Finance Minister Nirmala Sitharaman has urged public sector banks (PSBs) to become more youth-friendly and adapt their services to the expectations of Generation Z. Speaking at PSB Confluence 2026 on Tuesday, Sitharaman said young customers often perceive private banks as "cooler" and asked state-owned lenders to understand what drives that preference and respond accordingly. Addressing participants at the two-day event, Sitharaman said public sector banks needed to engage more closely with younger customers rather than assuming that their existing products and services would automatically meet changing expectations.

She encouraged bank officials to speak directly with young people and understand how they view banking, technology, customer service and financial products. "I need public sector banks not to be not cool. You should, please get some young people to talk to you. What makes you appear cool?" Sitharaman said. She stressed that banks need to keep pace with the expectations of young customers as India's financial sector becomes increasingly digital and competitive. The finance minister's comments highlight the changing expectations of younger banking customers, many of whom are accustomed to mobile-first services and quick digital interactions.

Private-sector banks and fintech companies have increasingly focused on simplified interfaces, digital onboarding, personalised services and technology-driven customer engagement, creating pressure on traditional lenders to modernise their approach. Sitharaman asked PSBs to identify why young people may prefer private banks and determine what changes could make government-owned lenders more appealing. Rather than simply replicating the products offered by private competitors, the emphasis is on understanding the behaviour and expectations of younger customers and developing services that are convenient and relevant to them. As part of this effort, Sitharaman has asked public sector banks to launch a month-long "Banking for Youth" campaign starting in October.

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The campaign is expected to provide banks with an opportunity to engage directly with young customers and explore ways of making banking services more accessible and appealing to them. The initiative comes as India's young population increasingly interacts with financial services through smartphones and digital platforms. Banking customers are becoming more accustomed to instant payments, online account management and app-based financial services, making digital experience an important factor in how institutions are perceived. For public sector banks, attracting younger customers also has longer-term significance.

Building relationships with Gen Z customers early could help lenders retain them as they progress through different stages of their financial lives, including higher education, employment, home ownership, investments and entrepreneurship. Sitharaman's remarks at PSB Confluence 2026 therefore put customer experience and youth engagement at the centre of the government's expectations from public sector lenders. By asking banks to understand what makes private-sector institutions appear "cool" to younger customers, she has called for a more responsive approach to banking that reflects changing consumer behaviour and expectations.

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