The willingness to go cashless correlates with income and urbanisation. Fifty-eight percent of urban consumers and 56% of high-income respondents are ready to go all-digital, compared with 40% of rural consumers and 42% with earnings below $50,000, the report found.

For fintech and banking leaders, that’s an operational and ethical challenge. Promoting cashless exchanges risks exacerbating the already-gaping economic divide between the haves and have-nots, unless infrastructure and pricing models can be designed to target inclusivity specifically.

While concerns about privacy may be often associated with older generations distrustful of all things technological, the study shows that 51% of Gen Z and 49% of Millennials want to preserve an appreciable level of anonymity in their financial activities. Despite being digitally fluent, younger consumers are increasingly aware of the data footprints created by every one of their online activities – and financial transactions are among the most sensitive. For fintechs and banks, there’s perhaps an opportunity to introduce privacy-preserving payment models via 100% transparent operations.

The key to trust may lie in open banking initiatives and digital identity programmes that are consensual and trustworthy for users. Trust is built on transparency and honesty, so data protection and privacy need to be at the core of any financial product’s value proposition, and not be regarded as an internal compliance burden for the sector.

There is something of a blurred boundary between traditional banks and fintech platforms among the report’s respondents. Only 64% of consumers identified JPMorgan Chase as a bank, while 31% classified Cash App and Chime as banks, despite neither of the latter holding FDIC insurance directly. For Gen Z, the distinction between regulated banks and payment apps is less pronounced; half consider Cash App a bank, compared with just eight percent of Boomers.

Later generations’ perceptions are eroding the historical advantage banks held because of their deposit insurance, branch networks, and the trappings of financial solidity. Financial institutions were once a literal physical presence for older generations; yet later generations have never made the association. As digital newcomers deliver comparable financial functions with less friction, thanks to their digital-first approach, traditional banks’ regulatory status becomes less visible, and arguably less important.

For financial strategists, the evolution suggests a need for better messaging about safety and the guarantees enshrined in legislation, or alternatively, partnerships that blend fintech agility with institutional credibility and reliability.

The report shows generational differences in financial literacy, with only 56% of Gen Z respondents knowing that FDIC insurance applies exclusively to banks, compared with 80% of US Boomers: Over time, fewer customers associate banks with safety and solidity. Financial institutions that once used their status as a selling point may need to re-frame their message for Gen Z and new generations.

Without physical branches or traditional, mainstream advertising, how can old-school banks reinvigorate the trust that previous generations have always held for them? Digital solution vendors in the sector often stress the speed of onboarding new customers as one of their advantages. Yet ‘onboarding’ a new account at a bank a couple of generations ago meant assembling paperwork and attending an in-person interview with be-suited bank personnel. That lent the process, and therefore the institution, with an undeniable gravitas.

If signing up for a financial product is akin to opening an in-game account to buy a player ‘skin’, there’s no inference of trustworthiness, solidity, nor security.

Across all generations, three attributes dominate decision-making regarding financial services: security from fraud (49%), low or no fees (41%), and deposit protection (40%). These are more important across the board than conveniences such as peer-to-peer transfers or 24-hour customer service. For financial professionals, the takeaway is that consumers expect protection and predictability more than novelty.

Gen X, often held to be among the most financially stable cohorts, places the heaviest emphasis on cost reduction. Younger generations, meanwhile, prioritise frictionless peer-to-peer capabilities but with high degrees of sensitivity to privacy. The generational spread indicates a need for flexible product design by financial providers, products that need to balance convenience with robust, and robustly-stated safeguards.

The report shows the convergence between regulated and non-regulated financial entities is continuing, and differentiation between the two parts of the sector is poor: Consumers behave as if traditional banks and digital payment providers form a single ecosystem.

Maintaining consumer trust will need a strong focus on transparency, especially as open finance frameworks expand. Providers have to be as explicit about data usage as they are about transaction security and deposit guarantees. Getting the message over more effectively about the advantages of regulated status is important to older institutions, while neo-banks have a hill to climb combating data privacy and security concerns.

(Image source: “1 Wall Street and Empire Building” by epicharmus is licensed under CC BY 2.0.)