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Millennials and FinTech: A Love Story

Updated: Jun 18, 2020

Millennials are a generation who have always learnt to serve a well-connected world. They prefer digital interactions over human ones. They were born in a world with computers and technologies. One area where this is especially true, and one where this group’s reliance on and their expectancy of connectivity is a concern for established business is in the area of banking.

Findings from the Millennial Disruption Index (MDI), a three-year study of industry disruption, are frightening for banks but great for fintech start-ups: 1 in 3 Millennials would switch banks in the next 90 days and more than half of the 10,000+ respondents don’t think their banks offer anything different than other banks. These Millennials are looking to financial technology start-ups to change the face of the banking industry. To wit, over 70% of Millennials said they would be more excited about a new offering in financial services from Google, Amazon, Apple, Paypal, or Square than from their own nationwide bank.


One of the foremost reasons is the Great Depression. Millennials have seen their great grandparents suffer through that which has made them overly cautious. Not only did the Great Depression have a very negative effect on the job market, but it also highlighted the failures and shortcomings of the large banks and financial institutions. Banking and insurance have very negative ratings with millennials, a perception that is likely to last a lifetime. FinTechs provide an alternative to the business-as-usual institutions.

Secondly, millennials do not have the patience to physically make a trip to their local branch and wait to speak to a relationship manager for advice on savings and retirement planning like their parents did. In fact, even making a phone call and waiting to reach a customer service representative is too much of an ask for many, who prefer to interact with a messaging or chat interface instead. Majority of Millennials access their bank accounts and carry out routine functions online, rendering physical bank branches less relevant than ever before.

Thirdly, Millennials have faith in the power of technology to solve their problems, as they were born with it. In fact, the Occupy Wall Street generation may be more likely to trust a fintech company than a big New York banking firm. Moreover, millennials are heavy users of social media, and apt to recommend services they enjoy to their contacts. They show a “set it and forget it” attitude towards money management, desiring to delegate the responsibility elsewhere so they have more time for their passions, whether that’s their careers, hobbies, or travel.

Traditional financial advisors are all about establishing a personal relationship with their clients, understanding their financial situation and walking them through their options. “They have a phone number and an email for customer service, and that’s about it,” says Luis Viceira, George E. Bates Professor and Senior Associate Dean for International Development at Harvard Business School. By pursuing a “one-size-fits-all” approach to investing, robo-advisors eliminate a huge amount of operating costs.

However, the bigger issue is whether, as millennials get older and develop more sophisticated investing, tax and estate planning needs, FinTech companies will continue to keep them as customers or lose them to more traditional firms.

Meanwhile, another 22 fintech apps, including banking, payments, and stocks, are being developed for the Apple Watch. A whole new market of wearable apps now exists with a potential audience of 20 million users. The race for fintech companies to join the wearable app world is heating up. After all, the Apple Watch is billed as the most personal of devices, customizable for your wrist. While a good chunk of Millennials – nearly 25% – don’t carry cash, I bet they will be wearing a smartwatch. After a long run, they may want to pay for a refreshing juice with the same wristwatch that tracked their route.

One day, many years from now, they may transfer money to their own college-aged children, or rebalance their investment portfolios, with just a few flicks of their wrists. Will real fintech tools end up on our wrists? Maybe. No doubt this is an exciting time for the entrepreneur in the financial services industry.

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