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Digital-First Banking Trends and Engaging Gen Z and Millennials

As the payments space continues to evolve, and as Gen Z and young Millennials reach critical financial life stages, the demand for convenience and digital-first banking continues to rise.

ByTransFund in partnership with Mastercard
January 27, 20264 min read

As the payments space continues to evolve, and as Gen Z and young Millennials reach critical financial life stages, the demand for convenience and digital-first banking continues to rise. In response, digital-first financial institutions (FIs) typically have less physical branches and prioritize digital channels as their primary means of serving cardholders.1 As consumer preferences shift more towards digital services, traditional brick-and-mortar FIs can pursue digital banking efforts by enhancing channels such as mobile apps and websites. This subsequently boosts cardholder experience and better meets the needs of the growing Gen Z and Millennial audience.

Engaging Gen Z & Millennials

Today, Gen Z accounts for 20% of the global population2 and earns an average annual income of $22,9253 while Millennials make up 22% of the population,2 and earn $47,034 annually.4 In terms of purchasing power, Gen Z and Millennials are projected to reach 17% and 31% of total global spending, respectively by 2030.2

Much of the switch towards digital-first banking can be attributed to evolving cardholder preferences towards convenience, especially among Gen Z and Millennials. These younger generations are also more likely to explore new and innovative products. In a recent study, 79.9% of Gen Z and Millennials report that they become aware of a financial institution’s products and services through their mobile app.5 Likewise, the top stickiness factor for Gen Z is easy-to-use mobile/online banking services, highlighting the importance of convenience and user experience for long-term retention.6

Key Digital-First Banking Trends

Digital-first banking provides cardholders with a seamless user experience while targeting the preferences of younger generations. These capabilities range from convenience features such as contactless payments and digital card issuance to mobile banking experiences that enable personalization and accessibility.

 

  • Contactless payments allow cardholders to quickly transact by “tapping” to pay with their physical card or mobile wallet. A recent study found that 73% of millennials and 66% of Gen Z use contactless payments on a consistent basis.7 As Gen Z and Millennial preferences continue to shift towards convenience, speed, and security, it is crucial that FIs enable digital features, such as contactless payments, to meet changing cardholder demands and to maintain competitiveness. TransFund supports a variety of mobile wallets – including Apple Pay, Google Pay, and Samsung Pay – while enabling secure contactless payments through tokenization.
  • Digital card issuance enables FIs to instantly issue virtual cards to new and existing cardholders while they wait for their physical card to arrive in the mail. In a recent study, 44% of cardholders report that instant card access boosts their overall satisfaction, indicating that digital issuance not only promotes convenience and immediate card use, but also effectively meets cardholder needs.8 With TransFund’s Digital Now, FIs can instantly issue their cardholders a digital version of their physical card that shares the same permanent card number and enables immediate access to funds.
  • Mobile-first banking experiences empower cardholders to seamlessly interact with their FI and take control of their accounts; as such, FIs should focus on promoting mobile banking services to their cardholders. A recent study found that more than half of Gen Z and Millennials now use mobile banking as their primary banking method.9 This shift not only reflects changing preferences but also enables FIs to deliver differentiated experiences through features such as transaction monitoring and card controls. With TransFund’s Card Suite, cardholders can monitor transactions, lock and unlock cards, and set custom transaction limits, boosting cardholder experience and stickiness.

Conclusion

Digital-first banking is transforming the way FIs interact with cardholders, making a digital-first approach increasingly important as consumer demands evolve, especially among Gen Z and Millennials. With TransFund’s Contactless, Mobile Wallet, Digital Now, and Card Suite services, FIs can offer their cardholders a seamless and convenient digital-first experience that effectively meets their demands, while ensuring competitiveness in today’s evolving market.

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Sources

  1. PYMNTS, What Is Digital-First Banking, 2022
  2. Javelin Advisory Services, Get Out Your Wallet: Gen Z Debit Payment Preferences, 2024
  3. Investopedia, Here’s How Much Gen Z Spends Per Year. How Do You Compare?, 2025
  4. The Tokenism, Millennial Income Statistics, 2024
  5. Insider Intelligence, US Banking Consumer Habits 2023, 2023
  6. Javelin, Generation Z: Building Mobile Banking for a Generation in Transition, 2024
  7. Market.US, Contactless Payments Statistics By and Facts, 2025
  8. Marqeta, Deloitte: Modern Card Issuing is Here to Stay, 2022
  9. Bankrate, Digital Banking Trends In 2025, 2025
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