Fair Isaac shared some eye-popping statistics on the financial preferences and habits of the so-called “millennial” generation, born in the early 1980s or 90s. Also called Generation Y, 75+ million millennials have a much greater propensity to use mobile financial apps than their Gen X predecessors or Baby Boomers. Financial institutions will soon confront “millennials and their money” issues.
When dealing with money and finance, millennials demand convenience and relevance. Millennials are the social generation – inextricably entwined with social media and eager participants in the sharing economy. They share restaurant and bar tabs with the Venmo app rather than writing checks to each other or swiping multiple cards. But don’t just take our word for it – watch the FICO videos, and this is what you’ll hear: it’s “10 times faster,” millennials are “connected all the time,” and mail from banks is “weird and annoying.” Even phone calls may be passé; some millennials don’t answer if they don’t recognize the caller’s number.
More than half of millennials use or are likely to use non-traditional payment companies, and a third will use mobile payments in the next 12 months. This is double and quadruple the rate of their over-50 peers. Millennials will not only pay differently, they will borrow differently, being more than 10 times as likely to use peer-to-peer lenders than the middle-aged.
Millennials, say Fair Isaac, want their financial messages delivered on mobile apps, texts, or through the web, and they conduct banking activities (checking account balances, transferring funds) digitally. They have the same amount of time as everyone else, 24 hours a day, but they’re less willing to use it on banking tasks.
Bloomberg predicts the millennials stand to inherit $30 trillion (yes, you read that right). What will they do with it? Who will they trust to manage it? They’re more likely to gather financial information on Facebook, YouTube and online commentary than from bankers and brokers. Fidelity Investments says they rely more for advice on friends and their parents than on financial advisers.
These are sobering and challenging findings for banks and other traditional financial providers. In the short-term, they’ll have to figure out how to communicate with young, tech-savvy customers (without compromising on data security) in a manner maximizing convenience and relevance. In the medium-to-longer-term, they’ll have to develop products that compete with the exploding universe of financial apps. Because what bank wants to be “weird and annoying” to customers?