Exploring the spending and banking habits of millennials
The big-spending Millennial demographic arguably came of age last year, as its youngest members reached the tender age of 18. As a result, this group now provides a significant study opportunity for economists, particularly in terms of how its individuals spend and bank their cash.
The rise of Millennials has certainly driven a move away from traditional and corporeal banking in developed economies, with an estimated 55.4 million U.S. Millennials aged between 23 and 38 expected to use digital banking by the end of 2019.
However, there’s more to this statistic than initially meets the eye, whilst a number of additional factors are also influencing the financial behaviour of Millennials.
Whilst a growing number of Millennials are embracing digital and mobile banking, fewer than half of those aged between 18 and 34 would consider switching to a digital-only platform.
This underlines the importance of corporal banking, which provides an outlet that enables customers to interact directly with customer service representatives.
It also offers an insight into the mindset of Millennials, as although they want to leverage the convenience and flexibility of digital banking, they also remain sceptical of institutions that lack a physical presence.
Make no mistake’ established banks with physical branches remain extremely popular amongst Millennials, and this trend is unlikely to change any time soon.
In essence, the way in which Millennials bank is indicative of a wider trend in the financial services sector. More specifically, it’s clear that whilst the members of this demographic have embraced the notion of managing their finances online and in real-time, they rely on a physical presence and an established brand to help to develop trust.
The same trend is prevalent in the credit industry, with Millennials more likely than any other demographic to spend using borrowed capital.
As a result, we’ve seen a striking increase in the frequency and value of credit card transactions during the last few years. So, whilst UK residents remain more likely to own a debit than a credit card, transaction volumes involving the latter increased by a whopping 7.3% in the year ending January 2019.
This means that Millennials are now managing a number of financial accounts digitally, from current and savings accounts to those associated with a credit card. These online platforms enable people to manage their accounts in real-time and receive paperless statements, without foregoing access to an actionable customer service team.
The Last Word
Spending is central to the Millennial lifestyle, as they look to tread the increasingly blurred lines between the virtual and physical worlds.
This is largely due to an underlying lack of trust and cynicism surrounding the virtual world, which continues to drive the popularity of established banks and credit card companies.
Credit card companies have also benefitted from technological innovation, including the emergence of service providers such as Compare the Market. This enables Millennials to search for the best providers and offers across the entire marketplace, all from a secure and real-time platform.
This certainly helps Millennials to develop trust in credit card companies, whilst the development of advanced credit checking techniques also ensures that people are extended manageable and affordable offers.
By moving away from manual credit checks and references, firms are able to guarantee the affordability of their loans and provide Millennials with the type of security and trust that they desire.