Significantly outnumbering baby boomers as of 2016, millennials have come to represent a space of social influence and an economically strong population with the potential for substantial financial prowess.
However, the exercise of this power through the banking habits of millennials looks different from that of previous generations, as millennials embrace diverse and alternative practices for earning money, investing their earnings and parking their money in financial institutions.
Millennials are a driving force in personal finance and are accruing wealth at a rapid rate thanks to their saving patterns. While they may have gotten a late start in some regards, the economic crisis has taught them to be creative with their money, life, and career, as well as instilling a penchant for saving.
According to data analytics firm FICO’s 2015 workup on the tech generation, millennials are continuing to embrace the non-traditional in their banking habits. Market analysts foresee the segment growing exponentially as the millennial population itself develops and matures, with two constants about millennials and banking being a penchant for mobile banking and a readiness to take advantage of non-traditional banking opportunities.
One financial practice notably on the rise with millennials is peer-to-peer (P2P) lending. Occupied by players such as PayPal or Venmo, this non-traditional lending and borrowing arena allows users to lend and borrow money directly from one another. They see value in the convenience, mobile support and ease of use. Conversely, the consideration of non-traditional payment providers decreases with age. For all age groups, customer satisfaction with a primary bank has no significant impact on consideration, with an equal number of satisfied and dissatisfied consumers now using non-traditional payment companies.
While mobile payment usage is still low across the board, younger demographics (18-34) are twice as likely to already be using mobile payments vs. the 35+ demographic, and much more likely to start using mobile payment in the next 12 months.
Millennials not only like to receive consistent communications from their bank, but they’re also more receptive to those communications when they’re sent via preferred channels such as mobile apps, texting, the bank website and telephone.
This isn’t just relegated to markets in Europe and the United States. In Indonesia, too banks are recognising the need to digitise their services to better cater to technology-savvy millennials according to consulting firm Solidiance.
And it’s not just banks. Considered digital nomads, millennials use mobile applications for ride-sharing and grocery and food delivery, thereby saving time on everyday chores. Companies have noticed this trend and offer online discounts and lower prices for services if their mobile applications are used.
It isn’t uncommon either to find individuals of this generation sharing rides via hailing applications or their apartments with those looking to visit their towns.
It wasn’t long ago that when one wanted to invest money and it involved a meeting with the broker who provided advise. Now the power and information are in one’s own hands so one can know how much money to invest and calculate based on various tools.
And this just the tip of the iceberg – there are apps for budgeting, investing, and saving. There are also hundreds of thousands of helpful personal finance blogs and communities that are here to help you as well.
The availability of connectivity infrastructure, combined with the increasing number of smartphones, higher internet penetration as well as a growing young affluent customer segment are factors that enable this digitisation process.
Most millennials have little trust in the government to bail them out. As they continue to save, while creating and participating in new technologies, the wealth management frontier will continue to shift and evolve in new ways.
This oft-criticised generation is putting their savviness -and “selfishness”- to use: by investing in themselves and their future.
This article is originally from paper. Read NOW!Jakarta Magazine April 2018 issue “Money and Finance”. Available at selected bookstore or SUBSCRIBE here.