By Jonathan Vaux, Executive Director of Innovation Partnerships at Visa
There has been a buzz around the new Millennial Economy as millennials are starting to move into their prime years. Born between 1980 and 2000, millennials have come of age during a time of technological advancement, globalisation and economic disruption. This has given them a different set of behaviours and experiences than their parents. And with their increasing spending power, they are poised to change the ways we communicate, entertain, shop and bank for decades to come.
One of the most distinct traits of millennials is their affinity for technology. They were the first generation that have been raised almost entirely in the Internet and digital media age. They have always had Internet, and from an early age, smartphone use has been the norm for them. It is natural then that millennials embrace and align themselves with technology. As a result, they tend to adopt new technology more readily and rapidly than older generations.
Among the vast array of new technologies, millennials are most interested in those that can offer maximum convenience and ease of use. They, more than any other group, recognise the inherent role technology plays in easing the burdens of day-to-day life. At the same time, they simply expect technology to work, because that has been their experience during their lifetime. On the security side for example, they demand that technology should be clever enough to protect them without them having to go through a complicated process.
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Of the devices that millennials use, the smartphone is probably closest to their heart. Many of them grew up with smartphones in their hands, and are comfortable using them to connect with others, find information, manage money, and make purchases. Smartphones can be a personal assistant, a money manager or a style adviser to them. It isn’t just a tool they use to navigate the world, it is their world. Recent research has reaffirmed that millennials own more mobiles and use their mobiles more than any other generations.
With these traits, one could assume that millennials would embrace new payment technology such as biometric authentication and mobile payment apps much more quickly than other generations.
These new developments have been designed with smartphones as the focal point and the main aim is to make lives easier for consumers. With mobile payment apps, payments can be conducted anywhere on a mobile device, taking away the pain of waiting in a traditional checkout line. Likewise, biometric authentication allows for a much simpler, faster and more secure payment, without the need for consumers to remember their PIN and passwords.
Data from our latest Digital Payment survey of Europe confirms that Millennials do indeed interact with mobile and banking apps much more readily than older age groups. For example:
- Over half of European millennials (54%) use mobile digital payments, compared with just 44% of the general public.
- Millennials are more likely to use digital payments for everyday essentials than other generations, too – paying bills (47% vs. average of 40%); transferring money to friends and family (56% vs average of 45%), and interacting with their banks (68% vs. 62%).
- Four in five millennials would be interested in seeing new forms of digital payments offered in future, compared with 67% for the general population.
Millennials preference for biometric authentication is clear, as well. In a separate piece of research Visa conducted earlier this year, it was shown that 81% of millennials would like to use some form of biometric authentication in the future in place of PIN and passwords, a much higher proportion than any other age group.
In contrast, and not surprisingly, older consumers can be more resistant to new change. Of the respondents in our survey who don’t use digital payments, three quarters of those 65+ say they didn’t see a reason to change from traditional payment methods.
But millennials could be the main force in changing this behaviour and driving adoption among older consumers. This group have been slower to marry and move out of the family home and remain in close contact with their family, which means they have the opportunity to influence household spending and introduce older generations to new technology. Just as millennials educated their parents on the benefits of smartphones, apps and social media, they will encourage older consumers to experiment with new payment and banking formats too. The research supports this theory as the fastest growth rate for mobile banking is people 55-64 years old (33%).
Not since the post-war “Baby Boomers” has a generation wielded such influence. At the rate they are spreading the word, it probably won’t be long until other generations are also as eager to adopt new shopping, payment and banking technology.