As millennials are projected to surpass baby boomers as America’s largest generation, they are already dictating the landscape of financial services, and the race to reap the rewards of their riches is anyone’s game. As counsel to a fintech platform that offers money transfer, banking and micro-credit solutions for underbanked and unbanked communities, I oversee and identify trends and legal issues in a plethora of different areas, including finance and credit, as well as corporate governance and business policy. Based on this experience, here are my predictions for what the millennial banking landscape will look like this year:
Big banks will re-evaluate their strategies.
Representing traditional authority and its inefficiencies, millennials carry the reputation for disliking the practices of big banks. According to a study by Scratch, each of the four leading banks is among the 10 least-loved brands by millennials, and 71% of millennials would rather visit the dentist than listen to their banks. Nameless giant corporations simply do not appeal to millennials, the generation raised on instant gratification and affirmation. Corporate chains are already experiencing the pains of millennial distaste. The day Google, Amazon or the like dives headfirst into banking, big banks and their ATMs will begin their inevitable decline into obscurity. To keep their millennial customers, I might advise larger banks to focus on personalized services in lieu of rebranding efforts.
Cryptocurrencies will become a popular avenue for millennial investment.
A study led by Blockchain Capital found that 30% of millennials say they would rather invest $1,000 in Bitcoin than $1,000 in government bonds or stocks. The sense on Wall Street is that cryptocurrencies stand to be the great lure to finally fuel an explosion of millennial investors. A study by Opinium projects that one-third of millennials will invest in the cryptocurrency market in 2018. Has the cryptocurrency market stabilized? Will another bubble burst? These are the true questions for the newly minted generation of millennial investors. Whichever way you slice it, the almost ubiquitous application of blockchain across multiple platforms, combined with its transparency and security, will likely spur millennial investment. Millennials, however, should stick to established cryptocurrencies when first investing — i.e., cryptocurriences that have been around for at least two years. The market is currently saturated with new projects, most of which are destined to fail.
Millennials will turn to mobile applications for their banking.
Over 50% of millennials are already using or considering banking applications like PayPal or Venmo. The instant transactions, friendly user interfaces and seamless integration into existing social networks make such applications a no-brainer for this demographic. I have seen that mobile banking is extremely important for millennials, and it becomes more prevalent as time passes. On a monthly basis, millennials are accessing their financial information via mobile device eight and a half times more often than other generations, a trend only likely to grow with time. When blockchain takes over mobile banking, the sky will be the limit. The transparency, security and simple newness of blockchain mobile banking (i.e., the Bitcoin experience with real USD) will be the trifecta for luring in millennials.
Student debt will prevent a vast portion of millennials from entering the housing market.
Student debt is delaying millennials from purchasing a house for an average of seven years, according to research compiled by the National Association of Realtors. As much as 35% of the decline in young American homeownership from 2007 to 2015 is due to higher student debt loads. As such, it is not surprising that 83% of millennials believe their student loan debt has affected their ability to enter the housing market, as noted by the above-referenced National Association of Realtors findings.
Unfortunately, for millennials, a higher level of education does not readily translate into financial security, at least not in the short term. In my personal experience, the biggest burden and stressor for millennials is their debt — in particular, their student debt.
In conclusion, the tidal force of the millennial generation has already begun to change the landscape of financial services and the viability of a full-time bank in your hands. In my humble opinion, the holy grail of financial services for the future generation may very well be the facilitation of mobile cryptocurrency investments that appeal to millennials as a means of mitigating their ballooning student loan debts. Despite these debts, or possibly because of them, millennials are ready to start investing, and where they are going, we won’t need roads.