Let me cut to the chase: The financial services industry is rapidly changing to satisfy its new best friend, millennials. There’s no getting around it; their sheer numbers necessitate attention. Millennials represent one in three Americans in the workforce, 25 percent of the global population (fun fact: there are more millennials in China than people in the United States!), and have $200 billion in buying power. They are the largest single generation in the workforce today. And, most importantly for financial services, they are 43 percent of all mobile banking and finance usage.
Digital Trumps Traditional
Indeed, millennials don’t value traditional banking like previous generations. Born into a digitally-connected era, they heavily rely on the Internet and smartphones to conduct their business, including managing their finances. According to research from Gemalto, more than one in four (27%) millennials have never even visited a bank branch. Comparatively, 77 percent use online services every month and many consider mobile banking “essential,” with nearly 40 percent reporting that financial apps help them control their finances. This becomes critically important in maintaining trust. Since they’ve never been to a branch, there are no people, no relationships to build loyalty. All trust, loyalty and affinity for the brand comes 100% from experience on the web and via mobile apps. Any breach here, and trust is broken…forever.
And, it’s worth noting, millennials want financial help. Millennials grew up during the global financial crisis, so managing debt responsibly and avoiding risk is very important to them. A TD Bank survey designed to understand these young adults’ banking behaviors found that “while 59 percent of millennials reported that they are ‘extremely’ or ‘very’ knowledgeable about their day-to-day banking products like checking accounts, they still want advice on personal finance topics,” including savings, credit cards and creating a budget.
In other words, millennials value tools and advice that give them control over debt and credit alike—which helps explain their reliance on fintech over traditional banks for financial advice and things like debt consolidation loans. In fact, millennials are driving a surge in personal loans, 36 percent of which are from fintech lenders.
All these statistics converge to make one key point: While there is a huge opportunity for fintech providers to capture market share and growth, there is also sizable risk. Why? Because data security is top of mind for these so-called “digital natives.” They understand the liabilities of trusting organizations, like financial institutions, with their online data and expect that it will be well guarded 24/7 with no lapses.
If it isn’t? say goodbye to your millennial customer base; millennials are 2.5 times more likely to change banks than their older counterparts if they aren’t pleased. And one surefire way to keep them happy is with a secure mobile and/or online customer experience. After all, the number one tool millennials want is better mobile security for financial transactions.
Don’t risk losing the most connected, powerful consumer demographic because of lax security. The guaranteed fallout—customer attrition, reputation loss and more—simply isn’t worth the risk. Proactively securing a secure customer experience is paramount to maintaining a competitive advantage and capturing the trust of your most important customers.