For so many years we have looked at Boomers as being the backbone of our economy, that many people still haven’t realized that Millennials are now the largest part of the workforce and as such, the biggest assets to an ongoing economy. However, with each passing generation preferences change and, so it is with banking. It is safe to say that Millennials prefer online banking, but do you know why? Perhaps it would be best to look at just who these consumers are and why the majority would choose the best online banks over more traditional financial institutions.
Millennials at a Glance
Since Millennials make up the greater portion of the labor force, it’s good to know a bit about who they are and what they stand for. First, a look at demographics. This particular generation was born between the years 1981 and the new millennium (of course!), the year 2000. In the United States alone there are nearly 80 million Millennials in a population currently estimated at 323 million in 2016. That’s one-third the entire population, of which all are now of working age!
While some are still in school, it is estimated that Millennials now comprise about 40 percent of the workforce, and with Boomers retiring by the day, that percentage is about to skyrocket! Within two years, it is estimated that Millennials will make up at least half of the labor pool, if not more. Almost ¼ of this generation has an upper-level education with a minimum of a bachelor’s degree, but that number is set to increase as well since some are just this year graduating high school, leaving many still in college. Finally, by this age they are half as likely to be married as their grandparents, the Boomers, were.
Millennials Distrust of All Things Institutional in Matters of Finance
Now we get to the crux of the matter. The reason why so many Millennials prefer online banking is because of their huge distrust for all things institutional when it comes to matters of finance. Most were hugely influenced by the financial crisis of 2007 and the eventual crash in 2008 that led to the Great Recession.
This had a negative impact on their view of financial institutions, banks and mortgage lenders in particular, because of all those that went under during this time. Not only did they watch their parents and grandparents lose everything, but they were also unable to find steady work in many cases, which also left a bad taste in their mouths.
Coming of Age
Even then, many are coming back around because they are making changes in the financial environment, but it is good to remember the time in which they grew up and came of age. Millennials are the first generation to have grown up on the Internet and, so they are at home with the digital realm. Even Gen Xers can’t lay claim to growing up with home computers because the first generation of these didn’t reach popularity, or even affordability, until the mid-1980s.
So, if you had to sum it up, you could probably say that Millennials have a large degree of distrust of traditional financial institutions while being comfortable with the digital world in which they were raised. For a Millennial, the best bank is an online bank and that is something you can take to the bank every time.