Lately, fintech products have been exploding in popularity. They offer convenient alternatives to existing financial services, so it makes sense that customers would embrace them.
Millennials and other younger customers, in particular, may be the key contributors to the acceptance of fintech products. They’ve grown up in a world where digital technology has rapidly simplified and improved many daily tasks. While older customers may be more accustomed to traditional approaches to financial services, younger customers are more likely to demand efficiency and ease.
In fact, fintech’s rise in popularity among millennials has been so great that many young people report they won’t need banks at all within the next few years. Read on to understand some of the reasons why fintech is succeeding, and why traditional financial institutions should collaborate with them instead of trying to compete.
Millennials are used to signing up for services and creating various types of accounts through computers or mobile devices. That may explain why surveys indicate that nearly half of all customers in this age group prefer to set up a financial account via a fintech app instead of doing so in person at a bank. These same surveys indicate that millennials have grown to distrust traditional financial institutions in the wake of the financial crisis, and thus may be more willing to give their business to a new startup.
Millennials and younger customers also find using fintech products to be a more intuitive experience than trying to perform a financial task at a bank or similar establishment. Fintech apps are designed to be as user friendly as possible, but the same can’t be said about traditional banking institutions.
An Appreciation of the Strengths of New Technology
Perhaps unsurprisingly, customers who have grown up with digital technology are generally more likely to trust it than real people when performing key financial tasks.
That’s a major reason why millennials generally embrace fintech products for making personal investments. They believe the technologies driving fintech-based personal investment products are at least as reliable as human financial advisors. (However, this may be, in part, a reflection of their distrust in traditional financial institutions, rather than the people themselves.)
Fintech products allow users to perform multiple financial tasks in a short period of time while offering them a number of flexible options for accessing key fintech app features. In many instances, it can be possible to access a feature via a computer, smartphone, tablet, and even a voice-activated digital assistant. A user could theoretically perform numerous financial tasks while running their daily errands.
Millennials, having grown up in a world where everything from receiving mail to shopping for groceries can be done via smartphone, appreciate the opportunity to complete necessary banking tasks without going out of their way to do so.
Fintech companies often understand that younger customers don’t want a “one-size-fits-all” approach to financial services. They want services tailored to their needs and lifestyle. That’s why many fintech products are equipped with sophisticated artificial intelligence, which can analyze the data and past behavior of individual customers to modify the service accordingly.
Fintech products also tend to let users exercise more control over the nature of the service. For example, there are personal investment apps that allow users to determine the general types of organizations they want to financially support. Perhaps users want to avoid investing in companies they disagree with ethically or maybe they want to invest in organizations in a particular sector. By simply answering some questions or setting parameters in the app, they will receive a customized portfolio based on their input.