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Zoomers: Traditional Financial Institutions Vs. Neobanks

Posted by Nikhita Gurukula on 20 Jul 2022

*Originally published on CUInsight.com

Generation Z, or Zoomers, is the only generation that has not experienced life without the convenience of internet connectivity. This fact, along with the ongoing COVID-19 pandemic, has disrupted the world of traditional financial institutions. As a result, Zoomers commonly explore neobanks. 

What are neobanks? 

According to Forbes, ‘neobanks’ are fintech firms that offer various software and apps to create digital banks. Much of what Zoomers value goes hand-in-hand with what neobanks have to offer. 

  • Accessibility: Neobanks have less bureaucracy, which leads to faster loan approval. 
  • Lower Costs: Gen Z is opposed to fees, especially overdraft fees. Neobanks save money on real estate and operational costs, which allow them to lower prices and eliminate extra fees for their account holders.
  • Adaptability: Zoomers are a fast-moving generation who value innovation above everything else. Since neobanks are mobile/digital-first, innovation is highly scalable. Neobanks entered the banking industry knowing that they could more easily expand their interfaces and creativity vs. the competition. They are constantly adding new features such as microlending and commission-free stock trading. 

Many traditional financial institutions are faced with the challenge of the speed and accessibility that neobanking offers. There was no real need for fast-paced evolution before the boom in online services, as they functioned for years within a structured oligopoly. As mobile-first financial institutions, neobanks have succeeded in creating high-speed, user-friendly interfaces. 

There are also some issues with financial institutions that lack alignment with Gen Z values. 

  • Scandal & Controversy: Generation Z values clean, ethical behavior in the political environment and the entertainment industry. Similarly, leaked information regarding traditional financial institutions’ unethical behavior repels Zoomer consumers. For example, Manole Capital Management’s 2020 study shows that 27% of Zoomers would never partner with a certain large bank due to their scandal in 2016.
  • Zoomers’ Minimal Interest in Visiting Banks: The study mentioned above showcased that only 16.70% of Zoomer consumers are interested in visiting the bank more than 5 times a year. Additionally, in 2018, Capital One Bank attempted to attract Gen Z consumers to branches by adding “money coaches”, “ambassadors,” and even complimentary refreshments. However, this was a failed attempt, and post-COVID is even less likely to work. 

Despite the evident modern edge that neobanking has, Zoomer consumers can admit that there are still services that only traditional financial institutions can offer. Neobanking, as of right now, is more focused on essential, simple services, like checking and savings accounts. Traditional institutions provide mortgages and other types of loans. 

Traditional banking institutions still have a lot to offer, including in-person services. The majority of Zoomers are still in school, and many of them have yet to worry about buying a home and paying mortgages, which is why the appeal of neobanking remains strong. Also of consideration—many Zoomers grew up watching their parents bank with traditional financial institutions, making it possible that they will trust what they’re familiar with.  

Read more about Zoomers in Zoomers on Campus: Where I Choose to Bank


Today’s legacy and siloed banking technology infrastructure limit credit unions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

Nikhita Gurukula Marketing Intern Nikhita Gurukula is an intern for Alacriti's marketing team, who is currently a sophomore in college. Currently attending Pennsylvania State University's Smeal School of Business, Nikhita is exploring and developing her skills in marketing throughout her college journey. Her areas of interest are content marketing and social media marketing. Nikhita brings the Zoomer perspective to discussions surrounding banking and payments. She is excited to learn more about marketing within and beyond the FinTech industry!