The Innovation Group at J. Walter Thompson Intelligence released a report, “The Future of Money” Report reveals that millennials in US and China are becoming a powerful economic force who want more financial products to be more integrated with their lifestyle, and are driving the growing use of mobile payments and person-to-person payment services offered by fintech companies such as PayPal, Venmo, Apple, Samsung, Google, and others. They say 63% of US millennials and two-thirds of Chinese millennials hardly ever use cash. Fintech startups are catering to specific needs and lifestyles of millennials that banks often overlook. Millenials are budget conscious and are now using apps to help them budget and save up to meet their goals. According to First Data, 40% of people in their twenties have downloaded a money management app.
“The financial sector is going through a period of unprecedented change, presenting massive opportunities and also challenges to traditional institutions, said Lucie Greene, worldwide director of the Innovation Group. “Consumers are adopting new behaviors en masse, including peer-to-peer payments, digital-first banks, cryptocurrencies, and more.”
Millenials are driving much of the mobile payments use, but in the US, mobile payments are not as popular as they are in China with their use of WeChat and Alipay. In fact, according to Mercator Advisory Group’s CustomerMonitor Survey Series report on mobile payments: Mobile Payments: Greater Value Is Needed for Widespread Adoption, mobile payments is not catching on as fast in the U.S., though 50% of US smartphone owners have used mobile payments in the previous year, more use it online (49%) than in stores (32%, down from 39% in 2016), but fewer did so in stores than in 2016. In fact, more than two in three consumers say that incentives, rewards, and discounts would motivate them to use mobile payments more often. And, those who use it often, 10 or more times a month are the only mobile payment user who uses mobile payments apps more often than in previous years. In an upcoming study on personal finance, young adults are indeed more budget conscious since 9 in 10 adults aged 18 to 34 adhere to a monthly budget. Today, young adults are more likely than older adults to use financial advisors and 80% or more young adults would like their financial institution to provide more services to help them build wealth such as automated savings, support for household budgeting and tracking to meet financial goals. And, young adults are interested in more personalized services and attention when interacting with their financial institution. Fintechs appear to be doing a good job of integrating their apps with the social lifestyle of millennials. And, in fact, 3 in 5 U.S. adults and 4 in 5 millennials use person-to-person payments, primarily PayPal and Venmo followed by Google Wallet, Facebook Messenger, and FI-based programs.
Overview by Karen Augustine, Manager, Primary Data Services at Mercator Advisory Group