SAN ANTONIO — Payment innovation will make or break the relationship young consumers have with their banks.

Younger customers lead the digital banking charge with 99% of Generation Z using mobile platforms as their primary banking tool, Tom Brooks, head of regional accounts at Visa, said Monday during Consumers Banking Association’s CBA Live 2022 event. Millennials are close behind, with 90% using online banking and 94% reporting personalized digital experiences as “important,” he said.

However, the gap between digital-first and legacy is surprisingly small, and payments will make the difference, Brooks told the audience.

“About 70% of Generation Z will start their banking relationship with the same bank their parents had,” Brooks said. “This forces us to think about the solutions we bring to bear for delivering financial services, not just directly to consumers in our banking relationship with them, but through their payments experiences.”

Eliminating friction points in the payments ecosystem, such as a lack of embedded real-time applications or unified bank-backed payment platforms, is critical for banks looking to retain these customers. Brooks noted that an “elegant solution that keeps the customer with you” is important in an environment in which third-party payment apps are more common than ever.

With young customers 11 times more likely to use a digital wallet than baby boomers, and two-thirds of them ready to switch banks, financial institutions must prioritize the payments experience or risk the digital migration coming to their doorstep.

“The shift to digital payments is here to stay,” Brooks said. “We have changing consumer habits, which inform both what we need to do and how we interact, but also the services that we provide to support the entire ecosystem. But this also presents new opportunities in the industry.”