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Monday, 18 november 2019 | Redacción CEU
It is said that Millennials are well-prepared professionals, who are demanding and always connected, and with an entrepreneurial profile which leads them to looking for new experiences constantly. As they were the first users on the digital world, most sectors, including finance, focused on them: they designed products for them, with high performance, which were digital and aimed at satisfying their needs and interests. Gen Y seems to have answered well to that caring attention, but what happens with the rest of the generations? Specifically, the fintech world is beginning to take steps in other directions, for example, by creating applications aimed at an audience that is increasingly attractive: Baby Boomers.
Millennials are considered the fintech generation. Mainly, because they have been those who have experienced the transition from a traditional banking model to a model that integrates a new catalog of financial services which are focused on the digital universe and encouraged by new technological advances. Precisely, as this segment of the population represents the main user profile of fintech companies, this generation is the one that seems to be inspiring the dynamics within the sector: immediacy, globalization, customization, the arrival of big techs to fintech firms, financial inclusion, the use of disruptive technologies, etc.
The fintech generation
Virtually all experts agree the favorite channel of communication for millennials is cellphones, in particular, instant messaging (text and voice messages). In fact, the young segment of the population is known as the mute generation due to its lack of interest in making and receiving calls. Obviously, this trend has also been reflected in the financial world. Millennials do not like to go to a bank branch, they prefer to carry out all transactions through their smartphones (or computers), and if it is possible without having to make a call. This preference has been decisive in the boost of fintech companies, but it has also had a significant impact on the new strategies deployed by the traditional banking sector.
On the other hand, Millennials have a different economic approach in relation to the generations that preceded them. The economic crisis broke out just when these young people had to enter the labor market. That is one of the reasons why they pay close attention to their personal finances. In turn, factors such as their digital skills and the search for immediacy have led them to establishing a closer relationship with the world of digital finance. In this relationship, certain trends can be perceived, for example, Millennials rely more on new technologies, are prone to make financial investments (as long as they do so through their smartphones), attend to the ideals that the companies defend and the impact that their investments have on the environment, etc.
A new generational perspective in the sector
In today's society, four generations coexist with very different approaches to life and economy: Baby Boomers (older than 50), Generation X (Baby Boomer’s successors), Millennials (people in their thirties and late twenties) and Centennials (the youngest generation). That is the reason why, although fintech companies had initially directed their attention to the youngest digital generation that had purchasing power, they are now beginning to open up new fronts:
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Baby Boomers
Baby Boomers and retirees are people with considerable assets and great purchasing power, so financial technology companies see in them a new possible target. In the report Step aside, millennials: Why fintechs are targeting Baby Boomers & retirees?, CB Insights points out that this segment of the population represents an attractive market for the fintech world. In fact, a considerable number of fintech firms are working on the development of services which are adapted to their particular needs. Among them, there are services on reverse mortgage, fraud prevention, financial management, health insurance, estate planning, etc. This growing attention also responds to their better technology management. However, the technological gap and the lack of trust in tech are still the main obstacles in this fintech-senior relationship.
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Gen X
In 2017, 25% of the population over 35 years old paid with cellphones in stores. Generation X is not so far from Generation Y, and maybe that is the reason why it has been able to identify what makes these companies attractive. This fact is evidenced in an analysis carried out by The Valley. In particular, the study of this hub specialized in detecting digital trends indicates a transfer of customers from traditional banking to these new digital services, due to reasons such as lower costs and commissions, lack of transparency, simplicity of operations or social discontent.
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Gen Z
It is the generation with the lowest purchasing power and also the most dependent, but this does not mean that fintech firms cannot create digital products which are suitable to this profile. At the moment, most accounts aimed at this target audience are not digital, something that is really paradoxical since this is the only generation that was born in a completely digital context. However, fintech companies are starting to work on the development of services that meet the needs and interests of the centennials. In this case, one of the biggest obstacles they find is the lack of attention to the financial education of the youngest segment.
The CEU IAM Business School believes that the field of digital finance has a great projection for the future. However, being a relatively new sector does not save it from being, like the rest of the fields, exposed to new trends and changes. That is the reason why our business school designs modern programs which are focused on meeting the current training needs of professionals in the sector, such as our Advanced Program on FINTECH or our Advanced Programme in Digital Economy, FINTECH and Intelligent Society (Online). Ask for further information!