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How can banks transform for a new generation of customers?

EY’s consumer banking survey reveals how rising consumer expectations and the competitive landscape are intensifying the need to transform.

In brief

  • The EY 2021 NextWave Global Consumer Banking Survey explored consumers’ primary financial relationships and found that FinTechs and neobanks are gaining ground.
  • Consumers no longer expect one financial firm to meet all of their needs and expect highly integrated experiences among all providers.
  • Ecosystem business models and personalization capabilities are essential for banks to deliver richer experiences and retain their relevance. 

Technology and digitization have created opportunities for new players to emerge in banking, just as they have in nearly every other sector of the global economy. Just as they turned to streaming services and online retailers, consumers are turning to super apps, FinTechs and big tech platforms for essential financial services, such as deposits and payments.

While there is still time to counter the competitive threats, incumbent banks around the world should act with urgency to protect their advantages, which are under direct attack by these new providers. They must also build new business models capable of satisfying today’s consumer needs, and evolving and scaling to meet future needs and market developments. 

Incumbents still lead in maintaining primary financial relationships (PFRs) with consumers. But non-traditional “neobanks” are gaining ground at a pace that should focus the minds of C-suite leaders and boards across the banking sector. EY’s latest NextWave Global Consumer Banking Survey highlights the extent of these market shifts and suggests how financial institutions can respond. The census-weighted survey included 12,000 consumers in 14 diverse markets across age groups, wealth tiers and genders (see full methodology).

Specifically, the research findings illustrate how current trends are tilting the competitive playing field toward areas where neobanks enjoy advantages. They also reveal a generational shift in consumer perceptions of trust and the strong preference for integration among different providers and services. Lastly, the survey results confirm why stronger personalization capabilities and ecosystem business models are essential for banks to maintain their customer relationships and chart a viable path to growth. 

Among our key research findings:

  • 27% of global consumers have relationships with neobanks.
  • Of consumers who have chosen neobanks for their PFRs, 37% are age 18 to 34, which includes Gen Z.
  • As payments become more central to PFRs, the competitive playing field will tilt in favor of neobanks, but the need to integrate multiple financial services providers is a significant opportunity for incumbent banks.
  • Trustworthiness and personal relationships, two areas of strength for incumbents, are the most important factors driving trust in PFRs, outweighing product impacts.
  • The rise of “super apps” and consumer preference for much greater personalization provide a strong impetus for transformation programs and ecosystem development at incumbent banks.
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Chapter 1

Neobanks are gaining ground

Non-traditional competitors are building sustainable customer relationships.

Most consumers still choose banks for their PFRs today. But neobanks have gained a foothold across generations. Among all global consumers, 27% have relationships with neobanks, with the highest rates of adoption in the Asia-Pacific region and Latin America. While incumbent banks still maintain an edge, FinTechs are capturing more of consumers’ daily operating cash flows.

Among consumers who have chosen neobanks for their PFR, 20% are aged 25-34 and 11% are aged 65 or older. The rates of adoption are well balanced across other age segments.

Consumers who choose neobanks for their PFRs mostly use them for deposits and digital payments. The emergence of payments as a core service within PFRs gives neobanks a clear competitive advantage since their offerings are generally strong in this area. Digital payments are especially important in some markets. For instance, 92% of consumers in Mainland China use digital payments, but only 59% use deposit products. As deposit accounts become less central to PFRs, banks are likely to lose more ground to neobanks.


Longer tenure equals larger share of wallet

Banks have long used deposits and other core product offerings as a foundation for customer relationships and the basis for expanding their share of wallet. Payments are the foundation for neobanks’ relationships with consumers. But, as their average customer tenure increases, neobanks will penetrate high-value products like investments and loans. Many are already developing insurance and investment products aligned to the needs of their customer base. As Gen Z becomes a larger segment in financial services, traditional banks may begin to cede market share even within anchor product categories (e.g., accounts and lending). 


The survey results demonstrate that consumers will add more products and services the longer they maintain their relationships with banks. That’s an issue for incumbents, because neobanks now have average customer tenures of more than five years.

A growing number of financial relationships

Consumers are also diversifying their financial services relationships. Consumers that choose global or national banks for their PFRs maintain an average of 2.5 relationships with financial services firms. Consumers whose PFRs are with neobanks have an average of 3.0 relationships. This fragmentation shows that consumers have concluded that no one firm is likely to meet all their needs.

As with the lengthening tenure of neobanks’ customer relationships, consumer willingness to maintain multiple relationships is a clear competitive threat to incumbents, which now must compete on multiple fronts, including both products and experiences. Banks should feel some urgency as neobanks continue to build on their existing edge in digital payments. In response, traditional players may explore partnerships with FinTechs and big tech to develop the offerings and experiences younger consumers are looking for. There is also opportunity for incumbents in that consumers would like to see banks serve as the unifying point of all of their financial relationships, as we discuss in chapter 3. 

