Millennials now make up the largest consumer base for banks, and, according to a new report by Oracle Financial Services and Wharton FinTech, banks had better adapt to today’s tech if they’d like to keep it that way.
More and more Millennials, especially those over 26, are making the shift to digital banking. More than 25 percent rely entirely on mobile banking. Nearly 70 percent interfaced with their banks and other financial institutions most frequently on their phones or computers, while 75 percent of Millennials in the U.S. were at least somewhat reliant on mobile banking to manage their accounts. The other quarter reported being entirely reliant on mobile banking.
“Numbering nearly 80 million and commanding $1.3 trillion in direct annual spending in the U.S. alone, Millennials now represent a mainstream banking demographic, a segment completely different from their predecessors. They have changed the game for almost every industry and banking is no exception,” the report reads.
With such a broad demographic, there are some distinctions. Oracle divided Millennial survey respondents into four subsets: young Millennials between ages 18 to 21; middle Millennials between ages 22 to 25; mature Millennials between ages 26 to 30; and grey Millennials between ages 31 to 45.
“Grouping Millennials by age reveals nuances in their behaviour towards banks and how they approach financial transactions,” Oracle says in the report.
For example, of all the subsets, young Millennials and mature Millennials are the most open to non-traditional modes of payment. Their preferred mode depends on age, however, with young Millennials favoring peer-to-peer payment platforms like Venmo or alternative payment services like PayPal. Mature Millennials were more likely to turn to mobile wallet and mobile money platforms.
The report catalogued a shifting relationship between Millennials and financial institutions. “Most Millennials maintain a transactional relationship with their banks, regarding them as primarily a safe place to store money. This was most prevalent amongst Young Millennials, 91 [percent] of which do not view banks as a lifestyle-enabling institution,” the report says.
Still, most Millennials hold that banks are the most trusted source for personal finance advice. Banks beat out family and friends (though only by one percent), personal financial advisors, online forums and online financial advisors.
The report also found that financial milestones ranged in priority, depending on age. While a person under 21 is most concerned with deciding on a college or furthering their studies, a Millennial between 26 and 30 is more concerned with daily shopping and budgeting. Both prioritized finding a new job and planning vacations, however.
“Millennials currently do not see their bank as lifestyle-enabling, but are resoundingly open to banks offering new ways to help them prepare for [life moments]. Banks have to move swiftly before the opportunity is lost,” the report warns.