The Misunderstandings Leading Consumers to Leave Traditional Financial Providers

SCOTTSDALE, Ariz. – More than $2 trillion has been withdrawn from traditional financial institutions and moved to fintech investment and high-yield savings accounts in the past few years, according to a new study from Cornerstone Advisors that found the changing role of the checking accounts and a misunderstanding of crypto are key drivers of the outflows.

The research, Stemming the Deposit Outflow: The $2 Trillion Investing Opportunity for Banks and Credit Unions, doesn’t just chart where the money is going, Cornerstone Advisors said. It reveals the primary checking account is “no longer enough.”

“Consumers are unbundling their financial lives and assembling best-in-class solutions across institutions, and investing is one of the first things they take elsewhere,” Cornerstone Advisors stated.

The study, commissioned by InvestiFi, is based on a survey conducted by Cornerstone in May 2025 of 2,757 U.S. adults with a smartphone and a checking account. 

The Key Findings

According to Cornerstone Advisors, key findings in the new research include:

  • Of the $2.15 trillion in deposits lost specifically by community banks and credit unions, 65% came from Gen X and baby boomer customers
  • Nearly half of Zillennials (Gen Z and Millennials combined) aren’t investing, mainly due to insufficient knowledge and a perceived lack of funds, both of which point to a need for better financial education
  • Over 50% of Zillennials said they’d switch to a bank that offered checking integrated with investing and other benefits

‘Heart of the Shift’

Ron Shevlin, chief research officer at Cornerstone Advisors and author of the report, said the changing role of the checking account is at the heart of the shift. “Increasingly, Americans treat their checking accounts like paycheck motels—temporary places for their money to stay before it moves on to higher-yield savings accounts, investment platforms, and other alternative financial services,” Shevlin said in a statement.

Cornerstone Advisors reported that on average, Americans surveyed for the report rated their primary checking account a lukewarm 7.8 out of 10, with younger generations even less impressed. 

No Measurable Value? No More Business

More than a third of Gen Zers and 40% of millennials said they’d be “very likely” to open a new checking account if they could directly make investments from it, get rewarded for moving money into an investment account with the same provider, or bundle the account with credit score management, subscription management, and bill negotiation Cornerstone Advisors added.

“The data makes clear that consumers aren’t abandoning banking, they’re abandoning banking that doesn’t deliver measurable value,” Shevlin concluded. 

The Role of Cryptocurrency

The rise of cryptocurrency is amplifying this threat, Cornerstone Advisors said, noting the study found that:

  • 25% of Gen Z and 33% of millennial investors hold crypto assets
  • On average, Zillennial investors have 25% of their investable assets in cryptocurrencies—20% have more than half of their portfolio in crypto
  • 33% of Zillennials and roughly 20% of Gen Xers plan to invest in crypto this year

Banks and credit unions that dismiss crypto as a fringe fad risk are missing the broader investing shift that’s pulling deposits—and entire relationships—out of the traditional banking ecosystem, Shevlin stated.

What Consumers are Demanding

What consumers are demanding is composable finance, according to Kian Sarreshteh, CEO and co-founder of InvestiFi, adding that consumers want digital tools that enable them to save, spend, invest, and grow all within one seamless experience, and fintechs are already delivering this.

“Community banks and credit unions aren’t just losing Gen Z,” Sarreshteh said in a statement. “They’re losing anyone who’s actively trying to grow their money, and that means nearly everyone. Consumers have stopped waiting for their bank to evolve; they’re moving on.”

The study can be found here.

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