Before Gen Z, for the last couple of decades, banks operated with the confidence that each of the new generations would eventually adopt their services, accept their pace, and trust their authority. That assumption no longer holds. Gen Z, born into a digitally native, post-crisis world (dot com bubble in 2000 and financial crash in 2008), shaped by millennial finances, is questioning the traditional financial system, not out of rebellion, but because better alternatives now exist.
Financial trust today isn’t built through legacy as it’s constructed on accessibility, transparency, responsiveness, and relevance. And for the most part, fintechs are delivering better on those fronts. I’ve observed this shift firsthand, both as a shareholder in a regulated Lithuanian EMI (from which I made a small exit) and as a board member of a Singaporean EMI operating in Europe. At Fintexus.com, after guiding early-stage fintechs through licensing, compliance, and board building, I see it clearly: the real story isn’t “problems with Gen Z” but the new benchmarks they’re setting for trust, transparency, and how business gets done.
Generation That Mistrusts Banks, and Numbers Tell the Story
Only 32% of Gen Z globally say they trust traditional banks, significantly less than older generations. This generation was shaped by financial instability, student debt, and a global pandemic, each event reinforcing the perception that traditional finance is slow to adapt and fails to serve real people. It is essential to consider the massive money-laundering cases involving traditional banks, which often have to pay fines that are a mere fraction of their earnings from such activities.
Usage is declining. Just 47% of Gen Z maintain accounts with traditional financial institutions, far below Millennials or Boomers. The preference is shifting to platforms that align with gen finance expectations: mobile-first, flexible, and fast.
World crypto is changing expectations. Crypto adoption among Gen Z is significant: in the U.S., 51% of Gen Z adults have owned digital assets. This generation sees crypto as more than speculation — it’s autonomy, accessibility, and a hedge against systemic inefficiencies.
The spending habits of Gen Z show a clear preference for independence, digital-first tools, and alternatives that feel more transparent.
What Fintechs Do Differently (and Better)
Faster Services and Support
Fintechs operate in real-time. Whether it’s onboarding, account opening, or P2P transfers, users expect speed. Most of the time, fintechs deliver that (some potential pitfalls will be described later). On the other hand, the traditional banks usually do only 3 settlements of payments per day, or even require physical branch visits. Generation Z spending habits show they’re used to instant gratification, and one-tap access to finance is no exception. The gap in service velocity has become a major differentiator, especially when it comes to first impressions.
Flexible Pricing with Tangible Value
While not always cheaper, fintechs often justify their pricing with added value (banks usually charge €1–2 per month). Take Revolut’s top-tier plan, Ultra. It’s around €45 per month but offers real perks: travel insurance, lounge access, cashback, and fee-free international payments. Younger users are willing to pay, but only when pricing is clear and benefits are immediate. Banks rarely offer this kind of dynamic pricing experience, or, if they do, it’s buried in terms and conditions.
Modern UX/UI Is Mobile-First by Default
Fintechs design their products around user expectations: mobile-first, intuitive, and frictionless. Features like biometric login, real-time budgeting, auto investments, savings opportunities, and transaction categorization are built in. Banks still tend to prioritize desktop-first platforms and legacy flows, creating unnecessary barriers. For Gen Z and Gen Alpha, who grew up with smartphones, poor design isn’t just inconvenient; usually, it’s a dealbreaker.
Crypto-Friendly Infrastructure
Many fintechs are far more open to serving crypto-native users compared to traditional banks. It includes facilitating fiat-to-crypto rails, enabling stablecoin deposits, or offering compliant multi-asset wallets. This hybrid approach is attractive to Gen Z, who increasingly want to manage both traditional and digital assets in one place. In contrast, most banks still treat crypto as a high-risk liability, limiting access or outright banning crypto-related payments.
Alignment with User Values
Fintechs tend to communicate more clearly, position themselves as transparent, and embed social or environmental consciousness into their brand. Gen Z notices. They are more likely to trust companies that speak their language, align with their ethics, and treat them like informed participants, not passive customers. The buying habits of Gen Z reflect this loyalty shift toward value-driven brands.
Licensing Is Not Optional
Fintechs moving into Europe (or anywhere in the world) quickly realize that licensing is critical, especially if they want to offer regulated financial services at scale. Usually, the EMI license (or equivalent outside the EU) is a strategic milestone for startups: it provides legal authority, access to banking rails, and credibility with users and partners alike.
As compliance isn’t a bottleneck but more a foundation for long-term trust, I support fintech companies through this journey, starting from helping structure their compliance roadmap, applying for EMI or CASP licenses. This approach helps build governance frameworks that scale, and is finished with appointing qualified board members to meet regulatory requirements and improve operational depth.
The Hidden Paradox of Fintech Companies
While fintechs are reshaping the user experience, there’s an underlying paradox most users don’t see. The majority of fintechs in Europe and globally operate under Electronic Money Institution (EMI) or Payment Institution (PI) licenses or equivalents, like an MSB license from Canada, depending on the services they provide. These licenses allow them to issue e-money, process payments, or facilitate transactions, but not to hold client funds on their own balance sheets.
Therefore, under the EU regulation, EMIs and PIs are required to safeguard client funds by storing them in segregated accounts held with traditional banks. In simple words, it means that banks still take control of the capital flow, acting as correspondent banks behind the scenes. However, when certain transactions raise red flags, these banks have the authority to freeze, delay, or decline transactions, often without much warning. It usually happens due to compliance, documentation gaps, or regulatory concerns.
Fintechs, in such cases, find themselves in a really difficult position. Their branding promises speed and transparency, but they can’t override the decisions of the banks that ultimately hold the money. As a result, users sometimes experience the very same limitations they tried to escape by leaving traditional finance.
It’s a structural contradiction: you get better interfaces, faster support, and a more modern product experience, but in the end, your capital is still held, cleared, and controlled by the traditional banking system. With the arrival of MiCA and the classification of some EMIs as Crypto-Asset Service Providers (CASPs), this reliance becomes even more relevant, especially when crypto-related funds interact with fiat systems.
Understanding this hidden layer is important, as it is not to discredit fintechs, but to explain the realities of compliance, custody, and operational dependencies in Europe’s regulated financial ecosystem.
Final Thoughts
Gen Z doesn’t distrust banks out of immaturity or being spoiled. They simply prefer platforms that respect their time, values, and behavior. The winners in the next decade won’t be those with the biggest legacy, but those who can offer regulated, fast, mobile-first, and crypto-friendly services in a way that feels personal and accessible.
And while Generation Z spending habits are reshaping finance today, fintechs already need to prepare for what comes after Gen Alpha — a cohort that will likely grow up with tokenized money, instant payments, and a world where banks are optional.
Fintechs that align technology with licensing and speed will not only gain traction but build something even more valuable: lasting trust.
