Millennials Will Cause the Next Financial Crisis
It’s no surprise that millennials don’t love their banks. Hard hit by the financial crisis, many millennials are saddled with crippling student debt and the seeming impossibility of finding a job after college. But at 80 million people and a direct annual spending power of $200 billion, millennials can’t be ignored
If financial services companies don’t look to change their products, services, messages, and how they deliver each, this could shape up to be another crisis for traditional banks. We went to our research partner Cubeyou to see what millennials do love, and how that information can be used to connect with the millennial audience.
Within their own generation, millennials experience widely different life stages: college, new career, new relationship, and a young family, perhaps. It follows, then, that what they need in financial services will also vary widely. So we started looking at how their attitude shifts along with age. Among the 18- to 24-year-old crowd, financial services under-index―a lot. But when we look at the 25 to 34 age range, we see that the index changes―which is to be expected given their greater financial service needs.
Let’s dig into the 25- to 34-year-old audience a bit more. While there may be reach among some of the traditional financial service companies like Chase and Citibank, we start to see a dramatic shift in relevance for nontraditional financial services like Moven, GoBank, Mint, and Simple. What’s different about these companies? They are all digital, all mobile first, all born from technology.
Traditional financial services companies should look to these new companies as they create products that are relevant to older millennials, including tools that are developed to be mobile first, and they should demonstrate an understanding of their money and simple ways to manage it.
When we look at the younger audience members, they aren’t thinking too much about financial services yet, even though they use them for student loans and everyday banking. While we see reach in companies like Chase and American Express, we also see sharp negative relevance. As millennials age, how can your financial services company stay relevant with products and services they will love and stick with?
Let’s look at Venmo, an app acquired by payment company PayPal and with direct appeal to the millennial audience. It began as a peer-to-peer payments app. With social deeply embedded into the app, it brings fun and social interactivity with friends to paying for your share of the pizza. This app is one of the only financial services companies that pops with relevance for the 18- to 24-year-old millennial. And as PayPal adds new features like Pay with Venmo, the ability for users to make a payment at any PayPal merchant, it is designing deeper use that builds a long-term relationship for the millennial.
Connecting with millennials is about more than just clever marketing messages that appeal to this large and financially powerful group: it is also about financial services products that are designed for millennials’ unique relationship to mobile, to technology, and to financial services. Start with a product that provides what millennials need now, with an understanding of their unique behavior, and with a robust product roadmap that adds new features as their needs for financial services change over time.