The Millennial Generation is Shaping the Future of Payments

Members of the Millennial generation are getting older and coming into their own. They’ve surpassed Baby Boomers in numbers, they’re taking the workforce by storm, and their money management preferences are making headlines. What sets them apart and makes them such compelling subjects for payments industry researchers is their lifelong relationship with technology: they’re the first fully digital generation, having grown up with computers and other gadgets as part of their daily lives. Sure enough, they’re a significant driving force behind the changing consumer payments landscape.

Payments: Reimagined

With so many Millennials displaying a strong preference to transact electronically, companies’ old rules for customer service are undergoing a re-boot. For example, consider the process of buying a cup of coffee: a Starbucks customer can place and order and make a payment on their mobile device on their way into the store, and simply pick up their order at the counter—leaving the barista stationed at the register to serve more “traditional” customers.

While it remains to be seen whether or not this particular variety of self-service will catch on in other industries, it represents a stark difference to the way things used to be in the days before mobile technology. And it helps to explain why 70% of the Millennials in the JWT study The Future of Payments and Currency said they think the way we pay for things will be totally different in 5 years.

Millennials and Money Management

Compared with older generations, Millennials are simply more open to nontraditional forms of both banking and payments (read Millennials: How They Pay Today for relevant statistics and insights). These millennial spending habits include mobile wallets such as Apple Pay, online peer-to-peer lending services like Venmo, and alternative business funding sources like microlenders.

These forms of managing money impact consumer expectations, especially with their more traditional banking partners. The MobilePaymentsToday.com article Banking’s Digital Future: Becoming More Relevant to Millennials cites Accenture research finding that consumers expect their banks to be:

• Intuitive – they want their banks to locate discounts for them
• Intelligent – they want proactive bill payment services
• Individual – they value proactive product recommendations

In other words, Millennials expect banks to rise to the challenges of meeting their paradigm-shifting demands for (pun intended) next-generation services.

Next-Generation Service Must-Haves

Money management services designed for the Millennial consumer will be characterized by:

• Anytime, anywhere, any-device access providing real-time information, flexibility, and self-service, even in-store
• Personalization offering more individualized benefits, perks, rewards, recommendations, and deals
• Customization enabling a smooth, user-friendly experience with options and built-in controls

In fact, according to Western Union and detailed in their Bill Payments Money Mindset Index, businesses will need to create a customized approach to bill payment and presentment in order to serve their Millennial customers:

• Provide choice in bill payment options that include comprehensive channels and payment methods that promote convenience, satisfaction, and on-time payments
• Leverage these same channels to offer text alerts and email reminders, partnering with customers to help them pay on time
• Reduce paper by offering more convenient and more environmentally-friendly eBills and mobile payments

At the very least, banks and payment providers need to offer customers access to fully-loaded online services—arguably a “gimme” for today’s consumers in every generation—as well as up-to-the-moment mobile capabilities. Digital transactions are gaining popularity across the board, but with 86% of those aged 25-34 wielding smartphones (according to FirstData.com’s The Unbanked Generation: A Guide to the Financial Habits of Millennials), the virtual paymentsphere is the place to be.