By : Andy Brown
December 28, 2016 08:00 AM
The payments space is one of the most exciting, rapidly evolving elements of the financial system, so it makes sense that the tech-savvy millennial generation would be central to its ongoing development.
In a recent report produced by VocaLink, titled 'The Millennial Influence', this generation is defined as those born between the 1980s and 2000. More than 5,000 people across the US took part, spanning the 18-24, 25-29 and 30-35 age brackets. The findings provided some fascinating insights into what's important to these demographics, particularly in terms of financial services and payments.
A life rooted in technology
In order to gain an understanding of the habits and desires of millennials, it's first crucial to recognize the importance of technology to this generation. They're young enough to feel included in the latest tech trends and innovations, but old enough to remember a time before smartphones and the internet. Consequently, they have a unique perspective on just how important these concepts are.
Pretty much all participants in the VocaLink study (98 percent) used a smartphone. PCs and Macs are still some way ahead of tablets - with adoption rates of 80 percent and 57 percent respectively - while one in five millennials (20 percent) use wearable tech like the Apple Watch or Samsung Gear.
Their familiarity with technology means millennials are comfortable with online banking and payments. However, adoption of new services doesn't necessarily mean more traditional ways of completing transactions are left behind. Nearly nine out of ten US millennials (87 percent) had deposited a check in the three months leading up to the survey, with 69 percent having done so manually. More than four out of ten respondents (44 percent) had used technologies that allowed them to deposit checks remotely, via scanners or cameras on desktop computers, smartphones or tablets.
As far as payments are concerned, the report concluded that cash "is no longer king" for millennials in the US. Cards have now overtaken cash for all forms of transaction except person-to-person payments, where 48 percent of respondents relied on cash and 44 percent preferred cards.
Given the ubiquity of mobile phones in modern society, it would be reasonable to assume that millennials would waste no time in using their phones to complete transactions. However, the research suggests that many consumers in the US are hesitant to embrace the mobile channel for payments.
More than half (52 percent) of those surveyed by VocaLink were currently making mobile payments, while one in four had tried out the technology but stopped using it, mainly because of security concerns. Seven out of ten respondents (70 percent) said they would be more likely to use a new mobile payment service if it came from their own bank.
Cara O'Nions, director of marketing and customer insights at VocaLink, said: "Surprisingly, the element of 'trust' and 'security' was a priority for many of the millennials we spoke to, and as a result [they] felt strongly that their bank was the preferred provider of payments technology.
"However, it is clear they still want to see further innovation from all payment providers, to respond to their need for ubiquitous and reliable instant mobile payments. At this stage, while a number of fintechs are still in the process of developing and fine-tuning their products and services, the banks have a substantial head start to provide or support a superb customer experience."
Accenture's 2016 North America Consumer Digital Payments survey provided similar findings. It suggested that consumers in the US and Canada still rely on traditional payment methods, despite the availability of new digital channels.
With so much potential for growth and further innovation in the market, there are huge incentives for banks and specialist providers to prove to consumers that mobile payments are easy, reliable and secure. Many customers will wait to see that this channel offers something genuinely valuable and unique before committing to it.