Born between 1997 and 2012, Gen Z, currently aged 12 to 27, is starting to have a significant financial impact, and their distinct behaviors are set to reshape the future of the finance sector. A recent report by Bernstein analysts highlights how this generationâs financial habits could drive the evolution of financial markets in the coming years.
Gen Z Rapidly Moving Away from Traditional Financial Systems
Unlike previous generations, Gen Z shows a strong preference for digital and decentralized financial solutions. Survey data from leading crypto exchanges like Coinbase reveal that young individuals find traditional banking systems to be expensive, slow, and outdated. This dissatisfaction is pushing them towards alternative financial options that offer greater efficiency and lower costs.
A FINRA survey emphasized this trend, showing that 55% of Gen Z investors in the U.S. prefer to invest in cryptocurrencies, marking a significant shift away from traditional assets and towards decentralized, government-independent options. Their inclination towards crypto is not just about investment, but also about how they manage their finances daily.
The Bernstein report further explains that Gen Z prefers to manage their finances on-chain rather than using conventional online banking systems. They find existing digital banking platforms cumbersome and unclear, leading them to seek out decentralized finance (DeFi) applications and stablecoins pegged 1:1 to the U.S. dollar. This shift towards on-chain financial management reflects Gen Zâs desire for greater transparency and control over their financial transactions.
At the same time, stablecoin adoption among Gen Z is rapidly increasing, with nearly 27 million active wallets processing stablecoin payments on-chain each month. Progress in blockchain technology, especially in scaling, now enables cross-border transfers of up to $1,000 for fees of less than $0.10, making cryptocurrencies even more attractive. Currently, about $160 billion worth of stablecoins are active on blockchain, and the integration of AI agents is expected to introduce new stablecoin payment models, further increasing their use and appeal.
Gen Zâs Shift May Challenge Traditional Finance
While institutional investors have traditionally been cautious of cryptocurrencies, Gen Zâs growing interest may lead to a reevaluation of the capital opportunities within the crypto market. As Gen Z, alongside millennials (currently aged 28 to 43), continues to build household wealth, their combined financial management approaches will play a significant role in shaping the future of financial markets.
Over the next decade, as Gen Z becomes a more prominent part of the financial ecosystem, we may see the rise of new markets tailored to their preferences for speed, cost efficiency, and decentralized control. This generational shift presents both challenges and opportunities for traditional banks and brokerage firms that have long managed the wealth of older generations like the Baby Boomers. Adapting to Gen Zâs preferences will be crucial for financial institutions looking to stay relevant in an increasingly digital and decentralized financial landscape.
