As the fastest growing demography in India, millennials are gaining significant power as consumers. According to a report by Reetu Raina of Amdocs (India) they will comprise 50% of the workforce this year, and 75% by 2025.
As consumers and working professionals, millennials have unique expectations when it comes to banking. They seek customization, flexibility and transparency from their banking service providers. Additionally, they demand personalized, easy-to-grasp financial advice about budgeting, saving, investing and debt management.
According to Sujith Narayanan, Co-founder, epiFi, these digital natives, who played a significant role in driving the growth of the digital economy, are used to online transactions. They, therefore, want to carry out their banking activities with minimal fuss, relying extensively on technology.
He opined that the processes and systems of traditional banking service providers are unable to meet these expectations. However, the advent of changes in the ecosystem, like Aadhar’s use for KYC verification, Account Aggregator services, etc, and leveraging of new-age technology, offers scope for product innovation to make banking more accessible, transparent and convenient.
WANT IT, GET IT
As digital natives, millennials seek customized products and services that acknowledge their financial realities. These should account for their technology preferences and help them demystify their finances, maximize savings and spend intelligently, Narayanan explained. In short, they want a single-point digital wealth manager, preferably an app, which takes care of everything – from digital payments to loans, insurance and investments.
Since it leverages a breadth of digital technologies to offer this, neo-banking is becoming more popular amongst millennials as compared to traditional financial institutions. According to a 2018 PWC report, the global neo-bank market was worth $18.6 billion in 2018 and is expected to accelerate at a 46.5% CAGR from 2019 to 2026, generating around $394.6 billion by 2026.
“Neo-banks provide a wide umbrella of financial services that tech-savvy millennials prefer. Convenience of opening and operating accounts, fund transfer, money lending, budgeting, investments and personalized financial products are some features that are attractive to millennials, micro and small companies and underbanked or unbanked customers. It also helps them manage their short-term and long-term financial needs from a single hub,” Narayanan explained.
ONE PLATFORM TO MANAGE THEM ALL
The traditional approach of setting aside some money to save on tax by taking fraternal and familial advice is fast reducing. Digital natives want to make these decisions based on facts, figures and with clarity.
Neo-banking also helps time-pressed millennials in managing and automating their financial transactions securely across multiple bank accounts. “Technology today allows for interlinking of all bank accounts for easy viewing and transacting. While we live in a data surplus environment, using this securely in a manner that is compliant with privacy and security guidelines is critical,” Narayanan pointed out.
India's version of General Data Protection Regulation (GDPR) is expected to be out this year. This will mandate stringent processes across all stakeholders and will ultimately benefit the millennial consumer, giving the neo-banking segment another shot in the arm.