Millennials and Banking – How Old Banking is Dying and New Banking Dominating
Millennials. They’re kind of a big deal. Not only are they the fastest growing customer base, they’re also hyper-connected and some of the most educated customers that businesses have ever dealt with.
Because of this, they’re disrupting a lot of industries. And, according to a study by Viacom Media, banking, as an industry, runs the highest risk for disruption for the following reasons. Why? Because 1 in 3 Millennials are open to switching banks within the next 90 days. And, they just don’t see any differences between banks.
If you’re involved with a traditional brick-and-mortar bank, that doesn’t paint a promising future. It’s actually getting to the point where old banking is almost dead for the following reasons.
Millennials are skeptical.
Did you know that 71% of Millennials would rather go to the dentist than listen to what banks have to say? Also, all four of the leading banks, JPMorgan & Chase, Bank of America, Citigroup, and Wells Fargo, are among the top ten least loved brands by Millennials.
Why are they so disillusioned with traditional banking institutions? It probably has to do with the financial crisis in 2007 which made it harder to find a job and pay down debt. And, as previously mentioned, this is an extremely educated group. It was easy for them to realize that some of the causes of the financial crisis were due to the greed and fraud the banking industry.
In fact, Millennials are so disassociated with the traditional banking system that most of them believe that innovation will come from outside of the industry. Furthermore, a whooping 73% would be more interested in new financial services from Google, Apple, Amazon, PayPal, or Square than from their own nationwide bank.
Millennials demand digital services.
It should come as no surprise that Millennials prefer online banking. In fact, Millennials are 3X more likely to open a new account with their phone than in-person. Another 61% reported that having a mobile banking app has made it easier for them to track their spending, which means that they are making wiser purchasing decisions.
Overall, 67% of Millennials want digital budgeting from their banks. Other digital services, such as mobile payments, mobile banking, and wealth management, are needed if banks want to reach this demographic.
Besides building around mobile, Millennials also demand;
- Educational content like funny videos and webinars that give them advice like building their credit.
- Transparency, like sharing social causes and being upfront about fees.
- Choices regarding how they bank, with which banker, and on which platform.
Why Millennials Love New Banks
This demographic of people born between 1981 and 2005 can actually be considered the “unbanked generation.” They don’t want or need to physically walk into a bank. They don’t write-out checks. They don’t even want a credit card.
They want easy-access and control their finances in the palm of their hand. They want to be able to transfer money to friends and pay bills in just one-click. They want to be able to view their spending habits, be offered guidance, and have real-time access to their finances.
That may sound like a tall order. But, new and exciting banking institutions, such as Venmo, Due, Tilt and Circle, are catering to Millennials by offering these digital services, personalization, and availability to real-time data. And, unfortunately, that’s something that old banking systems can’t currently handle.