8 Reasons Why Millenials Are Taking Their Banking Online

8 Reasons Why Millenials Are Taking Their Banking Online

What do mayonnaise, high school reunions, and napkins have in common? They’ve all been “killed” by Millennials, the cohort born between 1980 and the new millennium.

The latest victim of young Americans’ changing consumption habits? Brick-and-mortar banking. Rather than set foot in a traditional bank, they’re taking their financial lives online.

While it’s easy to laugh, it’s better to understand why Millennials are going against the grain. The deeper you look, the more you’ll see there are sensible reasons why Millennials are ditching traditional banking. These eight factors are driving Millennials toward online banking:

1. Lack of Transportation

As a group, Millennials are less affluent and more environmentally conscious than past generations. Those things, coupled with their tendency to live in cities with public transportation, mean that many Millennials are without a vehicle of their own.

Without a car readily available, making their way to a physical banking establishment becomes a hassle. And because the same services available at traditional banks are online, Millennials don’t see a reason to go out.

Compounding this factor is the Covid-19 crisis. While many banks have added plexiglass barriers to their teller windows, visiting one still isn’t as safe as staying home. And frankly, that suits most Millennials just fine.

2. Desire for Convenience

Time-crunched Millennials are thirsty for convenience. As far as they’re concerned, the quicker a task can be completed, the better.

Why get cash out of an ATM when you can just swipe your debit card? Why bother visiting a bank to deposit a check when you can do it from your smartphone? And since the advent of autopay, even clicking to pay bills online is beyond the pale for many Millennials.

When you bank online, banking services are virtually immediate. Want to check your transaction history? You can have it pulled up in the amount of time it takes you to pay for your morning coffee.

3. Minimal Human Interaction

You know it’s true: Millennials are a lot more introverted than the generations before them. While they may be just as friendly, if there’s a chance to avoid human interaction, they’ll probably take it.

With online banking, you can accomplish just as much without spending any time on the phone or at a teller’s counter. In many cases, a chatbot will do it for you. And if self-service methods fail, most online banks offer support on social media, where Millennials spend so many of their waking hours.

4. Lack of Clutter

Banks have a tendency to use a lot of paper. Bills and statements inevitably wind up on countertops and tables, collecting dust before they’re finally trashed.

Remember, Millennials are concerned about the environment. Plus, many of them are minimalists who live in small apartments, which have a way of getting cluttered quickly.

Going paperless with your banking will help keep your home and the planet a little cleaner. If you ever do need a paper copy, such as a bank statement to use as proof of address, you can always print one out. On-demand paper is much better than unsolicited piles of it.

5. Better Rewards

Look for the rewards, and you’ll find the Millennials. They tend to do their research to find the best deals, whatever the product or service is.

Many online banks offer perks above and beyond those of traditional banks. For example, the typical online bank offers a higher interest rate on savings than their brick-and-mortar peers. Others provide fee-free ATM withdrawals, no international transaction fees, and savings automation tools.

This same trend can be seen with credit cards. Millennials will happily cut up their old card if a new one debuts offering more cash back. Expect to see financial institutions become more and more generous with rewards as Millennials become their primary customers.

6. Real-Time Monitoring

The reality is, most people will be victims of identity theft at some point in their lives. Millennials are especially security-conscious, as are online banks. The reason is, their entire business model is at risk if consumers worry about whether they can trust an online bank with their data.

Online banks not only monitor their users’ transactions for suspicious activity, but they offer all sorts of security tools to their customers. Many of them send real-time notifications of transactions, alerts about suspicious activity, and reviews of recent billing activity.

This also ties into convenience. Millennials would much rather check their transaction history in an app than rifle through their old bank statements. Because statements are only sent once a month, doing so allows them to catch and report fraud sooner.

7. Trendy Technology

Millennials are always looking for the latest gadgets. But they’re not just interested in the freshest iPhone; they want to carry cards that signal that they’re up to date on financial technology.

Online banks spend a lot of time perfecting their user experience. They’re often the first to roll out new tools, such as smart cards. They know that if they can get Millennials to adopt these technologies, other generations will follow.

8. Lack of Loyalty

Compared to previous generations, millennials are up to 2.5 times more likely to switch banks when they become dissatisfied with their current bank, according to one Gallup poll.

While part of the reason is that Millennials do their research, the other is that they feel financially slighted. Millennials make less money and have fewer assets than past generations. Fairly or not, they associate traditional banks with a financial system that has short changed them.

Until Millennials can afford kids and a house with a two-car garage en masse, don’t expect this to change. Once trust in institutions has been broken, it’s tough to rebuild.

Now that you know why many Millennials are taking their banking online, why not make a change yourself? Think about what it is you want out of a bank. If an online bank checks those boxes better than your current one does, it’s time to look elsewhere.

John Norwood
John Norwood is best known as a technology journalist, currently at Ziddu where he focuses on tech startups, companies, and products.