Over 80 million strong, millennials rival baby boomers in their numbers. Their purchases already account for a little over one out of every five dollars spent on consumer goods and services. And in just over five years they will hit their peak and become a defining force in the US economy.
This me generation matured along with digital technology. The oldest of them remember dial up modems and the youngest were still in high school when the iPhone debuted. But all are quick to latch onto the latest innovations, often disrupting entire industries (bye bye, old media). For banks the impact has so far been manageable, but at Moven we believe all of that is about to change.
Equipped with smart-phones millennials now navigate their social, physical and even service environments in completely brand new ways. In particular, the rise of mobile applications has fundamentally redefined how they find, select and purchase services. Traditional banks are missing this shift towards "appification", where constant experimentation and innovation is the new norm. And while the landscape is changing around them, there are five key principles that they've missed:
1. Download the App
An app is easy to download and set up. A bank account, not so much. Whereas the best apps can have millions of users in a very short time, banks struggle to achieve single digit account growth. Without a streamlined mobile account signup, the app discovery and trial behaviors that millennials love is impossible with banks.
2. Share with Friends
Millennials look to their friends and peer groups for recommendations and are quick to share when pleased. If getting an app takes minutes, it's far easier to champion the brand. The best apps go further, creating shareable moments that complement millenials' own personal social brand.
3. Get Instant Insights
As with a bank relationship, apps are all about usage and retention. And when it comes to making money decisions, millenials want insights at their fingertips. Foursquare tells me where my friends are, Yelp how good the food will be, and Google the fastest way to get there. But what does my bank app do? My balance is a start, but certainly not the end. At Moven we've created MoneyPulse™, a real time analysis of your spend compared to your goals, but there's room for lots more experimentation by banks.
4. Be Financial Healthy
Entering the workforce during this great recession with heavy student debt, millenials are making very different money decisions. Whether it be living at home, buying fewer cars, and even postponing marriage, many are trying to be better savers. But while the intent is there, the behavior is not as they dedicate more of their spend towards smaller discretionary items. Traditional banks have yet to tap into this financial angst and provide meaningful, effective solutions that fit the new "appified" service paradigm that millennials prefer.
5. Trust Us
Finally, millenials are extremely skeptical of banks. It's not that they're unwilling to pay for services, but that they expect banks to take every opportunity to exploit them (cue occupy wall street). The increasing appeal of prepaid cards in this segment signals their willingness to choose consistency and transparency over hidden fees and the temptation of greater debt. While banks are moving towards this, they can go even further by committing to an oath, as we have done, assuring customers that their best interests always come first.
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Mohamed Khalil, Head of Product, Data & Partnerships at Moven, has over 15 years of experience in financial services management consulting, fintech startups, and retail brokerage and bank strategy. He has an undergraduate degree from Princeton University and an MBA from Wharton. Moven is a startup dedicated to providing mobile money management services that help consumers spend, save and live smarter. Moven was awarded a Best in Show at the 2013 Finovate London event.
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