The four day Money20/20, event is currently taking place in Las Vegas – 22-25 October 2017. Money20/20 is the world’s largest marketplace for ideas, connections and deals in Payments and Financial Services, and on day two it turned its attention to the financial habits and attitudes of millennials in the US.
Daoud Fakhri, Prinicipal Retail Banking Analyst at GlobalData, a leading data and analytics company, attending Money20/20, commented: ‘Part of day two’s agenda covered some intriguing insights about the financial habits and attitudes of US millennials, presented by Bankrate.com and CreditCards.com. Contrary to the widespread belief that millennials are financially insecure and cash-strapped, Bankrate’s research found that this generation is the only one to have enjoyed an increased level of financial comfort over the last 12 months.’
Also running counter to intuition, millennials are saving more: a quarter of older millennials and a third of younger millennials are saving more for their retirement than a year ago. Debt management is also under control, with older millennials having the highest savings-to-credit card debt ratio of any generation.
Fakhri commented, ‘‘It was interesting to hear the viewpoint that millennials are the most cautious with respect to investing, and exhibit the strongest preference for cash and the weakest for equities as a long-term savings vehicle.’’
Research by CreditCards.com revealed that millennials are no less likely than other generations to use credit cards, and are only slightly less inclined to revolve their balances. Confirming Bankrate’s findings on financial security, this research also found that millennials have high levels of job security and enjoy bigger pay rises than other generations.
Respected commentator Ron Shevlin, explored the threats posed by challengers and alternatives to the checking account, the mainstay of most banks. He stated that “deposit displacement,” where funds that used to be held in bank accounts are now being deposited elsewhere, is undermining the dominance of this product. For example, total deposits at Venmo now amount to $2.2bn, and $2bn is held on Starbucks payment cards.
Consumers are also willing to consider checking accounts from alternative providers. 43% of millennials would be happy to pay $5–10 per month for a packaged account from Amazon.
Fakhri observed, ‘‘Interestingly, Shevlin added that millennials would be far less likely to opt for a no-frills account that was free of charge. This suggests product is more important than brand, and that offering value-added services is the way for providers to attract consumers.’’
Fakhri concluded, ‘‘The banking sessions held over day two of Money20/20 covered a wide range of topics, and served to showcase the huge level of consideration that is being given to how the industry will be shaped by technological advances, the entry of new challengers, and changing consumer attitudes. The day also highlighted the considerable uncertainty over how the industry will look in years to come, which demonstrates just how fluid banking is at present.’’
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