BAI found that younger Americans are less loyal to one financial institution and often have accounts with multiple institutions, which means increased competition for big banking players

In its latest report, the Bank Administration Institute (BAI) found that less than half of Gen Z and millennials used the same financial institution as their parents in 2021. That's a significant drop compared to 61% of Gen Z and 54% of millennials just one year ago.

Changing preferences among younger Americans

While Gen Z and millennials value low fees (31% and 36% respectively) more than any other factor, they don't prioritize them as much as past generations.

More than 60% of Gen Z and millennials would consider switching for better mobile apps or digital capabilities.

These generations were also more likely to consider banking with a non-traditional player, such as Amazon, Google or PayPal.

In addition, the BAI reports that over half of Gen Zers and millennials would switch banks for a higher commitment to ESG and DEI. In comparison, only a third of Gen X and fewer than 20% of boomers say they would do the same. ESG (environmental, social and governance) is a system for measuring a company’s commitment to bettering society, while DEI (diversity, equity and inclusion) refers to measures that are specifically meant to promote inclusion

Big banks must adapt to keep up

Only one-third of Gen Z completely agreed with the statement that their financial institutions were effectively meeting their needs.

The biggest business challenges for bankers in 2022 is to improve the customer’s digital experience and acquire new customers, says the BAI.

By 2024, customers expect 61% of their banking business to be digital and 39% human-assisted.