Digital Disruption and the Future of Banking

When considering which traditional industries are ripe for disruption, it’s hard not to think almost immediately of banking and finance. The banking industry, which has long made face-to-face transactions core to operations, hasn’t been the quickest to adapt to the emerging technologies that increasingly shape consumer demand.

When millennials were still young adults with little skin in the banking game, and Gen Z hadn’t yet reached adulthood, it was easy for traditional financial institutions to carry on with business as usual. However, as millennials begin to enter their 40s and Gen Z are entering the workforce in a real way, expectations of how financial products and services should operate are changing. 

In this article we’re exploring how fintech (financial technology) is making its mark on the industry, and what the future of banking will look like when all is said and done.

Technology and services modern banking customers expect

Members of digital native generations are open to new technologies that seem confusing or risky to Gen X, baby boomers, and anyone older. Services like Venmo, for example, were viewed with skepticism by older consumers when they first emerged but were eagerly adopted by millennials.

Having grown up with technology, millennials and Gen Z have very little patience for a lack of digital options or for poor usability of available tools. Some of the features and products these consumers are embracing, and indeed coming to expect include:


One of the most significant disruptors in the banking industry has been the rise of digital-only banks (also known as neo-banks). Examples include Chime, Nubank, and Sofi, among many others. These banks carry out all their business online without physical branch locations. They generally promise perks like no-fee checking and no overdraft fees. 

Neobanks are also more mission-driven, promising to help younger consumers focus on their financial wellbeing and save for the things they care about.

AI-driven planning, monitoring, and investing tools

AI also has a role to play in disrupting traditional wealth management. AI in the form of “robo-advisors” is being leveraged to help execute smarter trades and mitigate risk. It can also be used for more effective fraud detection.

Mobile payments 

Mobile payments have been less readily adopted in the U.S. than in other countries like China and India where they are increasingly the preferred method of payment. Cashless options like debit/credit payments have long been readily available in the U.S., and mobile wallets don’t provide a dramatic improvement on the technology that already exists.

Still, though they remain a small segment of overall payments in the U.S., mobile payments are on the rise. Some estimates predict mobile payment share will grow from 3% of all payments to 7% in the next five years. As more merchants begin to accept mobile payments, consumer adoption will follow.

What fintech disruption means for the traditional banking industry

The possibility that traditional banks and financial institutions could lose large numbers of customers to upstarts and disruptors is a very real one.

Legacy institutions like Capital One are already jockeying to position themselves as customer-friendly and hip to digital innovation, while mainstream banks around the country are looking to leverage blockchain technology to streamline operations and help transactions move quicker.

This level of disruption means that traditional players will have to adapt quickly to new technologies, and will very likely look to acquire startups as a means of staying relevant with younger consumers. Core to their continued survival will be how successfully they are able to make themselves believably customer-centric after years (decades, even) of being perceived as thriving at the expense of the average consumer.


Fintech disruptors are posing a substantive threat to the traditional banking and wealth management sector. A huge cohort of younger consumers have come to expect more expedient digital experiences in all aspects of daily life, including when it comes to access to and management of their money.

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