Two out of three millennials are already using or considering using fintech services, research reveals
Millennials have adapted better than any other generation to technology. From day dot most of Generation Y has lived and breathed technology – notice that our smartphones are always within arms reach. Millennials are obsessed with apps and social media and on average check their phones 40 times a day.
This is important: people born between 1980 and 1994 will make up the largest demographic in the workforce by 2020. According to social researcher Mark McCrindle, baby boomers comprise a third of today’s total workforce, however by 2020 they will make up less than a fifth. Millennials will grow from 21 percent of the workforce to 35 percent by 2020.
Not only will millennials dominate the workforce, they will also transform it. More than half of students studying for today’s careers will be employed in jobs that have yet to be created. This is the biggest change in the global workforce since the industrial revolution. Millennials are faced with the opportunity but also the challenge of creating jobs for themselves.
“Millennials seek leadership opportunities, and desire to create jobs for themselves, rather than looking for a job – Generation Y is one that doesn’t need a job for survival and security reasons,” said McCrindle.
A global study by Sage looked at 7,400 millennial entrepreneurs around the world and found that 65 percent of millennials believe they will start more than one business during their lifetime.
Kriti Sharma, director of product management at Sage, explained, “As a millennial entrepreneur myself I know first-hand that this business group are shaking things up. We’re rejecting established patterns of working and making technology work for us. We see business through a new lens. We’re willing to work hard, but want flexibility in how, when and with whom we do business.”
In particular, millennials are already driving rapid change in the financial services industry and the role those services play in how they digitally deliver products. A report conducted by Telstra revealed insights into what the new millennial customer looks like and which technologies have the potential to help build stronger relationships with them.
The report found that millennials vote with their money, through apps and online payment systems. Young people are increasingly switching to a cashless society and use their smartphones to withdraw, transact, manage and invest their finances.
Institutions are driven to digitally transform and create networked ecosystems that provide exactly what millennials want and need from online transactions, risk management, investment and finance services.
Australian fintech startups are increasingly creating platform-based, data intensive and capital-light business models that use blockchain, artificial intelligence and data analytics to engage younger consumers.
Apps like Acorns and FirstStep and online platforms like Stockspot, Simply Wall St, Wealth Fury, GoFundMe, Money Brilliant, zipMoney and The Empire Club are just a handful of disruptive fintech companies that tailor financial services for specific needs. Each platform has generated a user friendly experience to get millennials interested in fintech. From mobile banking to crowd funding, payments, wealth management loans, and investing, there are apps and services for everything. According to Telstra, two out of three millennials are already using or considering using fintech.
Approximately 90 percent of bankers believe fintech will have a significant impact on the industry’s future. Findings from the Millennials Disruption Index (MDI) revealed that millennials are looking to fintech startups to change the banking industry. Over 70 percent of millennials said they would be more excited to use a new offering in financial services from Google, Amazon, Apple, Paypal or Square than their own nationwide bank.
According to CB Insights, as of May last year, fintech startups targeting millennials raised over $2.29 billion across 126 deals globally. Startups working in the digital banking market have also made a big dent in the fintech sector, attracting more than $10 billion since 2010.
While fintechs continue to engage with younger generations, it should be noted that the sector as a whole still lacks diversity. Women working in this sector are sorely underrepresented in these firms. It is unfortunate that this sector either fails to attract or keep women working in high profile positions. After acknowledging the importance of having a female CEO, Aussie fintech MoneyBrilliant later announced her leave from the company after its acquisition by AMP. For whatever reasons, its clear to see that while women have a great interest in finance, they still lack representation.
However, startups and corporates in the finance space alike would do well to look to women: Duhaime and Sam Maule of Carlisle & Gallagher Consulting Group wrote a white paper on ‘Power Women in FinTech: Bridging the Gender Gap and found that women in fintech are more innovative and return better financial results.
“By not employing women, companies are missing out on a different perspective on their products and services. By not more inclusive towards women, organisations are missing out on business opportunities,” the report stated.
With a great need to diversify, fintech companies still have a way to go to completely harness the power of millennials. The importance of this demographic along with the importance of the women in it should not be overlooked by not only fintechs but all disruptive industries.
Fintechs are in a great position to harness opportunities that the traditional big banks are missing out on. Having the flexibility to transform and create tailored made financial services for millennials is what gives fintecsh an edge over jobs and industries that fail to innovate and understand younger generations, but they must be careful to not make the same mistakes of the companies that came before them.