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Chapter 2

Trust in the competitive context

There are multiple dimensions to trust and incumbents have advantages.

Neobanks have gained traction with consumers largely because of the superior products and personalized experiences they offer. As important as these offerings are within financial relationships, trust is a critical factor, too. Indeed, trust has become a crucial front in the battle for relationship primacy, especially since consumers show a greater willingness to maintain multiple financial services relationships.

When it comes to trust, incumbent banks are still operating from a position of strength. First and foremost, consumers have high degrees of trust in the firms they choose for their PFRs. Vast majorities of consumers completely or mostly trust their PFRs, ranging from 72% of UK consumers to 92% of Chinese consumers. The global average of all markets is 82%. Looking across generations, in most of the countries we surveyed, Gen Z consumers had notably lower levels of trust in their PFRs than any other age group. 

Why consumers trust banks also favors incumbents. Trustworthiness and personal relationships are the most important drivers of trust in PFRs, and for all financial services brands. These particular trust drivers are almost universal ­– that is, they matter to consumers in markets around the world, as our survey results show.

Consumers trust traditional banks and neobanks for different reasons, which suggests that the PFR landscape will remain dynamic for some time to come. For incumbents, that raises the question of defining the best relationship to neobanks – collaboration, competition or both?

Looking at regional variations, having a branch nearby is a top-three factor of trust for PFRs and all financial brands in all Asia-Pacific markets. In contrast, consumers in the US and Germany did not rate branch proximity as a top-five trust factor.

Still, banks have some inherent advantages relative to trust, including long-term relationships and consumer preferences to turn to banks when they need financial support during key life events (e.g., buying a home, saving for college, planning for retirement). That is part of the strong legacy of trust banks must build on as they seek to strengthen relationships with consumers and future generations of customers in particular. 

When it comes to trust, incumbent banks are still operating from a position of strength
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Chapter 3

The super app threat and ecosystem opportunity for traditional banks

Super apps and ecosystems will define the future of banking.

The survey results indicate consumers’ growing preference for “super apps” for their banking needs. Super apps combine multiple financial services (e.g., checking and savings accounts, investments and payments) via one app or digital experience. Typically, super apps have a higher degree of integration and customer-centricity than typical banking ecosystems, which enables them to serve as consumers’ personal financial operating system (OS).

Beyond “one-click” or “one-tap” access to a full range of services, super apps provide next-best-action recommendations and offer additional support for every action taken in any part of the ecosystem. In contrast, many banking ecosystems simply provide mobile or online access to the same services available in branches and point users to external third-party providers (e.g., travel companies) without fully integrating the experience. In other words, while every super app is an ecosystem, not every ecosystem is truly a super app.

Reflecting the competitive dynamics of today’s market, the higher number of financial relationships can be viewed as a challenge to boosting share of wallet. However, neobanks see an opportunity to become super apps by making it easier for consumers to maintain multiple relationships (e.g., through payments solutions that integrate across accounts). Neobanks that play this aggregator role can develop “core” services on top of the baseline integration. Their business models are designed so that they benefit when customers connect other financial relationships via apps. Those benefits are both direct (neobanks don’t have to originate all products) and indirect (through access to transactional data).

Today, most incumbents cannot monetize those outside relationships and need to adjust their business models if they want to in the future.

Integration is the keystone

However, the research indicates that major banks are best positioned to create and benefit from super app ecosystems. In fact, within key markets, consumers expressed a strong preference for traditional banks over neobanks when it comes to developing ecosystems. That demand seems particularly strong when it comes to the critical need of protecting consumer data, where incumbent banks have a trust advantage. Some super apps may also turn to banks for access to banking licenses and to meet other regulatory requirements.

The rise of super apps reflects the reality that consumers want seamless integration of financial services within their lives and across multiple providers. It’s notable that integration is extremely or very important to majorities of consumers no matter their choice of company for PFRs. Interest is highest among consumers that maintain between three and five financial services relationships.

The overall interest in super apps is highest in most Asia-Pacific markets, though consumers in Australia and New Zealand indicate a below-average interest in super apps. Interest is similarly lagging among consumers in Germany, France and the UK. Interestingly, consumers who trust their PFRs are most likely to be interested in super apps, suggesting the depth and breadth of market interest). At the same time, people who are interested in super apps are also most likely to change their financial behavior coming out of the pandemic

Conversely, those who are already using super apps are least likely to change their behavior when COVID no longer impacts daily life. This is clear evidence that consumers are looking for new solutions and are open to working with more providers if that’s what it takes to meet their needs. Consumers globally are interested in their most trusted financial providers – often incumbent banks – leading the integration with other services.

