It’s a fact universally acknowledged that millennials (of who I am – just – a member) are a lost generation.
The victims of spiralling house prices, sky-high rents and stagnating wages, we’ve not generally felt the benefits of home ownership that have lifted the fortunes of the Baby Boomers and the Generation Xers.
Without a foot on the property ladder or the money to settle down, we’ve chosen to live in the financial moment rather than the financial future. We’ve funded our passions, not our pension pots. Extreme sports. Exotic holidays. Festivals. Friends. We’ve embraced the experience economy.
A life online
At the same time, we’ve lived our lives almost entirely online and a lot on mobile. We are truly digital natives.
For us, it’s been all about Spotify, Uber, Deliveroo and Craft Beer subscriptions. Not serious things like cars and houses. And why would we bother with all that, anyway, when we get stung for motor insurance and our credit rating is always so lousy? On average, young millennials’ credit score is 653, compared to an average of 727 for the Boomers.
It seems the banks don’t care about us. And we don’t care about them. Perhaps they don’t think of us as ‘serious consumers’.
Don’t diss the digital natives
But here’s the truth: we matter. Because, whilst our parents have been sitting on their nest eggs, holding smug dinner parties to crow about house prices, we’ve been biding our time.
And we are, in fact, a generation who has largely lived within our means. We are less likely to have credit cards and have gone into unplanned debt; we’re more likely to be responsible, goal driven savers.
When we put our minds to it, we can be prudent and single minded with our money management. We like to be in control. 70% of us say we manage our finances well, something that hasn’t got through to the Baby Boomers still yelling something about avocado toast. You see, we DO want those cars and houses – we’re just prepared to wait for them.
The tide is turning
And the tide is definitely turning. We are going to be a force to be reckoned with.
The millennial generation now outnumber the Baby Boomers. The oldest among us, after all this time, have finally begun to earn proper money. We’re starting to settle down and have children.
We’re in the money
And we – how can I put this delicately? – are about to become the recipients of the largest wealth transfer in history. We’re set to inherit over £30 trillion over the next decade.
In other words, we’re going to be rich.
And the banks need to start taking notice if they want a slice of it. As the late, great David Bowie almost said:
“And these children that you spit on / As they try to change their worlds / Are about to become the new High Net Worth Individuals / of the 21st Century.”
Digital disruption strikes again
So, it really does matter how we’re treated. And it’s fair to say, that thus far, the traditional banks have done a terrible job of keeping us on side.
They haven’t made the effort to understand us. They didn’t think they could do anything with us. But they’ve been quite happy to keep taking our cash, in the form of monthly fees and assorted, pointless charges.
They haven’t spoken in our language, despite a report from Harland Clarke saying millennials consider ‘authoritative tones’ to be ‘self-centred and out of touch’. I suppose they thought we were a captive audience and we had nowhere else to go. They thought they could chuck a few apps at us and we’d be happy.
Well, that’s just not the case anymore. Our dads might be impressed they can transfer funds using their phone and that it doesn’t take ‘three working days to clear’ anymore, but it doesn’t cut much ice with the ‘on demand’ generation. In fact, the FT reports that 72% of the UK population will manage their accounts via an app by 2023, and the industry should be ready to embrace this change – or lose customers.
Banking app of choice
The fact that 85.5% of millennials feel dissatisfied with their mobile banking experiences demonstrates the banking sector is struggling to understand us as consumers and how to satisfy our needs. This isn’t an impersonal issue: a bank that appears indifferent can be a huge and unnecessary added anxiety, and it may be sending our business elsewhere. According to the American Bankers Association, millennials are three times more likely to open a new account on their phone than they are in person.
In a TransUnion report, millennials use credit cards far less than Gen X-ers, we open less mortgage and credit card accounts, our credit performance is worse than Gen X-ers and when we drive we have higher insurance risk-profiles than other generations even including those in their early thirties.
Radical change is round the corner
The face of banking has to change radically. Particularly for millennials, who have been busily disrupting every other industry that hasn’t been treating them right. TV, music, holidays, taxis, you name it – we’ve taken it apart and rebuilt it in our own image.
When it comes to the legacy banks, we have no reason to be loyal to them. We want a better deal. We want amazing, connected, cross platform experiences. We don’t want stupid, punitive charges and finger-wagging letters.
And whilst we’re at it, why should my banking app be a walled garden? Why can’t we manage all our different financial partners from one digital hub? And why should a bank be in charge of our money anyway? In India, 91% of millennials report that they handle their own finances. We want to be in charge of our money using the tools and platforms that we choose.
Your API and you know it
Disruption has come late to banking – but now it has arrived. These new players like Starling Bank, inspired by proselytising visionaries such as Chris Skinner, are unbundling supply and service for us. They are pioneering design-led innovation. They are building features that fit around our digital behaviors, taking advantage of Blockchain tech and AI to serve us faster and more seamlessly. Apps for challenger banks like Vanquis now include useful new features like Promise to Pay that can help millennials with their cashflow. They are making the API Economy a reality for us.
A different kind of consumer
It’s also worth remembering that we millennials are a different kind of consumer. We are suspicious of the old corporates. We are environmentally aware and socially progressive. We are also more likely to moralise our choice of bank, swayed away from promises of prestige and heritage in the face of suspect investments, associated clients and practices.
We are potentially dismissed as ‘Keyboard Warriors’, but we actually practice what we preach. Don’t forget, Ed Sheeran paid more tax than both Amazon and Starbucks did in the UK last year. If we carry on like this, we might even get around to voting at the next election.
The perfect storm
So, this is a perfect storm for the legacy banks. An important demographic, who they have ignored for years, has suddenly come of age. The millennial generation is finally taking control of our financial future with the disruptive tools we love – and it feels good.
It’s going to take more than free mobile phone insurance, a Taste Card or some patronising poems on a TV commercial to sort this one out.
Anyway, I’m off to have my avocado on toast!