How to build a fintech startup that Millennials and Gen Z trust

Earning and maintaining trust in any sector is paramount, but this is especially true for the fiercely competitive landscape that is fintech.

Trust is the foundation for success, especially when it comes to connecting with Millennials and Gen Z – a generation that typically demands more services than the average high street bank can offer. This challenges startups to rethink the way they approach product design, user experience, and most importantly, authenticity. Understanding and addressing the key drivers of loyalty and long-term user engagement is crucial for founders who are aiming to create not only a lasting impact, but a sustainable business. So, how can startup founders succeed in such a competitive space? 

Why are traditional banks failing the younger generations?

Traditional banks have been key industry players for over a century, but let’s face it, it feels like they’re struggling more than ever to stay relevant with their younger customers. 

The problem with big banks isn’t that they’re failing in the conventional sense. After all, they’re still making lots of money and are strongly entrenched when it comes to personal checking accounts. However, we feel they may be struggling where it actually matters most, which is staying connected to a new generation. Legacy tech and often arduous processes make them slow and resistant to change; a stark contrast to fintech startups that thrive on agility. Fintechs are built to adapt, experiment, overcome and innovate at speed, which gives them a competitive advantage in delivering user-focused solutions.

For Millennials and Gen Z, banking is no longer just about storing money. It’s also about having a financial toolkit that fits their fast-paced, digital-first lives. According to First Direct, 59% of Gen Z adults in the UK already have a five-year financial plan. Ironic, considering Gen Z are often labelled as impulsive and frivolous, yet they are proving to be incredibly future-focused. But despite all this, they’re often stuck with outdated models or quite clunky user experiences that don’t always fully meet their expectations.

And the challenges they face are no joke, making their savings struggle a morale and psychological issue as much as anything. Stagnant incomes, a rising tax burden, unaffordable housing, and global economic uncertainty has made financial security feel harder to achieve than ever. These pressures also make it harder than ever to save or invest. But the opportunity is still out there to create a much more secure future and fintech startups often have the tools to bridge this gap. Becoming a Gen Z or Millennial shareholder, allows you to take advantage of some of the positive aspects of global trends that you're unable to alter anyway, rather than simply being a passive victim. Offering solutions that address these realities head-on, while motivating users to save and invest, gives fintechs the chance to redefine the financial landscape.

Then there’s mobile banking. Over 55% of Gen Z rank it as their top priority when choosing a financial provider, according to Finextra. And let’s not forget that this is a generation that seeks peer validation, making their reliance on digital reviews a key driver to choosing to engage with a particular brand. These are trends that point to a broader shift toward digital trust mechanisms, an area where fintech startups shine. Their ability to combine transparency, simplicity, and speed puts them in the perfect position to capture the loyalty of a generation that demands nothing less.

The financial world feels like it is at a bit of a crossroad, raising the question of who is actually challenging who? Take Nutmeg, a fintech that is now owned by JP Morgan, which everyone would agree is a big traditional bank. A tougher funding environment means that more and more of these firms may seek the financial security of life in a big incumbent. With this, are fintechs destined to genuinely shake up the financial world or are they destined to become Gen Z and Millennial-focused subbrands of traditional financial organisations, coaxed into the very systems they originally set out to disrupt? The one thing we can be absolutely sure about is that the future always belongs to those who can meet the needs of the next generation. In the case of Millennials and Gen Z, this means not just seamless app experiences, but authentic, value-driven solutions. 

Creating user experiences Gen Z and Millennials actually want

The average attention span of Gen Z is estimated at just eight seconds. But while this may seem daunting to a business that is trying to capture the attention of this demographic, it highlights even more the importance of creating intuitive seamless experiences. A bit like the Pink Floyd song, Just Another Brick in the Wall; we can educate people about finance, but if they're fundamentally not interested and disconnected from it, then the chances are that they won't retain the information and won't apply it in their day-to-day life. They will just be ‘another brick in the wall’ with all the lost opportunities for a better ‘Future Me’ which would have come from more engagement on financial issues.

At the heart of a good user experience for a fintech startup? Trust and transparency. 

Transparency is a cornerstone of trust, particularly for Millennials and Gen Z. A recent study by NielsenIQ shows us that the value of transparency in the eyes of global consumers has been on the rise for the best part of the last decade, with affirmations of its importance climbing from 69% in 2018 to 76% in 2023. When it comes to communicating and engaging with generations that are often reliant on peer reviews, ‘finfluencers’ and third-party validations when considering their financial options, integrating trusted voices into marketing strategies to educate and further financial literacy can also enhance credibility. Yet these relationships must be well-considered by fintechs as well as interesting enough to compete, without leading users up the garden path. 

