Fintech Vs. Traditional Banks: Why More Young Americans Are Making the Switch

Introduction

Remember when you literally had to visit a bank in person just to open an account or dispute a transaction? That's quickly becoming a thing of the past. Millennials and Gen Zs are ditching traditional banks for fintech options that offer more control, lower fees, and smarter financial tools.

According to a 2023 report from Business Wire, nearly 56% of Millennials and 51% of Gen Zs currently hold at least one fintech account. Instant transactions, AI savings, and social saving features like Plently's Money Circles make fintech platforms the new normal and not just an alternative anymore.

So, what is driving this shift? Let us break it down.

Why Traditional Banks Are Losing Young Customers

1. Outdated Systems & Slow Technology Adoption

Legacy banks are founded on outdated systems that can feel ludicrously slow and outdated. Long lines, bothersome branch visits, and clunky mobile banking apps make doing your banking an annoyance. Compare this to fintech apps, providing seamless, app-based banking with 24/7 convenience—no branch visits required.

2. High Fees, Low Benefits

Overdraft fees, maintenance fees, transaction fees—banks charge them all. In 2022 alone, U.S. banks collected over $11 billion in overdraft fees. Fintech alternatives cut these unnecessary costs by offering lower fees, better exchange rates, and even cashback.

3. One-Size-Fits-All Approach

Old-fashioned banks offer the same to everyone, regardless of individual spending habits. No automatic saving, no smart budgeting tools, and no rewards personalized for you. For the next-gen who is all about AI-driven insights and gamified saving, this old-fashioned approach just won't cut it.

The Rise of Fintech: Why It’s Winning

1. 100% Digital, 24/7 Access

Fintech platforms eliminate the need for branch visits. Everything—from setting up an account to managing transactions—happens instantly on your phone. Fintech users are not required to plan their timing around the working hours of a bank.

2. Lower Charges & Transparent Costs 

Fintech platforms incur lower overhead costs than traditional banks and are hence able to pass savings on to consumers. That means no minimum balance requirements, less charging, and better interest rates.

3. Smarter Money Tools

Fintech applications powered by AI can track your expenses, suggest budget adjustments, and even save money automatically according to your income and expenses. Round-up savings and goal-based saving schemes are only two such features that make money management a piece of cake.

4. Instant Transactions & Crypto Integration

While banks may take up to 3-5 business days to clear a transaction, fintech services provide real-time peer-to-peer transfers, digital wallets, and even crypto transactions. In the age of everything being instant, waiting 3-5 business days for a transaction is just so last century.

5. Better Rewards & Perks

Most fintech apps offer personalized rewards, cash back on everyday purchases, and saving boosts. Fintech companies reward smart money behavior, unlike traditional banks, which rarely reward customers.

How Plently is Changing the Game

Fintech is not just a replacement for the banking of old, its ambition is to improve it. Plently is leading this transformation through AI-driven products, easy-to-use savings technology, and social money management capabilities.

1. The Plently Debit Card

Designed with the convenience of its users in mind, the Plently debit card provides:

 ✔ Real-time tracking for wiser money management. 

 ✔ Strong fraud protection to safeguard your finances.

2. Money Circles: Social Saving Made Easy

Consistency is one of the biggest barriers to saving. Plently's Money Circles feature allows users to save together with friends and family members who they can trust, adding a social responsibility aspect to budgeting.

This is how it works:

 ✔ Create a Money Circle for group savings (vacation, emergencies, etc.).

 ✔ Save collectively and watch your collective savings grow.

 ✔ Encourage one another to be responsible with money.

Money Circles make saving fun, interactive, and more achievable—a concept traditional banks haven’t even begun to explore.

The Future of Banking: Can Traditional Banks Keep Up?

Traditional banks are trying to adapt by rolling out mobile apps, fintech partnerships, and digital-only services, but they still struggle with high costs, slow innovation, and rigid systems.

Fintech is racing ahead at breakneck speed. Features like AI-based financial management, blockchain security, and social banking are leading the charge. In a few years to come, we can conceivably have even more fintech upstarts rendering traditional banking irrelevant.

Conclusion

Young Americans are turning to fintech because it's smarter, faster, and better aligned to their financial needs. Apps like Plently offer personalized rewards, automatic saving, and social money management, which make them light years ahead of traditional banks.

Still saddled with outdated banking systems? Maybe it's time to switch to a fintech platform that gives you complete control over your money.

Want to experience the future of banking? Sign up for Plently today!