Millennials also known as Generation Y, are widely considered to be individuals born between 1981 to 1996. Millennials currently make up about 30% of the population across US, Australia and the UK.

In the next 3 years millennials will make up over 80% of workforce, and just like they are in other areas of society, millennials are evoking huge changes across the Western banking industry.

The millennial stereotype

There’s a stereotypical perception that tells us millennials want to work less, but spend more. These perceptions tell us millennials are less focussed on the future and live much more in the now, preferring to spend their hard-earned money on ‘going out for brunch’ and fun experiences that give them meaning, rather than save for a house.

As early adopters of social media, having been the first generation to grow up with the internet, these perceptions also tell us millennials are heavily influenced to purchase by what they see on their social media feeds. But while spending is a priority, working a ‘9-5’ is not – they want jobs that give them purpose and a work life balance over a gruelling 60-hour work week.

The other perception is that Millennials have it tough with rising house prices, expensive educations and a post GFC economy which has resulted in fewer jobs and with salary levels that are proportionately lower.

So, what’s actually true?

We know that millennials have little trust in the banking industry, and according to 71% of millennials they’d rather go to the dentist than listen to a bank[i]. We know that only 54% of millennials see themselves owning a home by retirement, so their financial goals are entirely different from the generations before them.

We also know that by 2023, 2 out 3 dollars in Australia will be earned by Millennials, making them incredibly important to the banking sector, so we need to stand up and listen!

So how are millennials behaviours creating change in financial services products?

A desire to become more Financially literate and diversify their investments and assets has seen products like Splitwise and Money Brilliant born.

Millennials want low barriers to entry, meaning that they want it to be easy to sign up to a product and where possible – free.

We are now seeing new Software-as-a-Service offerings which have free subscriptions that are self-service with no pressure. Payment is required however if you want to upgrade, for example YNAB allows you to sign up for a free trial, but after the trial has ended you’ll pay $84.00 per annum.

They want mobile first, meaning they want an app for everything and the apps need to be spot on. This need has seen hundreds of new banking apps created.

What do millennials want in an app?

Millennials are looking for apps that offer holistic solutions.

A great example of this is Money Brilliant

Money Brilliant connects your accounts and enables you to get a complete view of your money! This helps you understand where you really stand. Money Brilliant connects bank accounts, credit cards, loans, mortgages, superannuation and even loyalty cards.

They also want apps to be personal, which is where apps like Splitwise have done a great job.  Splitwise helps you share expenses, whether it’s with lunch with friends, or bills with your housemates. According to the NY Times “This phone app makes it easy to split everything from your dinner bill to rent. It will also calculate everyone’s share and keep track of any I.O.U.s.[i]

Apps also need to be visual. Apple Card is a perfect example of this, showing you your balances in easy to read graph form. You can also break your money into categories like shopping or food.

Early Adopters

We also see Millennials as the first to adopt new technology. In the past, access to mainstream banking services was largely limited to the four big banks. Now, there are decentralised models like Neo Banks, Peer to Peer Lending and Crowdsourcing that are growing in popularity.

Neo Bank’s for instance exist in a 100% digital and mobile platform, so there is no need for a physical branch. According to Medium, Neo Banks “systems are 100% new too. This means it is not simply a digital front end to a traditional (and mostly cumbersome from a technological perspective) bank.”[i]

When making payments, we also see millennials adopting new ways of payment.

Apple pay, Venmo, and ClearPoint built Zip are all popular choices. Like the apps above, they are visual, have a simple sign up process and most importantly put the user in control of their money.

Positioning for Success with Millennials

Looking to the future, ClearPoint is in a strong position to work alongside existing and new banking partners to ensure they remain ahead of the curve in developing products tailor made for this most influential of part of the population. Having delivered successful projects including Zip and a new app for AMP Wealth Management New Zealand, ClearPoint has established itself as a dynamic and market leading tech services provider and looks forward to the challenge of reimagining banking services to suit the changing needs of a rapidly changing population.

Do you need help accelerating? Talk to us about how we can help you design and build your mobile apps fast. 

See how we created the MyAMP iOS and Android apps in just 14 weeks here.

See how we built the Zip payments mobile app in under 3 months here.

 

[1] The millennial disruption index

https://lookwhoscharging.com.au/millennial-disruption-index/

[1] New York Times

https://www.nytimes.com/2018/08/28/smarter-living/money-finance-apps-tools.html

[1] Medium.com

https://medium.com/crowdfundup/what-is-a-neo-bank-and-how-are-they-disrupting-traditional-banking-models-3c1b2fa5b8e1