Combining this approach with a financial product suggests that Millennials and Gen Z are unlikely to engage with in-app financial literacy unless they see a clear, tangible benefit. To make a real impact, startups should focus on creating accessible interfaces paired with motivational features like gamified savings platforms or transparent financial planning tools which are then integrated directly into the app.

For instance, embedding financial guidance directly into fintech products transforms abstract concepts into actionable and tangible insights. Users are far more likely to embrace learning when they see immediate, positive outcomes as it creates instant gratification. Whether that’s saving for a first home or making their first investment. The key is to connect education with motivation and results, ensuring financial empowerment is not just theoretical but experiential.

Unlocking growth through strategic partnerships

Strategic partnerships shouldn’t be seen as just a mere bonus, but when done correctly, they can be both transformative and essential for those fintech startups that are aiming to stand out in a competitive landscape. Collaborating with banks, retailers, or ‘finfluencers’ can amplify not just your product reach but your credibility too. However, authenticity is key. Millennials and Gen Z have super sensitive antennae when it comes to detecting inauthenticity, and partnerships that feel forced or transactional may well do more harm than good.

We know that Embedded Finance is spreading; that is, taking typical commercial transactions and adding finance to them. With this, financial technology is effectively bringing the ‘City of London’ into everyday lives, and it's doing that through innovative tech coupled with strategic partnerships. A prime example of this can be seen in solutions like the popular buy-now-pay-later (BNPL) model with Klarna, offering credit provision at the point of sale. In fact, 70% of Klarna’s customers are Millennials or Gen Zs, and to what do they credit their strong market position with this demographic? Strategic partnerships – in this case retailers.

While it’s important to note that these innovations can be prone to misuse, they highlight the vast potential of embedding financial services into everyday transactions. An area ripe for further exploration, especially when looking at integrating investments into this ecosystem. To identify the right partners, you need to consider where your product fits within the broader financial ecosystem. For instance, partnerships with retailers offering cashback can create a tangible incentive for users to engage with your platform. Similarly, working with ‘finfluencers’ who align with your brand’s mission can help establish trust while expanding your audience reach.

Scaling with purpose: lessons from the field

Growth in fintech isn’t just about acquiring users at lightning speed, because who really wants to be a one-hit wonder? Growth is about scaling at a pace which is sustainable. Startups that prioritise their users’ needs, while cultivating a culture of consistent value will tend to outperform those who are focused solely on rapid expansion. 

That being said, building a business that scales sustainably starts with securing the buy-in of your team. Ensuring that everyone understands the company’s mission and goals is crucial for keeping employees aligned. Every team member needs to feel that sense of organisational purpose and play their best role in achieving the company’s mission. They must see that their work matters, and that they’re contributing directly to their company’s success. Everyone talks about AI or speculates about the limits of AI, but actually, ‘EI’, or Employee Intelligence, is vastly more important. If people don't feel like they're being treated like humans because they're being treated like machines, then you're going to get AI-type processing out of your super valuable ‘EI’ assets. This becomes inauthentic and leads to significant opportunity costs. 

Fintech founders must also be careful not to rely on top-down power dynamics. We get it, running a business can be highly stressful at times, and when your heart and soul are poured into the company, it’s easy to get carried away and forget the human aspect. It’s these behaviours that can erode trust internally and damage a brand externally. Pivoting to the external aspect for a second, lots of successful startups incorporate 360 feedback loops, using early user insights to refine their offerings. This user-centric approach not only builds trust, but also ensures that the product aligns with user priorities.

For Kaldi, this also spills into our relationships with our retail clients. Relationships with retailers will be enormously important in delivering not only positive outcomes for users of the app, but also for the retailers who are hoping for more meaningful and enduring connections with Millennials and Gen Zs as a result. This starts with creating a product offering that works in a realistic way, layered with fungibility.

Fungibility is essentially the ability to exchange one store of value for another store of value that might at any particular point in time have a greater economic benefit to you. In the consumer world, we have short-purchase cycle goods, like supermarket shopping or other everyday spending, and long-purchase cycle goods – items you buy every five to ten plus years such as a new car or bike. If your short-purchase cycle shopping activity could contribute to the purchase of that next bike you've always wanted, your love for short-purchase cycle retailers is likely to grow exponentially, because they're linking your everyday spending rewards to something which holds true value for you. This works both ways. Building fungibility provides authentic consumer value and also ensures that every single retailer's proposition in that network becomes exponentially more valuable and relevant. 

Creating and establishing a fintech startup that resonates with Millennials and Gen Z is both challenging and rewarding. Addressing the gaps left by traditional banks, prioritising seamless and transparent user experiences and leveraging authentic partnerships that make the financial world more accessible to people’s everyday lives, allows startups to position themselves as trusted allies for the next generation.