The Millennials. The generation made up of people who are now between the ages of 18 and 34 years old and the largest, most influential group of people in today’s society. This generation was raised in an age of technology and financial struggle. They are considered to be the disruptors of almost every industry due to their unique outlook on life and values, and their impact on the payments industry in particular is certainly no different. As Millennials continue to drive innovation and shape the products and services the world uses, they also continue to change the way that we handle our money.
How Are They Changing Things?
The way that millennials interact with the world around them is profoundly different from older generations. Through social media and mobile devices, they have completely altered the way that people around the world communicate and engage with brands. In our constantly connected society, millennials don’t have to go out of their way to find the things they want or need, almost everything is right at their fingertips (literally).
Millennials were the first generation raised in a time of constantly evolving technology; a fact that has also made them the most willing adopters of new technology, including alternative methods of payment. Their preference for electronic transactions whether completely online or in-store has continued to drive a shift in the way the world’s economy and businesses operate. Millennials live their daily lives with electronics practically glued to their hands are more likely than others to opt out of human interaction and exchange at any possible point. The ongoing development of these self-service options makes completing even the simplest of transactions easier than ever and continues to change the typical consumer experience.
Another important characteristic of the Millennial generation is the way that they think about and manage their money. With most of the group being born or raised in a recession and an era with a very low employment rate, they collectively have less discretionary income than any generation before them1. Also, the average student loan debt for today’s 25 year old is almost double what it was for a 25 year old 10 years ago. Today, people are even putting off buying a home or starting a family longer than ever before and choosing a life that offers more flexibility and less responsibility. Due to these factors, millennials are far more critical of the banking industry and their demand for innovation in that space continues to grow.
What Do They Want?
There are three key factors that millennials care about in their everyday lives:
Millennials value their time. They don’t want to spend more time than they have to doing anything, especially paying for things, and they don’t want to deal with unnecessarily difficult processes. Because of this, the payments industry has continued to develop speedier ways to efficiently complete transactions at the point of sale, both online and in-store. With the introduction of near field communication, mobile wallets, and even wearable mobile devices the ease with which we can now pay at the register is better than ever. The convenience factor doesn’t just stop at payment transactions, either. Millennials have demanded easier, real-time banking capabilities on their personal devices as well, and the banks have started to oblige. Several banks now have unique apps that allow users to do everything from deposit checks to transfer money to other users in a matter of seconds.
Often called the “me generation”, Millennials are known for being very concerned with their personal identity as an individual. They want to know that their personal needs and wants are met. Through personalization in fintech, millennials have the ability to take advantage of features that specifically benefit them. Development that combines loyalty and consumer habits with financial data allows companies to not only reward customers engaging with their technology, but also to capture data and continue crafting messaging and experiences that make sense. Other advancements like subscription-based purchases and automated bank account alerts sent directly to the user’s phone also enhance the personalization aspect in today’s payments landscape.
Customization allows millennials to continue defining their identity as consumers. There was once a time when consumers were excited about simply having a credit card with a design they could choose. Now, consumers are deciding whether or not they want to carry their credit card at all. Younger generations appreciate and take full advantage of the ability to decide how, when, and where they will engage with a brand or business. Many companies are accepting a number of different payment methods and even allowing customers to decide whether they want to physically shop for items and check out at a register or simply place an online order and come in to pick up their goods. Also, capabilities that allow the consumer to decide what to be notified about and how often has completely changed the relationships that we have with our banks.
As millennials continue to enter the workforce, spend more money, and pave the way for more innovation businesses and financial institutions around the world will be working tirelessly to keep up with their demands. As trends turn to norms, those parties that rejected change will begin to suffer. There are 80 million American Millennials and they make up 46% of all U.S. income2. With that much buying power, Millennials are sure to rid the economy of any business that doesn’t want to provide what they want, the way they want it. As they become more stable and begin to make larger, more frequent purchases millennials will inherently seek out technology that makes these life events even easier and keeps them in control.
Businesses and institutions that embrace this culture of change have been and will continue to grow and succeed. Look toward the implementation of technology that continues to provide the ease of access and flexibility that millennials are becoming accustomed to. With a smartphone in the hands of 86% of the millennial generation, mobile apps and payment processing technology is a great place to focus when considering new technology.
- “Best Infographic Ever: Millennials’ Influence the Payments Industry.” Isabella Passey. July 7, 2016. http://www.cross-check.com/blog/best-infographic-ever-millennials-influence-the-payments-industry
- “Millennials: Coming of Age.” Goldman Sachs. http://www.goldmansachs.com/our-thinking/pages/millennials/