Finance and technology have always been strong bedfellows. Long before they were known as the twee portmanteau of fintech, tech helped traditional banking systems process transactions and automate functions. Over the years, things changed; its uses evolvedfrom back-end support to include front-facing services. As its role in the financial industry continues to develop, no demographic of individuals is better situated to capitalize on these new services than Millennials. Digital nomads who prefer automatic, app-based banking, Millennials are managing their money online in increasing numbers thanks to fintech.
Millennials don’t trust the system
There are several factors that make Millennials — especially the youngest of this cohort — ripe for fintech alternatives to traditional banking. Many of them were entering adulthood at a difficult time in US history, and the recession forced them to rethink their futures in every way.
Meanwhile, the government bailed out Wall Street at the same time Millennials faced the worst economic conditions in decades. Resentment and distrust festered, and their darkening perspective was bad news for the old banking guard. The Millennial Disruption Index reveals over 70 percent of them would rather go to the dentist than deal with the bank.Emerging fintech startups—often spearheaded by Millennials— don’t have the same history as retail banks. They offer a clean slate.
They prioritize convenient, online relationships
Millennials grew up with tech, watching as flip phonesevolved into the smartphones that we know today. The youngest of them can barely remember a time without them. Technology, particularly social media, is incredibly important to this generation. In many cases, the relationships they make online are just as vital as any other relationship they have away from the screen.
Convenience is also another huge factor influencing Millennials’ widespread adoption of online alternatives to banking. If you’re of a certain age, you’ll remember when banks operated on a 9–5 schedule and closed on the weekends. There were no ATMs to offer 24-hour access to your cash, let alone drive-thru ones. And when you managed to find time to bank, you had to fill out deposit and withdrawal slips for everything you wanted to do. It was tedious and time-intensive.
Young Americans don’t share these memories. Waiting for branch opening hours is a thing of the past, and they expect their financial services to offer the same immediate response as any other online platform. Simple banking isn’t the only way they’re doing it. While many Millennials are opting for mobile banks that offer 24/7 care, they’re also favoring cash lenders that let them get a payday loan today online rather than forcing them to wait for in-person financial checks.
These online lenders have convenient apps that let them apply for and review their loans with a few swipes of their fingers. Millennials are happy to download them alongside apps for their checking accounts, robo-advisors, and money management tools. The effort moving between each service requires moving their thumb across a screen. Compared to scheduling time-intensive interviews at various institutions across the city, these online alternatives are simple and hassle-free.
Millennials don’t want to bank the old-fashioned way. They prefer apps that let them manage their money quickly and conveniently. Whether it’s depositing a check with a click of their camera, checking in on a cash advance with a swipe of their finger, or letting an AI create a passive portfolio on their behalf, online methods are a popular and superior way for this generation to bank.