How Financial Services Can Evolve To Stay Relevant For Gen Z – Financial Services #IndiaFinance

Now is the time for financial institutions to reshape their
offerings and engage Gen Z— tomorrow’s most powerful
economic force.

In brief

• 20% of global Gen Z is in India. Their preferences are shaping
  banking, payments, and investment trends of the future.




• 83% of Gen Z prefers digital-first financial services but also
  seeks human interaction for major decisions.




• To capture Gen Z’s loyalty, financial institutions must
  align with their digital needs and trust expectations.

India hosts one in every five Gen Z globally, making this
generation a driving force in reshaping banking, payments, and
investments. This tech-savvy generation values seamless digital
experiences, personalized services, rewards and financial products
that align with their social and environmental values. Financial
institutions must adapt to these evolving needs and financial
habits to maintain relevance and foster growth.

This report provides insights into Gen Z’s financial
behavior and offers recommendations for financial service providers
to effectively engage with this key demographic. The survey
highlights Gen Z’s complex relationship with digital finance,
which includes:

Gen Z values both digital convenience and human connection

A significant 83% prefer digital-first financial services,
showcasing their comfort and reliance on technology. This digital
fluency, however, does not equate to blind trust. Gen Z seeks human
interaction for important financial decisions, revealing a demand
for both convenience and personalized guidance.

Gen Z is financially savvy and actively manages their
finances

Gen Z demonstrates a proactive and strategic approach to
managing their finances. 48% maintain multiple bank accounts,
indicating a desire to segregate funds for different purposes.
Furthermore, 44% actively explore various bank features,
highlighting a generation keen on optimizing their financial
tools.

A growing appetite for rewards and cashbacks

The survey also uncovers Gen Z’s payment preferences and
cashback and rewards inclinations. Gen Z is driving the rise of
UPI, with 68% using it for the ease and cashback perks. Credit
cards are also a growing trend, with 46% choosing them for rewards
and discounts, and 36% for sheer convenience.

Gap in engagement and financial education

Despite their digital prowess, Gen Z are not fully satisfied
with the financial experiences available today. A significant 42%
find UI/UX lacking, and only 7% trust bank representatives for
advice.

The key to winning Gen Z lies in the FUTURE framework

Financial institutions (FIs) must foster personalized
experiences, unite rewards with payment convenience, transform
financial advisory, uphold financial discipline, reassure through
tailored engagement, and empower flexible, affordable credit
solutions. By adapting to Gen Z’s evolving expectations, banks
and FinTechs can not only meet their needs but also build long-term
loyalty and future-proof their growth. The proposed FUTURE
framework comprises:

• Foster channels for personalized experience:
  To meet Gen Z’s needs, banks must offer intuitive, mobile-first
  experiences with seamless navigation. AI-driven personalization
  enhances engagement through tailored solutions. Social media
  banking builds trust, while FinTech integration creates a
  connected, lifestyle-focused financial ecosystem.

• Unite convenience and rewards in payments:
  Banks can strengthen co-branding and partnerships with lifestyle
  brands to offer exclusive rewards and integrated payment solutions,
  enhancing Gen Z loyalty. They can boost credit card-linked UPI
  adoption by offering better incentives and seamless settlements.
  Partnering with Fintech and digitals enables advanced instant
  payments with features like automated bill splitting.

• Transform financial advisory: Banks could
  build trust through transparent communication, offering clear
  advice, ethical AI, and responsible advocacy. They can enable
  goal-based financial planning with AI-powered tools and
  personalized guidance. Expanding digital investments with
  micro-solutions and ESG options caters to Gen Z’s
  preferences, while mentorship programs and interactive financial
  education empower both advisors and customers to make informed
  decisions.

• Uphold Gen Z’s financial discipline: Banks
  could offer gamified financial tools to encourage savings and
  financial discipline through rewards and goal-based approaches.
  Integrating budgeting tools within apps empowers users with
  real-time spending insights, while reward systems for regular
  activities and interactive educational resources enhance engagement
  and position banks as trusted financial partners.

• Redefine brand engagement: Banks can leverage
  influencers who align with Gen Z values to promote products
  authentically and build financial trust. Providing interactive
  experiences like webinars and virtual challenges can educate and
  engage Gen Z effectively. Banks can also build exclusive
  communities with perks and peer-led discussions while positioning.
  sustainability as a core to deepen loyalty and resonate with Gen
  Z’s social consciousness.

• Empower modern credit with flexibility: To
  support Gen Z’s financial needs, banks should offer flexible
  credit limits and customizable payment plans for better expense
  management. Real-time credit monitoring empowers informed
  decision-making, while alternative credit scoring expands access
  for those with limited credit history. Instant micro-funds access
  ensures financial stability by addressing short-term cash flow
  gaps.

How is Gen Z reshaping financial services, and are FIs ready
for it?

As Gen Z transitions into active earners amid rapid
urbanization, their demand for digital-first, agile, and
personalized banking and financial solutions is reshaping the
industry. Success lies in anticipating their evolving behavior and
delivering purpose-driven, dynamic experiences that align with
their values. Yet, the future remains uncertain – technological
shifts and economic changes will continue to redefine their needs.
For banks, building resilience and fostering innovation is no
longer optional, it is essential. The message is clear: Gen Z is
transforming finance. The question is: are financial institutions
ready to meet them where they are?

Aarthy Rangarajan – Partner, Business Consulting, Ey India has contributed to the article
and report.

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