The primacy of a bank or tech company in consumers’ payment preferences is on a spectrum. When they use both, millennials and Gen Zers will be the most likely of any generation to use a tech company for payments more than a bank. However, there’s still a greater general chance that each will use a traditional bank more. The bank clearly has an enduring role to play in consumer payments, but its role may not be the kind bankers are used to. They ignore that shift at their peril.

Despite the traditional bank’s apparent overall resilience, bankers can’t ignore the nuances. Their tactical challenge isn’t always to create an award-winning in-house digital experience. But that experience, no matter its sophistication, should always include building digital functionality that plays well with third parties. Rather than disintermediate the bank, that approach to the customer relationship can build loyalty, facilitate top-of-wallet status, and support the cross-sell of high-margin and high-touch products and services.

The partnership-centric approach to the digital experience takes an “ecosystem mindset.” Modern minimum viable retail banking offers digital access through the bank’s branded interface and enables access to customer data via tech, and particularly fintech, company apps that customers use with the bank. Bargain digital banking products from a core provider shouldn’t be an exception, and with open banking regulation on the horizon, they may not be as the technical means become available. Banks also face no meaningful barriers to participation in digital wallets, which don’t require an open banking connection.

This is not to say that tech companies aren’t a long-run competitive threat. Embedded payment methods, like Apple Card or Apple Cash, are opportunities for Banking-as-a-Service (BaaS) sponsor banks, but generally not the thousands of FIs that manage their retail customer relationships directly. Banks also play second fiddle to tech companies in the mobile wallet space, as we’ve noted, even though those partnerships are critical to both. Embedded payments via tech companies also threaten to usurp the bank as the primary payment method for mobile-first consumers.

But as we wrote this spring, consumers’ Zelle use reflects banks’ ongoing presence even in small-dollar P2P payments — Zelle users were about 43% of US P2P users in 2023. And high-dollar or high-volume types of payments are things tech companies just don’t offer, like wires for large sums or regular bill payments via direct debit or check. Banks clearly have a place in payments that few technology companies have interest in competing with. And despite embedded payments competition, banks have a top-of-wallet status with cards that will be hard to dislodge.