- Traditional banks are struggling to keep pace with the tech innovations that are now driving shifting customer expectations.
- $68tr 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, reports reveal.
- Millennials have become comfortable using fintech to help them access, manage and use their money rather than using a traditional bank.
Traditional banks are struggling to keep pace with the tech innovations that are now driving shifting customer expectations as legacy technologies and clunky business models are presenting considerable transformation challenges.
According to a survey conducted by deVere Group, one of the world’s largest independent financial advisory and fintech organisations, 59 per cent of the millennials, born between 1980 and 1996, are happy to switch this year or already have a digital-only bank.
Nigel Green, CEO and founder of deVere Group, said that it is more bad news for traditional banks, which seem to have been in a perpetual game of ‘catch-up’ in recent years amid evolving customer expectations, regulatory requirements and tech advances.
“Why? Two reasons: first, millennials because they’re the fastest-growing cohort of clients; and second, because they are becoming the beneficiaries of the Greatest Transfer of Wealth in history,” he said.
According to industry reports, $68 trillion 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.
Digital natives
“Millennials have grown up on technology. They are ‘digital natives’. 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,” Green said.
According to a Facebook white paper entitled “Millennials + money: The unfiltered journey,” 92 per cent of millennials distrust banks and many view them as an unreliable source of information.
Green said that the millennials have become comfortable using fintech [financial technology] to help them access, manage and use their money rather than using a traditional bank.
“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,” he said.
Moreover, he said that clients are also attracted by their green credentials as well as the on-the-go convenience, control and flexibility that digital-only banks offer.
Last year, the deVere CEO said: “Individuals and companies are increasingly embracing and expecting green, paperless banking. Traditional banks have a long way to go to catch-up with tech-driven challenger banks and fintech firms, which are intrinsically much greener and are leading the charge to a paperless future.”
“It’s natural that they turn to fintech instead of a banking system that they perceive as outdated and/or untrustworthy.”