Millenials: Often perceived as entitled, high maintenance, and poor. Virtually no one wants to be termed a “Millenial,” because the words that follow are generally negative. However, once the facade is peeled away, there are a host of other traits that Millenials carry—good ones. They’re famous for giving back to the community and striving to find fulfilling, meaningful work.
To say that Millenials have a complicated relationship with big companies (banks in particular) would be an incredible understatement. The generation lives and deals with money in a completely different way than those who came before. There are a plethora of tiny details that draw the generation away from traditional banking and towards FinTech. However, this relationship is also complicated. It’s not that Millenials simply love or prefer the new sector.
Rather, almost everything FinTech stands for is in line with Millenial values, and they work together, forming a dynamic, powerful relationship.
Millenials would rather go to the dentist than listen to banks
Understanding Gen Y’s affinity for FinTech begins simply by taking a walk in their shoes.
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An interesting study from Scratch, a division of Viacom, has been garnering attention by revealing that 71% of Millenials would rather go to the dentist than listen to banks. However, it’s not that bankers are simply annoying or offputting; it’s a very deepseated distrust towards the industry.
The same study revealed that Millenials rank all four of the big banks among the 10 least loved brands.Millenials rank all four of the big banks among the 10 least loved brands. Click To Tweet
While for some of us, the “talk” from our parents included how to build strong credit in order to someday buy a house, or choosing which guy to see about new investment opportunities, Millenials really live a completely different financial life. They are riddled with debt. They came of age during the financial crisis, and had their worldview painted by events like 9/11. Sometimes dubbed “Generation Occupy Wall Street,” Gen Y is taking the bull by the horns and trying to move forward. If big banks aren’t ready to get on their side, the Internet Generation is ready to find their own path.
It’s not just a matter of trust
Scratch’s study on Millenials also revealed that 73% would be more excited over new financial services from tech companies than from their actual nationwide bank. This may be, in part, because the generation grew up with companies like Amazon. They watched as tech adapted, evolved and dominated. Companies that started as underdogs are now some of today’s biggest names. Google, Apple, Paypal, and other companies that may, in fact, be huge, hold a special place in the heart of the millenial generation.
Despite having seem tough times, Gen Y isn’t backing down in the realm of finance. They are simply putting their money, follows and tweets, where their mouth is. They are actively seeking new opportunities, and that energy is helping drive the Fintech sector to blossom.
A paper from Wharton FinTech titled The Millenial Generation and the Future of Finance: A Different Kind of Trust, attempts to sum up the varying types of trust in the financial sector. The generation’s general distrust of established brands leads to three areas that are vital to doing finance with Millenials: technology, networking and social causes. For Millenials, technology isn’t just a pipeline to social media. It’s an incredible, powerful creature. Apps help explore, save time, order our finances and lives. The field is also new enough that only a handful of long standing big names exist. Hopes are still high, eyes wide and tails bushy.
What big companies will be taking over?
One thing banks (and the country) needs to understand is that young people want to move on from debt. They might buy a house—if they were financially able. The fact is that banks rarely offer real relief in the student loan department. Instead, innovation is coming from untraditional places, like SoFi, Earnest and Common Bond. Affirm is helping young people find loans. Robin Hood is fighting against stock trading fees. New startups are popping up to deal with the generation’s new problems.
Conversely, banks are often viewed as cookie-cutter institutions, offering all of the same useless bells and whistles. Startups (especially crowdfunded projects!) operate specifically on the premise that they can bring us something new. Something we need that no one else can give us.
The very nature of these smaller tech companies is part of their charm. It allows for a unique and dynamic relationship. If a blossoming startup loses that original flair and motivation, it’s their own supporters who will dismantle them brick-by-brick.
Which companies will flourish under this new order is still hard to determine, but one thing is certain…it won’t be big banks, unless they undergo a massive makeover.
Millenials and the Greater Good
Last of all, millennials are drawn to action in the FinTech industry because these companies tend to have credos people can get behind. It’s not all about money; it’s about values. Common Bond funds a needy child abroad for every loan funded on its platform. GlobeOne requires bank partners to return 50% of interest charged to the customers.
While it remains unfair to say “Millenials love FinTech!” the reality is that FinTech is aligned with many of the positive qualities that make up the generation. It works with the harsh financial realities of being a Millenial, and gives hope for development and innovation. Scratch’s study did say that 68% of Millenials believe that, in five years, the way we access and interact with money will be totally different. Expect FinTech to be part of that change.