Instant payments are quickly becoming a key differentiator for financial institutions in the U.S., especially as consumer demand for speed and convenience continues to rise. According to new research from Federal Reserve Financial Services, a striking 78% of consumers now prefer faster payments—and younger generations are leading the charge, often adopting nonbank providers to fulfill their expectations.

Meeting the Next Generation’s Demands
Gen Z’s priorities are transforming payment trends. Nearly 80% of Gen Z say instant payments are important in their financial relationships, which puts pressure on banks to adapt or risk losing the next wave of customers. This generation, along with millennials, values instant payments for their 24/7 availability, simplified sending, and immediate notifications. Their affinity for digital wallets and instant access is reshaping how financial products are delivered and how relationships are built.

Why Instant Payments Offer a Competitive Edge
Financial institutions implementing instant payment options see clear benefits:

• Higher customer satisfaction: Those who use instant payments report 8% greater satisfaction with their main financial provider.

• Stronger customer retention: Instant payments keep deposits in-house and help banks maintain core relationships.

• New use cases: From last-minute e-commerce and bill payments to real-time account transfers and payroll, instant payments are unlocking new ways to serve customers.

Digital Wallets and the Rise of Nontraditional Banking
While a majority of older consumers still favor traditional banks, Gen Z and millennials are increasingly open to banking across multiple institutions and nontraditional providers. With 80% of Gen Z using digital wallets and a growing number turning to instant payments, the pressure is on banks to remain relevant by offering seamless, innovative experiences.

The Path Forward for Financial Institutions
To attract and keep younger customers, banks must keep pace with rapidly evolving payment expectations. Offering instant payments isn’t just about technology—it’s about strengthening relationships and future-proofing their business in a market where competition comes from all sides.