Millennials trust Fintech as much as they do traditional banks

With the global economic crisis in 2008, and the pandemic recession in 2020, millennials, who are now between the ages of 26 and 41, have lived through some rather abnormal times.

According to Swiss Company, Unblu – a conversational Platform for Financial Industry –  many are faced with a precarious financial situation due to lower income levels and skyrocketing costs that have left them struggling to meet conventional economic goals.

As such, Unblu has reported that society has seen an increased need from millennials for assistance from the financial services industry in helping them handle their finances more effectively, from saving to investing, in order to plan for their futures. However, the way in which they expect such assistance is changing.

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Justin Asher, Head of Marketing and Strategy at upnup, the first Fintech platform in South Africa, recons that millennials have received an especially bad reputation in the media over the past decade, characterised as lazy and entitled, and attributed as the reason for the so-called death of a number of industries, from the diamond industry to even beer and napkins.

“But personally, I believe that the disruptive force they bring to industries has given rise to a positive, rather than negative, transformational shift, particularly in the financial services sector,” he said.

“Another characteristic that defines this generation is their relationship with technology. Surrounded by digital technology in their everyday lives, from the way they consume media to the way they talk to one another, millennials have new expectations when it comes to banking. Essentially, they’re looking for innovative products and services that cater to their tech-savvy needs, and as such more and more millennials are flocking to Fintech providers,” he added.

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Much in the same way that millennials are disruptors of industry, so too is the financial technology sector. Offering more flexibility and innovation at more affordable costs, the Fintech industry has grown significantly in recent years with the global Fintech market size expected to reach US$332.5 billion by 2028. Today, millennials now have as much trust in Fintechs as they do in traditional banks.

Fintechs are changing the banking game for millennials

Embracing technology comes naturally to millennials, so it should be no surprise that Fintechs have become such an attractive option to them.

Some of the biggest pain points in regards to financial services for millennials are trust and ease of use. According to Forbes, millennials are more likely to prefer robo-advisors and mobile apps instead of financial advisors as they offer seamless, quick and convenient transactions and offer lower fees and minimum investments which are appealing to those with less income and savings.

Additionally, millennials generally prefer not to have to use the phone to talk to real people, and are much happier with chatbots and instant messaging assistance as opposed to calling in to customer support centres over the phone, due to their speed, convenience, and the instant gratification these applications offer.

“Through financial options such as micro-investment, which allow customers to consistently put away small amounts of money over time, it becomes much easier for millennials to build up savings even when they don’t have much in the way of disposable income.

“But, more than that, by providing technology-based products and solutions, Fintech companies are plugging gaps that exist in the traditional financial sector and addressing customer needs by providing enhanced accessibility, convenience and tailored products,” Asher said.

Fintechs should not forget millennials in their marketing

Millennials make up a significant portion of the Fintech market, much more than Gen Z who, as the younger generation, are oftentimes the new drivers of technological development and transformation.

Additionally, millennials are now the largest demographic in the world, comprising 23% of the global population or 1.8 billion people, and are now at the age where they are looking at purchasing property and building their own families and legacies.

However, with the current economic climate, many young and even older millennials don’t see that as a possibility with fewer than ever buying houses and having children.

“Fintechs can play a significant role in helping millennials address the challenges they face in regards to managing their finances by offering targeted products and services that enable them to have more economic freedom, particularly as millennials are not as well versed in financial capabilities as older generations,” Asher explained.

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It’s also important for Fintech companies to note that millennials are one of the most socially-conscious generations and are more likely to lean towards Fintechs that not only offer frictionless, digital banking services but also value transparency, diversity and inclusion, and champion other social causes such as the protection of the environment or the eradication of poverty and inequality.

With millennials more favourably inclined towards adopting digital channels and services, Fintechs are increasingly becoming a more attractive choice for financial services.

However, the finance industry is undergoing significant transformation, with traditional banks becoming more agile and more digital.

As such, Fintechs need to continue to drive innovation and build their digital strategies to focus on customer experience. That means meeting the current needs of millennials and evolving with them as they do.