The Experience Gap: Challenges & Opportunities for Consumer Banks

For decades, consumer banks competed primarily on products, rates, and branch networks. Now, open banking is empowering new competitors to reach customers directly through their own data and platforms, while generative AI is redefining personalization, and an evolving regulatory landscape is raising the bar for greater transparency and standards of customer care. This new operating environment is forcing consumer banks to rethink how they build customer relationships, earn trust, and deliver value at every touchpoint.

Let’s look at three key trends impacting consumer banking today.

1. The challenge and opportunity of embedded finance

Where payments were once separate processes, they are now woven seamlessly into food delivery apps, retail checkout flows, and ride-sharing platforms. This shift raises a fundamental question: how do you build brand trust and relationship equity when your product is increasingly experienced inside another company’s platform? The opportunity is real — meeting customers at the point of need with zero friction — but so is the risk of invisibility and commoditization. Most consumer banks already consider embedded finance a cornerstone of their digital strategy, yet few have explored what this approach means for long-term customer engagement and loyalty. Winning in an embedded world requires more than technology integration. It demands a deliberate strategy for a cohesive brand experience when customers engage both in your channels and across an ever-increasing number of platforms.

2. Knowing and meeting evolving customer needs

The largest intergenerational movement of wealth in history is imminent as nearly $124 trillion in assets are expected to change hands over the next 25 years. Women are expected to inherit nearly 70% of this wealth and will soon control investible assets three times greater than they held at the start of this decade. The gap between that reality and how most financial institutions currently engage women in their messaging, advisory models, and product design is significant. According to a recent study, only 39% of women recall receiving financial advice from their bank, compared to nearly 50% of men. The firms that will define this next era are those investing now in building relationships with women as primary financial decision-makers.

Even as The Great Wealth Transfer commands attention at the top of the market, the shrewdest institutions are playing a longer game with a newer customer base. Gen Z is entering its peak financial formation years — opening first accounts, taking on debt, beginning to invest — and the relationships formed now will compound over decades. What makes Gen Z genuinely different is not just their digital nativity; it’s their expectations for values alignment and clear willingness to switch institutions if they experience friction. To earn Gen Z loyalty, banks will need deliver more than a better app. They will need to build seamless end-to-end customer experiences with the transparency and authenticity this generation expects as a baseline.

3. Digital and in-person shine in their own moments

Today most customers move fluidly between digital and in-person channels, but they use them for different purposes. Digital typically handles everyday needs and transactions, while the branch is reserved for the higher stakes moments such as applying for a loan or an issue resolution that requires a human. Thus, whereas other consumer brands can choose to live online alone, banks must design intentionally for how digital and brick-and-mortar work together, leveraging each channel for what it does best: speed and convenience digitally, trust-building and problem resolution in person. Some major banks are already acting on this and redesigning branches away from transaction hubs toward premium, advice-led spaces where clients can sit with a financial advisor, work through complex decisions, and access guided services that can’t be replicated in an app. This high-touch in-person experience, however, remains the exception rather than the rule especially for customers further down the income spectrum.

These trends are producing a growing gap between what customers expect and what most banks currently deliver – but also providing an opportunity for innovation. Closing that gap in product design and customer experience will be the defining strategic challenge of the next era of consumer banking.