A hyperconnected generation, with new habits of consumption of products and services, that approaches the technology in a different way. They are the millennials. The relationship of these new consumers with banks is morphing towards a new model, but, what are their financial habits?
For millennials – as Fintech Spain Chairman Pablo Blasco noted during the presentation of the Fintech Inside II Millenials report – one thing’s clear: for banking transactions… they trust their bank’s app. Young people still rely on their traditional bank and prefer the convenience of their mobile apps.
The study details some aspects of how millennials engage with traditional banks: More than 1 in 4 respondents still consider branch visits their primary form of relationship with their financial institution and 48% have only one account in a traditional bank. Most users interact with their institutions through their mobile or online platforms. Fintechs, on the other hand, occupy an unknown place in the minds of many of the people born between 1982 and 2004.
David Jiménez, Head of Raisin in Spain, a platform that allows opening deposits in banks across Europe, speaking during the event held at BBVA’s Innovation Center in Madrid, explained that “the inertia visiting a branch, since I am familiar with it and my money is safe. That confidence still exists and breaking it will be very complicated.” “The challenge for fintechs, according to the entrepreneur, is to improve the experience of traditional banking users, as these can meet the needs in a more efficient, quick and cheap manner.”
The key to fintech: experiences
And what do the young people know about fintechs? The part of the report analyzing knowledge about the fintech sector reveals that young people are especially aware of payment and transfer applications and only 6 out of 10 say they “have ever heard of fintech”. Bank apps have triumphed among millennials, more than half of which use them as their prime application. However, fintech apps account only for 10% of users’ financial applications.
Guillermo Vicandi, founder and CEO of Bnext, a marketplace for financial products, believes that “we have to do a job to explain millennials the work that fintechs are carrying out.” For Vicandi, millennials are used to trying new things and this will lead them to act as levers to add a boost to the new financial system. “It’s an interesting moment from the innovation perspective and from the user perspective.”
Although the traditional bank account still holds a huge influence as a way of accessing the financial system, models change and traditional products are transformed. “Millennials no longer think about savings accounts, loans or checking accounts, now there is another way to understand banking,” explains David Jimenez. For him, the most important thing about this transition is to think about user experiences. Banks can’t refrain to exclusively selling products any longer, but they need to link these experiences to the products.
According to Jiménez, millennials will be responsible for redefining the way banking services are consumed, since “they do not look for canned goods, but flexibility in what they need.” And the key to this lies in customization: “My products change according to my situation. Digital banks have to be personal and deliver the service you need whenever you need it.” For him, one of the main challenges for fintech applications is “breaking the barrier that digital is less secure”.
What fintechs have achieved is “to take advantage of the technology to improve the products in terms of cost and customer service,” says Vicandi. For him, this sector has “democratized services that were previously available to very few.”
The study also points out that young people’s banking habits are also changing, especially as regards savings, as only 1 in 6 respondents saves the same amount every month. And data on millennial financial education reveal that only one in four young people rates their financial education as high or very high and only 38% read about, occasionally, economic and financial issues.
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