-up.
- Account opening that takes less than five minutes and critical tasks that are done in one or two taps. (Institutions should track metrics like step count, completion time, and save/resume rates.)
- Disclosure statements that are delivered progressively, so choices appear only when needed. (Keep microcopy literal — e.g., “Turn on alerts” or “Add paycheck” — and confirm success instantly.)
- Log-ins and sign-ups that minimize re-keying, including by leaning on device biometrics and ensuring users can resume workflow if they switch apps.
Especially for Gen Z consumers, simplifications like these add up to less anxiety and better engagement.
Something to Talk About: Unlock the Power of an AI-First UX
AI-based user experiences for bank customers haven’t taken off yet. Nearly 40% of those surveyed by Deloitte in 2025 said they have not interacted with even the rudimentary customer service chatbots long ubiquitous on institutions’ web pages and apps. But when such services do begin to rise to the technology’ potential, they’ll likely find an eager user base among Gen Z.
Though estimates vary, it’s clear that Gen Z is already using AI more than other generations and has integrated it into many dimensions of their lives (including investing). According to a 2025 Gallup survey, 47% of Gen Z uses AI weekly, while a 2025 Salesforce survey puts the figure as high as 70%. More tellingly, Salesforce’s research reveals that 52% of Gen Z trust the technology to help them make informed decisions.
Against this backdrop, AI offers traditional financial institutions a chance to leapfrog fintechs — especially fintechs that have embedded themselves in younger customers’ lives with habit-forming single-function apps. The idea is to establish single-interface, conversational AI access to the whole banking relationship. Krajicek said: “If I can say ‘what’s my balance?’ and get the answer — and move money right there — that’s the best UX. Treat it like Siri, but then it takes the next step and completes the task.”
Banks still have a lot of work to do before AI experiences can fulfill that promise. J.D. Power’s 2025 U.S. Banking Digital Experience Study shows that satisfaction with today’s virtual assistants lags far behind mobile app and website performance, even as overall digital banking satisfaction climbs. Accenture similarly reports that while mobile apps now dominate customer interactions — averaging 150 per year — chatbots remain among the least satisfying touchpoints, and are often viewed as homogeneous and underpowered.
The immediate opportunity is to master the basics of everyday transactions through AI. That means designing assistants that can reliably answer routine queries — recent transactions, card freezes, bill payments — while offering precise, time-stamped information and one-tap follow-through. Speed, accuracy, and contextual awareness will be key. If a user can ask “what’s left in checking?” and instantly transfer money or see a posted balance with source-of-truth details, AI — and the financial institution it intermediates — starts to feel indispensable.
From there, the path opens to more complex use cases: proactive financial advice, personalized savings nudges, and accessible financial education woven into natural conversations. These are exactly the kinds of services younger generations say they want, and will certainly need, in a world of rising financial complexity.
The Balance in The Future
Gen Z’s financial lives today are defined by forces in tension — immediate needs versus long-term goals; powerful human impulses versus technology everywhere all the time. Banks and credit unions wishing to accompany this generation into its financial future will need to embrace design values that help them balance such forces.
For financial institutions, making the right product design choices means supporting the qualities that Gen Z values in themselves: adaptability, balance, authenticity, and a readiness to embrace the future. When financial products respect those traits — enable flexibility; safeguard well-being alongside progress; embed intelligent tools that feel natural — banks and credit unions help a rising generation build the stability and agency it needs to thrive in a complex world.
