As zillennials navigate their late 20s and early 30s, they find themselves at a critical juncture in their financial growth. They are more likely to be mid or higher income than Generation Z, while carrying several sources of debt and trying to put aside savings. And so, like many young adults, they have a scattering of income sources — from entry-level jobs and gig work to government assistance and gambling.
PYMNTS Intelligence’s latest research reveals that despite relying on traditional financial institutions (FIs), zillennials interact with a diverse array of financial service providers. And as digital-first consumers, zillennials represent a new wave of financial engagement, evident in the financial services they choose. They rely on mobile-first banking and have a strong interest in innovative financial features. Most use mobile apps as their primary banking method, though they do not predominantly choose digital-only banks. Zillennials also hold a variety of accounts, such as buy now, pay later (BNPL) and cryptocurrency.
These are just some of the findings detailed in “Generation Zillennial: Driving Financial Service Innovation,” a PYMNTS Intelligence exclusive report. This edition examines zillennials’ preferences and behaviors surrounding financial services and digital banking. It draws on insights from a survey of 3,724 respondents conducted from July 8 to July 22.
Key Characteristics of Zillennials’ Financial Lifestyle
Zillennials are likely to have a variety of income sources. Currently, 68% earn a salary from a job, while 22% have income from freelance projects, gig work or on-demand tasks. Having several income sources generally declines with age, with younger consumers averaging two jobs in the last 60 days while older consumers are more likely to have one. Meanwhile, at 77%, zillennials are more likely than older generations to have been able to save in the last month. This implies that multiple jobs or side gigs may enable zillennials to put aside savings.
Our data also shows that zillennials are more likely to have multiple sources of debt than other age groups. They are the most likely to have student loans and outstanding credit card balances: 27% have outstanding student loans, and 41% have outstanding credit card balances. Zillennials’ use of credit card installments is among the lowest, yet they are among the heaviest BNPL users. This suggests that these financially constrained consumers may turn to pay later options like BNPL to manage their cash flows.
Looking Beyond the Bank Around the Corner
Between cards, digital wallets and banks, zillennials transact with more financial providers than any other age group.
Zillennials engage with a wide range of financial providers. They have nine different accounts, on average, though some may be from the same FI. This is the highest among all generations. Along with saving accounts, debit cards and credit cards, they are the most likely to hold digital wallets, BNPL and cryptocurrency accounts. This generation also ranks as the most diverse age group in the activities they use to manage their finances. On average, these young adults engaged in 4 out of 7 proposed financial activities over the 30 days prior to being surveyed, more than any other generation.
Young consumers’ preferences are more diverse than older consumers when deciding where to bank.
Zillennials tend to view considerations such as proximity or business hours as less important when choosing an FI than older cohorts. This makes sense, since many zillennials are digital natives. For example, 32% of baby boomers and seniors cite convenience and accessibility as the crucial reason in choosing an FI. In contrast, just 22% of zillennials say the same.
These young adults are more concerned about technology and the digital experience and customer care when deciding where to bank than the average consumer. Nearly one-third of zillennials cite these factors as the most influential elements in choosing an FI. In fact, zillennials are 42% more likely to cite these than a conveniently located physical branch as the most important factor when choosing an FI.
Digital-First More Than Digital-Only
Zillennials are the most likely to use mobile-banking features, yet few lean towards digital-only banks.
As much as zillennials are touted as digital natives, most of them still use traditional FIs. In fact, zillennials are 23% more likely than the average consumer to bank primarily at national banks. Zillennials’ adoption of digital-only banks as their primary FI, at 16%, resembles that of Gen Z and millennial consumers, well above the sample average of 11%. Income seems a clearer differentiator in consumer choice of digital-only banks as primary FIs, with 23% of lower-income zillennials saying they bank primarily with digital banks.
Mobile banking is the channel that the greatest share of consumers primarily uses to access banking services. Among zillennials, the share primarily using mobile banking reaches 66%. This makes this generation 47% more likely to use mobile banking than average. This is a further indication of their tendency to rely on digital more than physical access for banking. In fact, 22% report that they have not banked at a physical branch or ATM in the year prior to the survey.
Zillennials also are more likely than the average bank customer to be interested in banking features and capabilities they are currently not using. Live support and chargeback resolution are the features they point at more frequently than any other age group. Zillennials also show greater interest in planning and budgeting tools and digital on-boarding than other generations. These findings suggest that zillennials not only value ease of use in digital banking but also see it as a tool to better manage their finances. FIs that do not prioritize these tools may risk losing zillennials to the FIs that do.
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Methodology
“Generation Zillennial: Driving Financial Service Innovation” is a PYMNTS Intelligence special report. This edition examines zillennials’ preferences and behaviors surrounding financial services and digital banking. It draws on insights from a survey of 3,724 respondents conducted from July 8 to July 22. Population weights are utilized to ensure analysis remains representative of the U.S. adult population.
