Fintech is nimble and making sprightly leaps towards mobile. This, in part, because of the almighty Millennial, the largest generation in American history, 84 million strong, born between 1980 and 2000. The Millennials are a tsunami of new consumers entering the work force, making money, and demanding a different relationship with the institutions that safeguard their money. That money will represent $7 trillion in liquid assets by 2020.
Findings from the Millennial Disruption Index (MDI), a three-year study of industry disruption, are frightening for banks but great for fintech startups: 1 in 3 Millennials would switch banks in the next 90 days and more than half of the 10,000+ respondents don’t think their banks offer anything different than other banks. These Millennials are looking to financial technology startups to change the face of the banking industry. To wit, over 70% of Millennials said they would be more excited about a new offering in financial services from Google, Amazon, Apple, Paypal, or Square than from their own nationwide bank.
Millennials are comfortable with digital technology, they grew up with it. They are comfortable moving not only towards the web and away from brick-and-mortar businesses, but moving directly to mobile apps. This applies for their financial services needs too: payments, investments, remittances, crowdfunding, consumer banking, and lending. Indeed, nearly 75% of them say mobile banking is important.
As of May 2015, fintech startups targeting this behemoth demographic raised over $2.29 billion across 126 deals. Many of the hottest fintech startups tailored for this generation are mobile app-only: Acorns (investment platform), iBillionaire (investment data and strategies), Level Money, acquired by Capital One (money management and budgeting platform), Moven (debit card and personal money coach), Osper (prepaid debit card and mobile banking service), Robinhood (stock trading service), Simply Wall St. (investment data and analysis), StockTwits (social network for investors and traders), and Venmo, acquired by Braintree (digital wallet for payments and remittances) are just a handful of disruptive, fintech mobile apps asking Millennials the most intimate of questions without even a handshake (What’s your net worth? Your saving and investing goals? Your social security number?). With mobile, the financial services industry is becoming increasingly decentralized, increasingly tailored for our specific needs, and more widely accessible.
Meanwhile, another 22 fintech apps, including banking, payments, and stocks, are being developed for the Apple Watch. Tesco Bank (retail bank), Yoyo Wallet (digital wallet for payments), Scutify (social network for investors and traders), and Prism (money management and bill pay platform) all updated their mobile banking apps to support the Apple Watch. A whole new market of wearable apps now exists with a potential audience of 20 million users. The race for fintech companies to join the wearable app world is heating up. After all, the Apple Watch is billed as the most personal of devices, customizable for your wrist. While a good chunk of Millennials – nearly 25% – don’t carry cash, I bet they will be wearing a smartwatch. After a long run, they may want to pay for a refreshing juice with the same wristwatch that tracked their route. One day, many years from now, they may transfer money to their own college-aged children, or rebalance their investment portfolios, with just a few flicks of their wrists. Will real fintech tools end up on our wrists? Maybe. No doubt this is an exciting time for the entrepreneur in the financial services industry.