Millennials Will Control 46% of the Economy
Originally published on the OnePay Blog.
There has been a lot of chatter lately about Millennials, some talking about them in good light and others comparing them to lesser positive things. Yet, what really remains after all the opinions are the facts, and like it or not the Millennials are the generation group with the highest population ever, even more than the Baby Boomers.
They are characterized as driven by innovation, technology and being connected to the internet. They have low attention spans, and like to test out new things, services and technologies just because they are “cool”. The grand majority of Millennials are connected to the internet through their smartphone, their new gateway for friendships, entertainment, news, information and leisure. According to FirstData 86% of Millennials are smartphone users.
The financial industry needs to pay attention to what the Millennials are doing and how they are behaving right now, given that they are poised to control 46% of the American Economy in the year 2025. To spice things up, the oldest Millennial (ranging from 1981–2005) is barely turning 34 years old in 2015. Many things are going to change and specifically in the financial industry given that its been the industry where innovation has been lagging behind.
FirstData released a white paper titled “The Unbanked Generation; A Guide to the Financial habits of Millennials“, where it speaks about the future of FinTech and how its going to be guided by Millennials. It is imperative to acknowledge some of the points talked about in it in order to understand the broader financial picture of the future.
1. There are 80 Million Millennials out there.
As mentioned previously there are the largest generation ever to exist, even more than the Baby Boomers, the previous generation that totaled 77 Million Americans. They are still pretty young as the age groups they range from fall between those born between 1981 and 2005, making the oldest Millennial barely 34 by this year. They are set to peak by the year 2020 and will control 46% of the total U.S. Income, which is basically $7 trillion dollars in liquid assets.
2. Millennials are constantly connected to the Internet via their smartphones.
3. 94% of consumers under 35 years old are active users of online banking.
Online banking and specifically mobile banking have rapidly overshadowed and taken over traditional banking. I remember when I was a kid going to a banking branch and having to wait for a while in that serpent-like line in order to get to a bank representative, and it was the norm. Nowadays, it is rare the time when a bank branch is full or even has a line. We have evolved into digital beings that like real-time and on-demand information about their bill status and account balances. This will shape the way we bank in the future, and its not too far off.
4. 63% of Adult Millennials don’t have a credit card.
This is an important statistic to acknowledge. Its implications are astonishing. This could create a huge impact in the credit card industries given that its opening it up for new up-and-coming innovators that might find the right formula to attack this particular reason why Millennials don’t use credit cards. While some answers to that can be simply “I don’t really care”, I believe there is a more powerful underlying reason that will become clear in the coming years.
5. Millennials use banks for; account balance information, bill paying and transferring money.
At first glance these seem like typical bank transactions, but when you really pay attention you notice a trend. Smartphones have become the new wallets and moreover have received the approval seal by titans like Apple with Apple Pay and Google with Google Wallet. Today everything is stored in our smartphones, everything from airline tickets, movie tickets, Starbucks rewards cards, credit cards, etc. More and more FinTech companies are starting to specialize in particular bank functions like Venmo with the transference of monies, Mint with its expenditure analysis and account balance information, and OnePay with its bill paying consolidation. Not to mention Bitcoin, whose end goal is to create a cryptocurrency that transcends national currencies and that is welcomed everywhere.
The idea of a branchless digital bank is not far off the future and even 27% of Millennials would consider using it according to FirstData.
FinTech is the next big revolution in technology and it is happening right now. The velocity at which its going to move in the coming years will bring shockwaves that will affect the very foundations of our archaic Financial System and will cause them to evolve.
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