More than 50 percent of millennials globally have moved from traditional physical banking to digital accounts. The switch, a survey reveals, is driven by their desire for convenience, preferring to own digital bank accounts in which they can get financial services from anywhere, anytime.
The global poll, which interviewed more than 550 millennials born between 1980 and 1996, shows that 59 percent of those surveyed are exclusively using digital banking services.
deVere Group, a global financial advisory company, interviewed its clients who currently reside in the United States, the United Kingdom, Asia, Africa, the Middle East, East Asia, Australia and Latin America.
Nigel Green, deVere Group CEO and founder, says that it is more bad news for traditional banks, which seem to have been in an endless game of ‘catch-up’ in recent years amid evolving customer expectations, regulatory requirements and tech advances.
“The poll’s findings are a big deal for old-school banks. Why? Two reasons: first, millennials are the fastest-growing cohort of clients; and second, because they are becoming the beneficiaries of the greatest transfer of wealth in history,” he says.
It is projected that Sh7 quadrillion in wealth is to be passed down from the baby boomers – the wealthiest generation ever – to their children and other heirs (millennials) over the next few decades – Generation Z.
Millennials have become the focal point in the Fourth Industrial Revolution, growing up during the mushrooming of the now global tech giants Facebook, Twitter, Wikipedia, LinkedIn, WhatsApp and YouTube between 2001 and 2010 up on technology, becoming digital natives in the process.
“They’ve been influenced by the enormous surge in tech as they came into adulthood – which came around the same time of the global financial crash that hit in 2008. Against this backdrop, they seemingly became comfortable using fintech [financial technology] to help them access, manage and use their money rather than using a traditional bank,” notes the report.
A Facebook whitepaper entitled ‘Millennials + Money: The Unfiltered Journey, 92 percent of millennials do not trust traditional banks and many view them as an unreliable source of information.
“Mobile-first millennials expect easy, immediate access and control of their finances in the palm of their hand. They demand to be able to transfer money and pay bills in one tap or swipe. They want to be able to review their spending habits, be offered guidance, and have real-time access.”
In most cases, ‘too big to fail’ traditional banks are struggling to keep pace with the tech innovations that are now driving shifting customer expectations. Legacy technologies and clunky business models are presenting considerable transformation challenges.
As well as the on-the-go convenience, control and flexibility that digital-only banks offer, clients seem to be be attracted by their green credentials.
Individuals and companies alike are increasingly embracing and expecting green, paperless banking.
“This is partly fuelled by the pressing need for us all to drastically reduce waste and better protect the environment – something the pandemic and issues such as raging wildfires has collectively focused minds on – but also because a paperless system is, typically, a more convenient and efficient one,” said Mr Green.