How Millennials Are Helping Drive FinTech Adoption
Once upon a time, people actually needed to visit their local bank branches in order to take out money, make a deposit, or get a loan. As International Business Times notes, this meant that customers were often making their banking decisions based on how much they liked the people they interacted with and might even open a new account or take out a loan for that reason. While some may miss the personal aspect of banking, a younger generation is embracing technology that makes banking more convenient and powerful.
Originally known as Generation Y, Millennials are loosely defined as adults who are between 18 and 34 right now. Since many of them have grown up with the Internet, there’s a general consensus that they are more tech savvy than previous generations. As a result Millennials are at the forefront of FinTech and other banking technologies.
According to IBT over 33% of the current workforce is comprised of Millennials with over a quarter of them making more than $75,000 annually. As big as their impact on the economy and banking at large is now, it’s only going to grow over time. WalletHub CEO Odysseas Papadimitriou explains this, saying, “Millennials are starting to buy homes and save for retirement and college funding. It’s going to have a huge impact in 10 years and in 20 years the banking landscape will be completely transformed.”
The first big change is the adoption of mobile banking. Last year more than half of all smartphone users reported engaging in mobile banking — a rise of nearly 10 points over three years. IBT notes that one of the reasons the technology hasn’t become even more prevalent is concerns over security that Millennials take just as seriously as other age groups.
Other non-traditional forms of banking have also caught on with the younger generation including peer to peer payments such as Venmo, saving and investment apps such as Mint and Robinhood, and even online-only banking. IBT reports that Simple, a bank that operates strictly on the internet, has experienced a 179% increase in deposits over the past two years. CNN Money also recently reported that the investment mobile app Acorns has helped Millennials save over $25 million so far.
We are no longer in an age where the average American knows their local banker. FinTech startups are changing the way consumers handle their money and the Millennial generation has shown their willingness to embrace these innovations. As Millennials mature and an even more tech savvy generation comes of age, it’s adapt or die time for the banking industry and the right time to be in the FinTech space.