From streaming platforms that learn your favorite shows to social apps that adapt to your moods, today’s users don’t just want options—they expect flexibility. If something doesn’t work, they switch, tweak, or move on. This mindset is especially true for Gen Z and millennial consumers, digital natives who have grown up navigating a world designed for instant control and constant choice.
As more of Gen Z enters adulthood, organizations are searching for ways to engage these digital-first consumers. Many financial institutions have struggled, even though these cohorts represent the future of business.
As Gregory Magana, Digital Banking Analyst at Javelin Strategy & Research, noted in the Millennial and Gen Z Business Owners: 5 Priorities for Winning the Next Generation report, younger adults are often unreceptive to the banking solutions that worked for their parents.
Instead, they seek business banking platform that mirror their consumer experiences: convenient, digital solutions that combine personalization with guidance to navigate the challenges ahead.
Risk and Opportunity
The primary reason to develop such solutions is that they offer financial institutions a way to build relationships with the next two generations of business owners. To better understand their preferences and behaviors, Magana researched their commonalities among these entrepreneurs.
“At their core, what we’re seeing from Gen Z and millennial business owners is that they tend to have more banking products and they tend to be spreading them across more FIs,” Magana said. “On average, they’ve got 7.1 accounts and the portion of those that are going to secondary FIs is larger, whereas older business owners have fewer accounts, and they tend to concentrate a larger proportion of them within the FI that they consider to be their primary FI.”
Smaller financial institutions, in particular, are starting to see their market share erode. Credit unions and other niche institutions often have limited reach, serving specific occupational groups like teachers or farmers.
Yet, smaller institutions still have opportunities to engage the business owners of tomorrow—if they modernize their approach.
“It breaks down this risk/opportunity where you’ve got Gen Z and millennial business owners who are willing to have more products, but they’re also dabbling with these secondary FIs as well,” Magana said. “There’s this question of which parts of their financial lives are they not doing with you and is there a risk that they’re going to turn to one of these other FIs?”
Self-Service AI
To create more relevant banking platforms for young business owners, Magana identified five key focus areas. The first is a top priority for most leaders: artificial intelligence.
Gen Z and millennial business owners show strong interest in AI, but primarily for certain functions.
“We asked business owners, ‘What AI use cases would you definitely use if they existed?’” Magana said. “As one would expect, there’s a lot more interest among the younger business owners than the older ones. It’s finding features within the app, researching new accounts, insights about companies, payment behaviors, and understanding tax obligations.”
“The common thread as you go through use cases like resolving fraudulent transactions and researching new accounts and finding features—a lot of this is self-service type of stuff,” he said.
Younger business owners are cautious about using AI for major business decisions or customer-facing applications, likely because the technology is still evolving and errors remain possible.
These concerns have left many financial institutions unsure of how to leverage AI effectively.
“Implementing AI is going to be a challenge,” Magana said. “If you’re a smaller FI, you might just not have the resources. You’re going to be relying on vendors a lot, so you should definitely focus on self-service feature discovery and app guidance and making simple tasks faster and easier.”
“It’s about making sure that AI is easy to understand, but also making it transparent,” he said. “You can opt in and opt out; It’s not mandatory. Everybody’s pushing AI so hard in society more broadly, make it optional for business owners and reversible.”
Smoothing Logistical Struggles
The next three priorities address logistical challenges that younger business owners face.
Digital invoicing has grown rapidly in popularity among Gen Z and millennial leaders. Yet many electronic invoices are overlooked by recipients. Banks could help by providing follow-up and reminder tools, keeping businesses and customers aligned.
Cash flow analysis is another area ripe for improvement. Despite widespread technology, many business owners still rely on pen and paper or Excel spreadsheets. Embedding cash flow insights and alerts into the banking experience—through bill pay, ACH, or wire services—could eliminate the need for separate tools.
Cross-border payments present another opportunity. While relatively few young business owners currently use them, they are nearly twice as likely to operate internationally compared with older cohorts. Banks can simplify these processes to support younger entrepreneurs’ global ambitionss.
“When it comes to commercial banking, cross-border payments can be this whole thing that requires a dedicated staffer,” Magana said. “If you’re a smaller business and you’re trying to work with cross-border payments, you’re going to need an interface that feels familiar and that works well with the rest of your digital banking that you’re using for your business.”
“A small business, especially if it’s a sole prop, is probably going to struggle with some big bells and whistles commercial banking cross-border payments solution,” he said.
Social Media Selections
To delve deeper into the mindset of young business owners, Javelin researchers took to social media. Specifically, Reddit has gained prominence as a forum to share human insights.
After perusing the r/small business subreddit, there were surprisingly few questions focused on fundamentals like invoicing or cash flow. Instead, many centered on choosing the right business account. This spotlights the final area of improvement in business banking.
“What this is telling us is that FIs need to be doing a better job with the account selection process,” Magana said. “You should explain what the value of a business account is and make sure that your landing pages are informative, user-friendly, and that they’re not just rate sheets.”
“We see that a lot in retail banking, where it’s, ‘How do I pick the bank account that’s best for me?’ and it’s like, ‘This one has 0.59% APY, this one has 0.65%, and this is what each of them cost,’” he said. “That doesn’t really tell you anything; that’s not a help-me-do-it approach to picking a bank account.”
These questions highlight a common challenge. Many Gen Z and millennial entrepreneurs start with gig work or side hustles, where business and personal finances are intertwined. Even tech-savvy users often seek clear guidance on account selection.
“It’s offering wizards and helping set up that advisory fiduciary relationship from the start,” Magana said. “Even with prospects who are trying to pick an account, it’s a big way forward. It’s also possible that winning the next millennial or Gen Z business owner might start with satisfying the ones that you currently have, because there’s a lot of cross-chatter in these social media spaces.”
‘Sometimes they’re like, ‘XYZ financial institution sucks and I’m switching away from them as fast as possible,’” he said. “That is probably not something that you want young business owners to see when they’re asking for help on social media. It might be important to tend your own garden first and let word of mouth help drive some of that acquisition.”
Alleviating Churn Risk
Fostering these relationships is critical because business owners have more options than ever. Beyond traditional banks, fintechs continuously expand their repertoire.
“We’ve seen Venmo in the retail space,” Magana said. “Venmo is perfect for settling up after dinner with your friends, but they also want to say, ‘You can keep your money in here and we’ll give you a debit card so you can spend your balance; we can do all this financial stuff and we’ll give you a credit card.’”
“It’s all well and good to have your younger business owners messing around with PayPal to send payments back and forth,” he said. “But what happens when PayPal wants to be their business bank, and all of a sudden you’ve silently lost this customer?”
Optimizing business banking across the five focus areas is key. Many young business owners already rely on third-party tools—Square for digital invoicing, QuickBooks for cash flow analysis, and PayPal for cross-border payments. Once these tools meet one need, they are likely to seek others, underscoring the importance of a comprehensive, modern banking experience.
“There is a percentage of these younger business owners who are using in-house tools, but some of these third parties—your PayPals, your Squares—they are happy to get you for payment services, but they’ve got other ambitions, too,” Magana said. “They wouldn’t mind also offering you a credit card or helping you run your business.”
“They pose this higher risk of churn if you’ve got a bunch of your younger customers banking with these tech-savvy third parties—and that’s a threat,” he said.
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