Finance minister Nirmala Sitharaman recently urged public sector banks (PSBs) to bring more young people into the formal banking system. A month-long “Banking for Youth” campaign is expected to be launched in October. The aim is to go beyond opening accounts and build lifelong banking relationships with young people.
The minister’s message makes sound business sense. India has around 400 million Gen Z individuals (born 1997 to 2012), who are currently between 14 and 29 years of age. They make up about 27% of the population. But as the country starts ageing, the number of persons in this age group is expected to fall. Estimates by the UN indicate that by 2050, the size of the 14–29-year age group will drop to 346 million, or 20% of the population.
In other words, banks have a golden window of opportunity: tapping this group now will build the requisite skill sets, product ideas, and systems to ensure years of business in the future.
However, unlike previous generations, Gen Z has grown up with internet connectivity and digital devices. As tech-savvy digital natives, they carry out many daily activities, including banking, on their mobile phones. Therefore, they expect fast, secure mobile banking apps with easy-to-navigate user interfaces.
Sitharaman suggested, rather apologetically, that PSBs may be giving the impression of not being “cool”. One way to assess a banking app interface is through Google Play Store ratings, which show a wide range of ratings across the top 10 public and private sector banks.
Clunky interfaces, slow loading and inability to log in are some common complaints about lower-rated apps.
In the battle to win young minds, banks may have to compete not only with each other but also with neobanks, payment banks, digital wallets—basically any entity that provides online financial services.
In the past, a bank account was opened upon entering the workforce, usually after 18 years of age, to bank the salary. But UPI (Unified Payments Interface) has changed the path and timing of entry into the formal banking system. Digital payments start in the early teens, long before teenagers open a bank account. These payments are usually made via UPI, through an app or wallet connected to a parent’s account. As a result, youngsters become familiar with payment fintechs at an early age. Fintechs can, and do, use this advantage to attract some business away from banks.
A classic example is that of Revolut, which started as a UK-based company selling app-linked prepaid cards for paying in multiple currencies. The cheap exchange rates offered quickly made it a youth favourite. Revolut used social media promotions and influencer marketing to build a large customer base, enabling it to eventually become a fully licensed bank. Today, one in five working-age adults in Europe use Revolut.
Of course, not every fintech will become a bank, but almost all will compete with banks on some aspect of digital banking. For instance, in India, between 2022-23 and 2025-26, the share of digital NBFCs in sanctioned digital personal loans went up from 12% to 19% by value and 66% to 77% by volume, directly cutting into banks’ market share. Youngsters, who are more likely to need small-value loans from time to time, are their top customers.
To the young, fintechs bring more than familiarity. They offer the convenience of seamless transactions and transparent costs. Consider Slice Small Finance Bank, which started as a fintech providing cards and credit lines to students and young professionals. Despite becoming a bank, Slice’s product lines, marketing strategy, and user experience remain focused on its core youth customer base. Its unique selling proposition includes comparatively higher interest on savings accounts, daily interest rate crediting, instant cash back, and deals on credit cards—all presented in an arguably clear, user-friendly interface.
The experience of international banks suggests Indian banks may need to up their cool quotient to win the young, and a couple of strategies need to be adopted. First, catch customers as early as possible.
Singapore’s POSB Bank has managed to engage with secondary school students by distributing app-linked smartwatches under its Smart Buddy program. The watch can be used to pay for purchases in participating outlets, including school canteens, bookstores, and retail stores. Parents use the app to set allowances or track payments; students can monetize savings rewards; and the app also has relevant financial literacy content. The program has successfully garnered a strong user base while simultaneously inculcating a savings habit.
By 2025, POSB had enrolled 320,000 students across 335 schools in the program, who collectively saved an additional SGD 19 million over the course of the year. The world's first in-school savings and payment program now also offers meal subsidies and mental health support content.
Second, modify credit strategies to suit the young. Gen Z is highly credit-active. Many of them view credit simply as an enabling transaction to reach lifestyle goals. This makes them more open to embedded finance, or credit, at the point of online purchase.
For example, ICICI’s co-branded ICICI Amazon Pay card gives reward points on Amazon purchases. Flipkart offers buy now pay later in collaboration with Pay U Finance. Embedding financial products in non-financial transactions enables the creation of an all-in-one unified app that seamlessly serves customer needs.
The youth opportunity is real and large, but outreach campaigns may not be enough to win it. Banks have a golden opportunity to tap the digitally savvy young population, but their banking needs to be simpler, faster, and technically efficient.
The author is an independent writer in economics and finance.