Millennials, FinTech and the Failure of Corporate Banks

I read an amazing piece by Nadja Schl?ssel, about the relationship of Millennials with banking, finance and FinTech and it got me thinking. FinTech solutions are typically app-centric and an on-demand financial services that truly hacks smartphone users offering them greater convenience. 

FinTech is then a solution for Millennials and GenZ, win their hearts and you will disrupt Banking & legacy financial institutions. 

Millennials Are Primed To be Disruptive Consumers

Why does it make sense for the branding, and CMO/CPO of a FinTech solution to target Millennials?

• They are app-centric and early adopters of new apps
• They are social sharers, more influenced by their peers and more likely to spread a useful solution by word-of-mouth
• More likely to post product reviews, if they find your solution convenient
• More susceptible to gamification with a greater preference for omnichannel seamlessness and frictionless speed of a service delivery
• They are socially-conscious and fully aware that many banks are ripping them off
• They are supportive of technologies that add-value while customized, personalized and more salient to their use cases
• They have more economic stress due to a stuttering economy and will change services for price disruption
• They are already mobile bankers on the bleeding edge by being omnichannal digital natives

Millennials are Early Adopters

A majority of FinTech products and services will actually be beta tested naturally by Millennials and even GenZ first, before it hits the mainstream. This is also just how young people are more aware of the app-ecosystem and spend more time being plugged into any add-on that gives them an easier way to accomplish financial tasks. 

For FinTech startups, it is therefore very important if applicable to fully understand Millennial preferences and survey them in relation to the adoption, interface and ease of use of your FinTech product. In general Millennials want: 

1. A seamless User Interface (Ux)
2. A frictionless customer experience of the product in relations to their micro transactions (Cx)
3. An immediate recognition of the value proposition of the solution (USP)
4. A recognition of how machine-intelligence, analytics, big-data and new technology makes your service disruptive to legacy financial institutions and current solutions to the same pain points (Data authority)
5. A solution that's so useful, effortless and impressive it's worth sharing with their peer network (high shareability)

Millennials Think Banks are Evil and Why It Matters

Millennials want to support ethical and sustainable business, not profiteers who charge a premium on every service and have a monopoly. This is why Millennials are only too happy to support FinTech: 

• Millennials' relationship to legacy Banks is grim, as Banks are among their least favorite brands.
• Millennials don't respect financial advertising and are skeptical about the corporate social responsibility (CSR) campaigns of Banks. 
• We tend to view Banks as profit making institutions divorced from the reality of common people. 

Millennials have Omnichannel Expectations

• Millennials demand a more personalized experience that recognizes and caters to their unique situation, needs and history. If banks can no longer provide this, then they will turn to better services (e.g. Robo advisors)
• Millennials would rather borrow $ from friends and family than take out a loan with interest from a Bank. 
• We don't tend to trust Banks and large legacy institutions have the flexibility or ability to truly care about us. Hence they are not seen as authentic entities, but as bureaucratic machines of an old world profiteer economy that is fundamentally uncaring. 

Less Brand Loyalty Means more Churn

Millennials are more likely to churn from a big bank in support of a more local indie bank or full on digital banking solution provider. This is what really worries Big Banks. 

Furthermore, why would Millennials trust a system that has put them in such a situation post 2008? The burst bubble of 2008 was a permanent PR disaster for banks that was never really addressed. 

The Millennial reality consisting of high debt, high post-graduation unemployment, delayed independence (impaired autonomy and social-clock congruence) and for many, living in a continual state of economic crisis. Higher debt to income ratios = less trust in an outdated system. 

• This is where FinTech startups can come in, and provide disruptive ethical solutions. 
• Easy access to professional advice. 
• Better customer service that's automated. 
• Better tracking and notifications of their situation. 
• More pro-active communications and more analytics available. 
• Establish higher trust and do branding hyper-targeted to Millennials. 

Millennials dislike price gouging: 

Millennials are completely disinterested in the ploys of banks and increasingly must themselves turn to entrepreneurship, small business and freelancing themselves and hence trust FinTech more on principle of the new on-demand economy, both functionally and philosophically.

Smart FinTech startups must capitalize on this to offer a service that's truly disruptive and will gain widespread adoption by young people, first and foremost. 

Millennials Trust Tech Companies more than Banks

Unsurprisingly, 73% of millennials say they would be more excited about a new financial service offering from Google, Amazon, Apple, Paypal, and Square than a nationwide bank.

Young Millennials & GenZ lead the way: 

18-24-year-olds are nearly 4x more likely to be comfortable getting a loan using only their smartphone than 45-54-year-olds

Banks have Failed to Market to the Biggest Future Demographic

Game over, no turning back. Banks have failed to adapt, letting FinTech have one up on them in the race to how finance will be done in the future: 

• The future is Millennials, this poor generation who will inherit the wealth of their Baby-boomer parents and will want to do up-end the traditional infrastructure of society, for whom they view, did not keep up with them.
• They want disruption, they want change and want to create a better future where institutions are more accountable, transparent, ethical and sustianble in the way they deliver services and listen to their customers.  

Feel free to skim some of my articles for other related FinTech posts. If you like what you see you can follow me. #BrightItOn

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Do you believe the Millennial generation has the power to help FinTech startups disrupt big Banking?