Millennials Find FIs Can’t Keep Up With Needs
In the wake of the Great Recession, millennials are facing new, previously unanticipated financial challenges. But, how are they adapting, and what kinds of financial services are they looking toward to help them achieve their goals?
This was the subject of a new survey commissioned by Think Finance and conducted by Harris Interactive that surveyed more than 1,000 Americans between the ages of 18 and 34 years old. The research was compiled over a two-week period through an online survey that sought to assess what millennials want from financial services, what kinds of tools they're using and how the economy is affecting their future outlook.
Ken Rees, Think Finance's president and CEO, said in a statement that though the findings covered these topics, the most notable revelation was that this demographic is being underserved by traditional banks.
"There is a clear desire among the millennial generation for financial flexibility and the ability to access credit in a pinch," he said. "It’s also clear that traditional banking products are not meeting all of Millennials’ financial needs and that innovative, responsible alternatives are in demand."
In this PYMNTS.com Data Point, we'll break down Think Finance's findings to better understand how payments companies and financial institutions can best adapt to the needs of this consumer group.
Millennials Expect Great Online Banking
Unsurprisingly, the study confirmed that millennials are now accustomed to performing financial services via computers, as a majority - 56 percent - said they preferred to handle their banking through a bank's website. Mobile banking was also found to be on the rise, as 29 percent said they used this method to handle their money.
Researchers found that when choosing a bank, however, millennials were most concerned about potential fees. Eighty-three percent said this was the most important factor in this decision, as the presence of fees often caused them to search for other payment options. Additionally, 59 percent noted online access and 55 percent said 24/7 access to money were the most important factors in their banking decisions.
Millennials Use Alternative Financial Products
The report also suggested that many millennials are learning to make use of less common financial tools. Forty-five percent of respondents stated that they had used an alternative financial product - such as a prepaid card, money transfer service, pawnshop or payday loan - within the past 12 months.
Of these respondents, 81 percent said having emergency credit options is important to them. The researchers suggested this belief proliferates among millennials as most don't have emergency savings funds of more than $1,000.
However, despite the negative connotations of some of these products, two-thirds of survey takers said they had a positive experience with this alternative product. This means banks may be able to further adapt new products for this market base, provided they're consistent with the preferences revealed in this report.
Millennials Want To Find Financial Success
Banking advertisers would be wise to note some of the study's final findings that illustrate how millennials are responding to economic challenges.
While the report determined that millennials are concerned about their financial future, most were optimistic that they'll overcome these challenges. For instance, 63 percent of survey takers said they will succeed in the long run to become more successful than their parents despite a worsening economy, a poor job market and fewer career advancement opportunities.
The report suggests that banks that can help millennials reach this goal may be the most effective at capturing this market.
For more insights, read the full report here.