Surprising Millennial Banking Trends

Millennial banking habits set them apart from other banking customers

Millennial woman using the mobile banking app on her smartphone to deposit a check

 FG Trade / Getty Images

Many millennials rely on their checking and savings accounts to help manage their finances, but they're increasingly swapping out traditional brick-and-mortar banks for new banking options. When millennials are dissatisfied with their bank, they're not afraid to move to greener pastures; they're 2.5 times more likely than Baby Boomers and 1.5 times more likely than Gen Xers to switch banks.

But where are they taking their money? And what factors drive their decision-making when choosing a bank? Here are the most important trends shaping millennial banking.

Millennials Focus on Convenience and Perks

Millennials want to carry out their banking activities with minimal fuss, and they routinely rely on technology to help them do it. Millennials are logging into their mobile banking apps most often to:

  • Schedule person-to-person money transfers
  • Transfer funds between accounts
  • Check their transaction history

But, their preference for mobile banking can be fickle when its performance is lacking. In one study, nearly 40% of millennials abandoned mobile banking activities when they took too long.


Compared to Baby Boomers and Generation X, millennials were more likely to bail on mobile banking when it proved inconvenient.

Additionally, millennials want banking products and services that offer a little extra bang for their buck. In a Kasasa survey, 83% of millennials said they'd be willing to switch banks for better rewards, such as a higher interest rate on deposit accounts, cash-back on purchases, and foreign ATM fee refunds. And 94% of millennials also said that no-fee banking was a priority.

Neobanks and Credit Unions Find Favor With Millennials

Neobanksfintech companies that take a tech-focused approach to banking and finance—are gaining ground among millennials. Neobanks can offer traditional banking services, such as checking or savings accounts, but they can also span a broader range of products and services, such as:

  • Payment apps and money transfer services (think Venmo or Cash App)
  • Online personal and business loan providers
  • Investing and savings apps
  • Bill payment and expense-tracking apps

Neobanks typically don't have branches, and many are intended to compete directly with bigger brick-and-mortar banks. Some neobanks, however, are offshoots of existing banks, credit unions, or financial institutions. Marcus, for example, is the online banking division of Goldman Sachs Bank USA.

The Appeal of Neobanks

The primary appeal of neobanks, particularly for millennials, is their streamlined and tech-centered approach. Neobanks offer mobile banking, but they can go beyond the standard banking features. They offer things like faster loan approval and funding compared to regular banks. Neobanks have low or no banking fees at all, broader ATM network access or ATM refunds, and built-in money management and budgeting tools. All of these features give millennial banking customers more control over their finances.

Because neobanks are often branchless, they typically have lower overhead costs. That allows them to pass on higher interest rates on deposit accounts, including high-yield savings accounts. Some of the best high-interest savings accounts, for example, offer an annual percentage yield (APY) that's 20x or more than the national average APY.

Where Credit Unions Have the Edge

Of course, the main drawback of neobanks may be the lack of branches. Two-thirds of millennials visited a bank branch in the previous six months, according to research by Gallup. While that figure trails behind Gen X and Baby Boomers, it suggests that millennials still need a human touch to manage their banking needs from time to time.


While credit unions may not offer all of the same tech capabilities as neobanks, they often have the edge over traditional banks. Credit unions compete well when it comes to the fees they charge for banking products, interest rates on loans, and annual percentage yields (APY) on deposit accounts.

Credit unions also feature the human component that online banks lack. Of course, the challenge for millennials is finding a credit union that they're eligible to join. Some credit unions have relaxed the membership requirement guidelines to allow a broader base of people to join, but neobanks and traditional banks don't have those same barriers.

What's Next for Millennial Banking?

As new technology evolves, including AI and machine learning, banks will likely have to evolve as well to keep pace with millennial banking needs. With Gen Z joining them and using banking services, too, there's more incentive than ever to realize tech's possibilities. For the short-term at least, the challenge is finding the right balance between offering digital banking features and products, while still offering a personalized experience that speaks to what millennials need and desire most.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Gallup. "4 Ways Banks Can Win and Keep Millennial Customers."

  2. Retail Dive. "Millennials Lead Mobile Banking Charge, Study Says."

  3. Kasasa. "New Research: You Already Have What Millennials Want."

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