In EY’s view, these findings confirm that banks must carefully consider the emergence of super apps and how they will shape strategies for customer acquisition and daily interaction. This is not to say that all banks should strive to become super apps. In some cases, the best approach may be to connect to super apps or even participate in their ecosystems. Whatever they do, they must clearly communicate to consumers the value of these offerings.

For banks to become consumers’ personal financial operating system (OS) banks, they must integrate services within personalized and intuitive ecosystem experiences. The goal must be to build comprehensive, immersive, interactive and connected digital ecosystems using all available data about consumers’ financial lives, goals, social styles and personal preferences to produce insight and promote daily decisions that lead to improved financial wellbeing.

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Chapter 4

The power of personalization

Micro-segmentation to meet generational and regional preferences is the end game.

Winning with financial services ecosystems requires understanding what consumers want. Strong privacy policies and features (e.g., ID theft protection, control over data usage) are consumers’ top priority in terms of influencing purchase decisions. Privacy in the context of personalization and fee transparency are especially important.

But benefits associated with payments (e.g., marketplaces) and rates (e.g., bonus points, cash-back) also matter to consumers. The key is to customize these benefits; generic offerings no longer attract attention. In consumers’ eyes, the best products are those that offer the most valuable features in terms of specific needs and preferences. Thus, banks need personalized communication to clearly convey how products meet customers’ needs and satisfy their objectives.

The research shows that personalization features that help maximize functional benefits linked to products, such as loyalty programs, are most valued. Younger consumers care more about personalization than older groups, with 81% of Gen Z consumers around the world identifying it as a feature that could deepen their relationships, compared with just 47% of consumers over age 65.

The preference for personalization
of Gen Z survey respondents say personalization could deepen financial services relationships

There are important regional differences in these customer preferences, however. In Mainland China and Hong Kong, for instance, payment benefits are exceptionally important and rate benefits are much less important than in other markets. Similarly, in some developed markets, like the US and UK, rewards are more important than rate benefits.


While survey respondents feel that their primary financial service providers cater to their needs, they still feel a gap in their experience. Given increasing consumer propensity to switching, these gaps are a huge competitive vulnerability. The survey data clarify what consumers want from their financial services providers:

  • Help in maximizing the benefits of existing products
  • Relevant product offers at the right time
  • Personal knowledge of things they care about
  • Customized product features

Thus, banks must ensure that their efforts to strengthen their customer knowledge and ability to serve them holistically are part of their strategy and transformation programs. Offers that overpromise and generic marketing emails simply won’t cut it.Consumers must come away from every interaction thinking “my bank knows me well and treats me like an individual with unique needs.” That’s especially important since consumers want many of the same things that regulators are prioritizing in terms of data security and customer privacy.

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Chapter 5

The transformation imperative

Our survey results point the way forward for banks.

Given the digital gains they’ve made since early 2020, banks are well positioned to keep momentum and make important strategic moves to navigate this new competitive reality. We believe the following actions are critical.

  1. Curate value through needs-based design: To retain their PFR status with existing customers and attract younger generations, banks must pivot to tailored lifestyle solutions directly aligned to consumer needs. Needs-based segmentation is the first step to success.
  2. Connect experiences via embedded finance: Embedded finance is about leveraging customer data to create seamless, connected journeys and experiences. Ecosystems will allow banks to seek out customers through multiple pathways and play to their strategic strengths.
  3. Personalize interactions: Banking executives know they need to offer truly customized experiences across channels, products, lines of business and other silos. Personalization features that help maximize functional benefits (e.g., loyalty programs) are most valued. But the end game is to create segments of one so that customers are treated uniquely at each-and-every touchpoint. 
  4. Pivot to a customer-centric operating model: In the dynamic financial services marketplace of the future, the entire organization must be designed for customer-centric ways of working. Redesigning the way people work, embracing Agile, updating incentive structures and re-energizing the culture are necessary – but challenging – milestones on the journey to true customer-centricity.
  5. Drive a platform agenda for continuous innovation and scale: Without a robust platform approach, it is difficult to provide the level of personalization and superior customer experiences necessary to drive growth. Platform enablement is about embracing what we call the mechanics of scale to accelerate the transformation to customer-centric business models. It also promotes operational reliability and resiliency.
Contact us
To learn more about what our survey findings mean for your company’s current market position and long-term growth strategy, please contact your local EY team.


As the survey results show, customers’ changing needs and expectations are the most powerful force in the dynamic market that’s developing. They expect to work with multiple banks and will gravitate to those that provide the most integrated and intuitive experiences. The competitive threats are increasing, but the opportunities are compelling, especially for those banks that rethink their growth strategies and expand their digital capabilities to curate personalized, connected customer experiences. 

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