Take a moment and imagine a future where, instead of a national bank, you use PayPal, Square or even Apple, Google, and Amazon for all your financial services needs. If you're in your late 30s or older, the thought of turning to any one of those companies rather than a trusted banking brand seems laughable and, most of all, risky. But if you're a Millennial - that is, someone born between the years 1981 and 2000 - this imagined future probably doesn't seem far-fetched at all, as 73 percent of this generation would be more excited by a financial services offering from one of those five companies than from their own nationwide bank.
That surprising statistic is among the findings of the groundbreaking study, The Millennial Disruption Index, which was conducted by the creative consultancy Scratch, a division of Viacom. For the three-year study, Scratch surveyed 10,000 Millennials about 73 companies across 15 industries. This week, I have the pleasure of talking with Andrew Glasgow, senior vice president of Scratch, at CES - Digital Money Forum 2016. I'm excited to learn more about how financial services firms can "do it right" with Millennials, a generation that totals 84 million in the U.S. alone. As I - and you, because of course I'll be sharing what I learn - gear up for this exciting talk, here's an overview of the index's findings.
First off, why should big-name national banks care about Millennials' thoughts on financial services? The fact is, banks can't afford not to care. Scratch calculated which industries will be most affected by the Millennial generation and ... drum roll please ... banking is the most at risk for a seismic disruption. This means fundamental changes to the way that the financial services industry operates.
In fact, Millennials see these changes coming and, moreover, they want them to happen. Sixty-eight percent of the Millennials surveyed by Scratch believe that, in five years, the way that we access our money will be totally different from now, and 70 percent believe that the way we pay for things will be totally different then. Plus, if that's not surprising enough - brace yourself for this - one-third of the Millennials surveyed don't think they'll need a bank at all in five years. And they won't be shedding any tears if the banks they use now disappear because all four of the leading banks are among the 10 brands least liked by Millennials.
So, why all this hate? It's largely a lasting side-effect of the 2008 financial crisis. Since then, Millennials have seen their parents financially struggle and now are struggling themselves. Meanwhile, they've absorbed news coverage of the U.S. government giving bailouts to large banks which they themselves may blame for the financial crisis. Compounded together, this has led Millennials as a whole to mistrust large banks. That's why 73 percent of the Millennials surveyed would be more excited by a financial services offering from PayPal, Square, Apple, Google, or Amazon than from their own national bank. It's simple: Millennials trust these companies and don't trust their own banks. In fact, more than 70 percent of them actually would rather go to the dentist than listen to what their banks are saying. Yes, you read that right: For Millennials, listening to their banks is more unpleasant than a dental cleaning or a root canal.
But this doesn't mean that the future has to be bleak for the financial services industry. If you're working at a financial services firm right now, look for ways that your firm can evolve its services to appeal to Millennials. For example, financial advisors, when you have face-to-face meetings with your Millennial clients, connect with them about their concerns, such as student loan debt, and not Baby-Boomer concerns.
And if the banks don't see the threat coming from the Millennial disruption, that doesn't mean we all have to sit on our hands waiting for it to happen. Instead - whether you are in tech or consultancy or marketing, you name it - take your awareness of what Millennials want and turn it into an opportunity. If you're in marketing, position yourself as the go-to person that firms can turn to for making their marketing and communication methods Millennial-friendly. That means: more communication through technological interfaces such as apps and less reliance on e-mails and phone calls, as well as greater thought-leadership focus on socially responsible investing. If you work for a tech firm - even a small start-up - work on developing financial services-orientated apps that meet Millennials' needs. The industry giants will notice your product's appeal and the rewards can be great. Just think of Morningstar's recently announced purchase of the Total Rebalance Expert (tRx) platform from FNA. FNA CEO Sheryl Rowling, developed tRx when she couldn't find a rebalancing platform that meet the needs of her own practice. In other words, she saw a gap in the industry and filled it.
And there are many more gaps in the industry to be filled by innovative professionals like Rowling - and like you. The findings of the Millennial Disruption Index are scary, to be sure, but they also mean opportunities for people and organizations that can help financial services firms work to meet Millennials' needs ... or risk falling by the wayside.