Although poles apart in lifestyle, the Generation Y consumers or millennials, from the richest western cities to the poorest rural villages seem to have 2 things in common when it comes to banking. They are both seeking simplicity and transparency from their banks, and they both are in love with their phones!
A recent study predicted that by 2018, millennials (current 18-34 year olds) will have the highest spending power of any generation. By 2025, three out of every four workers globally will be a millennial. These digital-natives check their smartphones 43 times a day, on average. They communicate via social media, share everything and show little loyalty.
Many authorities are reacting to the change in consumer behaviour and the loss of trust in traditional banks, by actively encouraging competition from new entrants. In the UK, Metro Bank was awarded a banking licence in 2010, the first new UK licence in more than 100 years. In 2015 a further 29 applications are in process. 2015 saw the Reserve Bank of India received 72 applications for small finance banks and 41 applications for payments banks.
The traditional high cost, “walled gardens” of the banks, are under attack from a plethora of nimble, low cost, and often greatly simplified offerings. Everyone from retailers and telco’s, payment companies and start-ups are looking to get in on the act.
However, there are dangers, people are starting to trust brands that are unregulated without being aware of the risks. Bitcoin exchange MtGox was trusted by many, and they assumed that their money was guaranteed. It wasn’t, and when MtGox went under, thousands of bitcoin investors went bust. MtGox lost $500 million in investments with no recourse, guarantee or reimbursement.Keep Reading