Millennials talk to each other in pictures, Snapchat through sunglasses, and hang out via live stream, so what happens when they go to the bank? Instead of visiting a branch, most millennials rely on an artillery of apps to keep their money moving. This approach is probably good for all of us.

“Banking is at the highest risk of disruption” does not sound like a sentence you ever want to hear, but think about the fees, interest rates, and inconvenience that comes with traditional banking. And millennials, in particular, are less likely to accept antiquated customer experience.

What’s my age again?

Born between 1981 and 2000, millennials are projected to make up 42% of the Australian workforce by 2020, and 75% of the US workforce by 2025. A recent survey in the US titled The Millennial Disruption Index, backed by Viacom, examined the habits and opinions of 10,000 millennials over three years. Of all industries, it seems millennials hate banks the most. In fact, 33% of them don’t think they’ll need a bank in five years, 73% would rather handle their financial services needs with Google, Amazon, Apple, PayPal, or Square than from their own nationwide bank, and 71% said they would prefer to visit the dentist than hear what banks have to say. Millennials do, however, view banks as trustworthy.

How millennials act

Globally, millennials spend 3.2 hours a day on their smart phones, while 51 per cent of them would rather electronic communication than face-to-face. Across the board, multi-channel, private, secure, flexible, customised, and automated services are high priorities for the millennial demographic, which reflects their wider lifestyle. Young people are less likely to own a home – over the past 10 years, the Australian Bureau of Statistics records first-home buyers declining by about a third – and more millennials are choosing not to have children. There is a generational gap when it comes to financial habits that banking services must reflect.

Filling this gap has made FinTech – the startup industry largely focused on electronic financial services – a millennial “go to”. For millennials, smartphones are the new wallets, which has made systems like PayPal such a key player when it comes to personal payments and money transfers. Also vital in this space: Square and Square Cash (founded by Twitter’s Jack Dorsey), allows small merchants to quickly process credit card payments and individuals to instantly send each other money; Venmo lets users make and share payments with friends over mobile; Apple Pay emits payments via an iPhone or Watch; personal finance apps like Mint and Wally help break down weekly or monthly budgets; and Digit assists millennials with saving.

Opening an app is more in keeping with the millennial lifestyle than swiping a debit card, which makes FinTech an increasing threat to traditional big banking. FinTech’s are also, for now, unencumbered by the level of regulation that plagues banks. No doubt, a reason investors poured $19 billion into finance startups last year.

What millennials want…

As FinTech offerings reflect, millennials want personalised services, available on their specific devices, and accessible whenever required. For this reason, some of the more innovative banks are viewing FinTech companies as potential partners, rather than threats.

US bank Citigroup now has a Citi FinTech operation, a nimble team of 40 with backgrounds at Amazon and PayPal charged with reforming the company’s mobile banking. JP Morgan bought a startup in directly, striking a business deal with online lender On Deck Capital to improve lending models to small business. Spain’s second largest bank, Banca Bilbao Vizcaya Argentaria (BBVA), took similar action by purchasing branch-free online banking service Simple.

In Australia, Commbank has launched Albert an EFTPOS table for businesses that could be a local competitor to Square. ANZ is currently the only Australian bank working with Apple Pay, giving it an edge over the other big banks. At a transactional level, ING Direct saw the dissatisfaction of millennials over costs to access their own money and responded with the ING Direct Orange Everyday accounts, which refund all ATM fees to customers with a balance over $1000. According to financial comparison website RateCity, Australians spent $548 million in unnecessary ATM fees in 2015. Seems what millennials want can be helpful for the rest of us too.

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Camilla Gulli


Camilla Gulli,

As Editor at Red Wire, Camilla is particularly passionate about diversity in tech, content marketing, social media, and disruptive platforms.