News

Millennials demand more from financial services providers

June 18, 2013

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

According to a new study released by online financial services provider Think Finance, nearly all (92 percent) Millennials say they currently use a bank, but almost half (45 percent) have supplemented banking services with an alternative financial product or service (e.g., prepaid debit card, money transfer service, check cashing, pawn shop, payday loan, etc.) within the past year.

Asked why they turn to alternative financial services, Millennials who have used them say the products are more convenient (42 percent), have lower or more predictable fees (31 percent), and have products that generally better meet their needs (30 percent).

More than half of Millennials indicate that they prefer to manage their banking needs on their bank's website (56 percent). Additionally, 29 percent report that they use a mobile app to help manage their money.

A strong majority of Millennials (83 percent) report that the most important factors to them in choosing a financial services provider are fee-related.

• The most important factors for Millennials in choosing a financial services provider are cited as: "no surprise fees" (69 percent); "no or low fees" (56 percent); "easy-to-understand fees" (48 percent); "no overdraft fees" (43 percent).
• Fifty-nine percent say online access to accounts is an important consideration
• A similar proportion cite convenient branch locations (55 percent) and 24/7 access to money (55 percent) as important

Millennials are generally downbeat in their perceptions of the economy and opportunities for achieving personal and financial success in today's environment.

• Eighty-one percent say the state of the economy is only fair or poor; 67 percent say it will stay the same or get worse in the coming year
• Seventy-seven percent of Millennials say it's very difficult to find a well-paying job, with 64 percent of employed respondents saying they feel underpaid for the work they do
• Seventy percent of Millennials agree that it was easier for their parents' generation to achieve the American Dream than for their own generation and 60 percent say their parents' generation also had better opportunities for career advancement

Still, most Millennials believe they'll succeed in the long run; 63 percent say they will be more financially successful than their parents, 55 percent say their personal financial condition will be better one year from now, and 79 percent expecting to be better off in 10 years.

"The economy is slowly improving, but it's still a tough time to be starting a career and saving for the future," said Ken Rees, president and CEO of Think Finance. "There is a clear desire among the Millennial generation for financial flexibility and the ability to access credit in a pinch. It's also clear that traditional banking products are not meeting all of Millennials' financial needs and that innovative, responsible alternatives are in demand."

The survey was conducted online within the United States by Harris Interactive on behalf of Think Finance from April 25–May 7 among 1,021 Millennials (defined as ages 18-34).

Read more about trends and statistics.