Millennials and Money: What You Need to Know

The next time you talk to a group of millennials, ask them the last time they went to a bank to deposit a check or withdraw cash. Or, when they last used a credit card. The answer may go as follows: “I would rather go to the dentist than go to a bank” or “I only use credit cards with rewards programs.” Because one thing we do know is that millennials value convenience and their time.

Millennial spending behaviors and preferred payment methods are much different than those of previous generations. According to a study from TD Bank, 41 percent of millennials state they shop online “all the time.” Other research findings on purchase frequency, channel and convenience has forced the payments industry to adapt and create products that meet this group of consumers’ wants and needs.

So, how are millennials really spending their money? Before heading out for work in the morning, they may order a coffee or latte through their Starbucks app that will be available for pick-up on their route to their workplace. At lunch, they may order a sandwich from Jimmy John’s online from their desk with a prepaid debit card and their weekly meal plan delivery will be waiting at their doorstep for dinner.  After dinner, they might purchase a new travel bag for that upcoming vacation from Amazon, rather than going to the mall or a big-box retail store. The common themes? Everything is digital and designed for convenience.

Technology & Convenience

Millennials are the most tech-savvy generation, with a significant amount of buying power. They want and have access to mobile apps that enable them to review a product and make a purchase with the seamless click of a button on their smartphone. Utilizing technology that provides convenience is one of their strongest desires. According to a study from Pew Research, 92 percent of millennials own a smartphone and 54 percent have a tablet. To meet the demands of millennials using those devices and channels to make purchases, companies are building apps that remove payment friction for consumers and allow for interoperability within and across applications.

Let’s use Starbucks as an example. The global coffee chain created an app that allows consumers to order customized drinks with the simple click of a button. Customers can then reload funds to their card through most major financial institutions without ever having to enter a brick and mortar location. The app includes a rewards program that adds points to an account after each transaction is made. Clearly, in addition to convenience, reward programs provide an added incentive for frequent purchases.

Like Starbucks, many large grocers such as Whole Foods Market and H-E-B have recently created programs that allow an individual to order and pay for their groceries online and pick up curbside at the store within a few hours. This added convenience eliminates the need for anyone to spend time picking out items in a store and then wait in a long line at the register– a factor these brands realized to be a hindrance in completing and increasing transactions. This combination of technology and convenience offers millennials a reason to actively engage with their favorite brands and get rewarded for doing so.

Payment Solutions

The mainstream payments ecosystem is beginning to catch up with these types of technology-enabled products and convenient solutions to meet the demands of the millennial population. However, untapped opportunities still exist in the marketplace for institutions to experience success within this customer base. First, companies must continue to work on interoperability of apps. This will require institutions to work together to provide millennials with the ability to do person-to-person (P2P) transactions and access and load funds to their retail applications. By offering interoperability and creating robust payment platforms – such as Zelle and Venmo – consumers will have access to a seamless payment experience and will continue to gravitate towards the brands and financial institutions that offer them this experience. Millennials are loyal to the brands that are popular in the marketplace and, more importantly, brands they can trust to provide speed and value.

The millennial population has had a long-lasting and profound impact on the greater payments ecosystem. Everything from the creation of applications to P2P payments was driven by the millennial generation and their desire to use technology for payments with an emphasis on convenience. The greater payments ecosystem must continue to evolve with this population as they age and change their expectations and demands for robust payment solutions embedded within an end-to-end buying experience. Turning these learnings into strategies to connect with future generations will make or break a payments provider’s longevity in the market.


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