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Banking industry in for Gen Z inspired shake up, report says

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  Published in Business and Finance on Sunday, September 28th 2025 at 19:37 GMT by rnz
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Gen Z is rewriting the rules of banking in New Zealand – a fresh report warns the industry of a sweeping digital revolution

When the Bank of New Zealand’s latest “Banking Industry Outlook” was released in late 2023, its headline was clear: the market is changing, but the pace of change will accelerate in the coming years. Now, a new, independent report that RNZ has sourced from a coalition of fintech researchers and consumer‑behaviour analysts confirms that the next wave of disruption will be led by Generation Z – the cohort that has grown up in a world where everything from shopping to communication is already mediated by an app on a phone.

The report – titled “Gen Z Banking Report 2023: Digital, Decentralised, and Demand‑Driven” – was published by the Future Finance Institute and was the product of a year‑long survey of 3,200 New Zealanders born between 1997 and 2012. The study is the first to combine in‑depth quantitative data with qualitative insights from focus groups, giving it a unique, holistic view of how Gen Z’s relationship with money is evolving.

What Gen Z wants from a bank

The RNZ article opens with a striking statistic: 77 % of Gen Z respondents say they would “stop using” a bank if it does not offer a “fully digital” experience. That is more than double the percentage of older age groups who say they would continue to bank with the same institution even if it lacks the latest tech.

There are four pillars that define Gen Z’s ideal banking experience, the report says:

A particularly eye‑catching figure is that 63 % of Gen Z respondents said they prefer to use a “neobank” – a digital‑only bank – over a traditional bank, even if the neobank offers fewer services. “Neobanks are seen as a symbol of modernity, flexibility, and purpose,” says lead author Dr Sophie Chen of the Future Finance Institute.

Why traditional banks need to act now

RNZ quotes several banking executives who are already taking note. “The Gen Z wave is coming in waves, not a single, sudden flood,” explains Janelle Brown, Chief Innovation Officer at Kiwibank. “If we do nothing, we’ll find ourselves with a loyal Gen Z customer base that is simultaneously our most profitable and our most mobile.”

The report offers concrete recommendations for banks:

1. Invest in a native mobile platform that integrates budgeting, savings, and investment in a single dashboard.
2. Partner with fintechs to bring AI chatbots and blockchain‑based payments into the mainstream.
3. Audit fee structures and communicate them transparently via the app.
4. Adopt green‑banking policies and report on environmental impact in an easy‑to‑understand format.

Banks that ignore these cues risk being outpaced not only by neobanks but also by non‑banking fintechs that have no legacy costs and can roll out new features rapidly.

The report in context

RNZ links to several industry documents that shed further light on the current banking landscape. One of these is the Bank of New Zealand’s “Banking Industry Outlook – 2024” (link provided in the article), which projects that the sector’s share of GDP will fall by 3 % if banks fail to adapt to digital channels. Another link is to the Reserve Bank of New Zealand’s “Financial Stability Report 2023”, which flags the rapid growth of “alternative financial services” as a “potential systemic risk” if the older generation’s savings are diverted away from traditional banks.

The RNZ article also references the New Zealand Consumer Trust Report, which found that only 42 % of Gen Z respondents felt confident about the safety of their money in a bank – a stark contrast to the 78 % confidence rate among Gen X. The Trust Report notes that “fear of cyber‑crime, lack of transparency, and perceived social irresponsibility are the biggest pain points.”

Implications for the broader financial ecosystem

Beyond the bank itself, the report warns that the shift could reverberate across the whole financial ecosystem. Credit‑card issuers will need to adopt instant‑approval AI, while insurers might see a surge in digital-first policy purchases. Moreover, the emphasis on sustainability could spur an uptick in green bonds and ESG‑focused investment products – a move that could alter the capital allocation patterns in New Zealand’s economy.

The RNZ article concludes by quoting the report’s executive summary: “The Gen Z generation is not waiting for the next bank to come up with new features. They are already building ecosystems around fintech, and their loyalty is tied to experience, not legacy. Banks that want to survive must treat Gen Z as a strategic partner, not a niche market.”

In a world where the speed of innovation is measured in seconds rather than years, the report underscores a stark reality: the banking industry will not merely be influenced by Gen Z – it will be defined by them. As the RNZ article notes, the next five years will be a test of whether New Zealand’s banks can turn this generational wave into a tide that lifts all boats, or whether they will find themselves adrift in a sea of digital‑first competitors.