Millennials (or Generation Y)—defined as people reaching young adulthood in the early 21st century—are changing the whole business landscape. It is that the number of Millennials in the U.S. will remain at the same level at least until 2030 (see Fig. 1). This tech-savvy group is expecting most products and services to be offered online. This fact is crucial for service providers since this age group is currently estimated to have the most spending power of any generation1. There is no doubt that if they want to stay on the market, companies must change their attitude and be more open to new solutions.
Among the others, the demand for digital services relates also to the financial industry, including banking2. Almost 40 percent of Millennials would like to use their smartphone for banking, and an “easy-to-use smartphone app” to bank is a primary factor for 30%3.
Online and mobile banking ... represent the primary banking channels for two-thirds of Americans. The trend toward digital banking was widespread across age groups. Nearly half of younger Americans (those aged 18 to 29) use mobile banking the most, and online banking was the first choice of more than half of those over 64.4
According to the Business Insider Intelligence’s study5, there is a significant demand for mobile banking money management tools among Millennials. This includes spending comparison, setting spending limits and account aggregation. But only a few of the top 15 U.S. banks offer each of these features, which means that banks are missing a very large opportunity.
It is not only online banking that is interesting to Millennials. According to the Aite Group report—based on a survey of more than 1,500 U.S. users of rewards and loyalty-branded credit cards in the third quarter of 2017—after years of being credit-shy6, Millennials started rapidly to apply for reward cards (see Fig. 2).
It is proven that about three-quarters of working Millennials are saving for retirement. They are paying off debts and continuing to buy . But have you known that they are not investing? This and many other habits make this group as noticeably different in various aspects from its predecessors. Are you prepared? Are your services sufficient enough to meet Millennials needs?
Innovation will be the single most important factor driving sustainable top- and bottom line growth in banking over the next five years. Innovation is doing things differently. Not just new products or a new customer experience, but doing things differently across the entire business model including transforming the business model itself.7