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Millennials want fewer fees, more flexibility

August 5, 2013 by Dan Kramer — Senior Vice President, Marketing & Merchant Servic, SHAZAM

Millennials are looking to financial services providers for lower, more transparent fees and convenient access to their money. In order to meet their needs, providers are turning to a mix of both traditional and alternative financial services.

When members of Gen Y (aka Millennials) find themselves in a cash bind, they need a quick, low-cost solution. Nearly half say they have turned to "alternative financial products or services," such as prepaid debit cards, payday loans, or pawn shops in the past year, according to a new study by Think Finance, which included 1,021 Americans ages 18 to 34.

A big reason may be the fact that fewer than half of Millennials surveyed have an emergency savings of at least $1,000.

Although the economy has shown some signs of improvement, it remains a difficult time to begin a new career and save money for the future. Pair that with the rising cost of education and what some view as Millennials' elevated level of expectations, and you get a potentially dangerous combination.

Millennials expect financial flexibility, as well as access to credit, when needed. They also expect innovative, responsible alternatives to traditional banking products.

When asked why they turn to alternative financial services, Millennials who have used them said the products were more convenient, had lower or morepredictable fees, and felt the products generally better met their needs.

While 92 percent say they use a traditional financial institution, they rarely see the lobby, as the survey indicated their preferred way to handle banking needs was through their FI's website. Mobile applications are gaining in popularity, as well, as 29 percent say they use an app to help manage their money.

According to the survey, there are a number of financial concerns facing Millennials today. Nearly three-quarters of Millennials surveyed claim their main concern is having enough money for retirement, followed by being able to afford health care, and paying their rent or mortgage. More than half worry they'll never be able to pay off student loans.

Perhaps unsurprisingly, a strong majority of Millennials report the most importantfactors to consider when choosing a financial services provider are fee-related. Sixty-nine percent identify "no surprise fees," 56 percent cite "no or low fees," 48 percent say "easy to understand fees," and 43 percent point to "no overdraft fees" as the most important factors when choosing a bank or other financial services provider.

Fifty-nine percent say online access to accounts is an important consideration. A similar proportion cite convenient branch locations and 24/7 access to money as important.

This survey provides interesting statistics and insight into the current expectations of Millennials. As your FI continues to reach out to this segment of the population, it's important to take note of their preferences.

Consider whether your FI's current efforts are in line with the majority of Millennials' expectations, or if modifications are necessary.

Read more about trends and statistics.

About Dan Kramer

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