How millennial traits are fuelling the fintech transformation.

It was American author Robert Collier who said that supply always comes on the heels of demand, and this cannot be truer for the fintech sphere. Think of Africa, and apart from the beauty of an endless savannah and numerous geological wonders, you’ll also be able to see the beauty of fintech embodied in the now ubiquitous M-PESA, a mobile money transfer service.

It’s normal, for instance, to see the people of Kenya or Malawi visit M-PESA booths and carry out money transfers. What’s so exciting about this is that M-PESA is an innovation that mobile network operator Safaricom envisioned for Africa’s underbanked citizens. They wanted to give people a way to transfer money and reasoned that a SIM card, a phone account, and an SMS was all that was needed.

M-PESA encapsulates in one word, the often-nebulous concept of fintech—the use of technology to innovate and deliver financial services.

Fintech today is exploding for two reasons around the world:

1. On the supply side, you have the massive adoption of digital tech in financial services. In fact, globally, fintech is slated to grow at a CAGR of 25 to 30 percent through to 2025, on the back of drivers like ecommerce, blockchain, RegTech, P2P lending, AI, and ML.

2. On the demand side, you have a worldwide demographic that comprises a large millennial cohort – about 23 percent of the population and 40 percent of the workforce. Born in the early 1980s to mid-1990s, millennials have no memory of a world without laptops, social networks, Google Search, and smartphones. They are highly educated and optimistic, prioritising technology, transparency, instant gratification.

The second point is particularly interesting because it defines the habits and psychological traits of arguably the largest generation in the world. In India, a region with one of the highest fintech adoption rates globally, a majority of millennials, 91 percent according to one study, believe in making financial decisions independently.

Since millennials comprise almost 50 percent of the country’s working age population and contribute 70 percent of total household income according to a Morgan Stanley report, there is no doubt that they are key drivers in India’s growth story.

With all that they bring to the game, here are four ways that millennials are shaping the fintech industry in India and overseas.

Precipitating digital touchpoints and online-only platforms

Millennials interact with the digital world with a great degree of familiarity. Gone are the days when you’d embark on a new route, frequently drawing down the car window to seek directions. After all, Google Maps is so much faster, more convenient, and reliable!

The same holds for millennials setting out on a financial endeavour. You can only trust what you know, and millennials understand digital lending, payments and investing in a way that makes paper-based protocols seem a bit opaque. It’s this trust and transparency that millennials have and see in digital touchpoints that puts neo banks and online-only platforms in currency.

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Giving UX and bots a key role in the user journey

Jean Twenge, a psychologist, researcher, and bestselling author, describes millennials as ‘generation me’, as they best embody the trends of individualism and self-help. It is this innate desire for problem-solving, speed, convenience, and instant gratification that has fintech striving to offer both personalisation and automation.

From seeking chat bots that assist with loan underwriting to robo-advisors that provide portfolio management guidance, the world of self-help coincides with the digital-first journey.

Millennials prioritise fintech innovations for their personalised, data-driven insights, ease of use, cost-effectiveness, time efficiency, and new-age features.

With DIY investing and lending in vogue, platforms that give millennials the tools to make their own decisions, and realise them instantly, become ever more important.

Creating total digital ecosystems with ‘super apps’

There is a common mantra pertaining to digital transformation that goes along the lines of, ‘Every company is a software company.’ Today, there is a similar sentiment with respect to fintech. Every big company is seeking to become a fintech company to solve for the various needs of their users on one platform.

Singapore’s ride-hailing company, Grab, is a prime example. Starting off in the transportation sector, today it has forayed into ecommerce and financial services, having recently raised $300 million to expand their fintech business!

Millennials find digital platforms reliable and once they trust a given platform there’s always room for companies to expand it and create a comprehensive digital ecosystem. With cross-service data available to companies, these super apps promise to add to the convenience and time-savings that millennials seek from fintech services.

Bringing sustainability and green finance into focus

No stranger to issues such as global warming and pollution, the average millennial is interested to know how his/her finance initiatives impact larger goals like sustainability. ESG funds, for instance, are becoming popular and millennials are keen to work for, endorse, and promote companies who share their ethical concerns for the common good.

It is no wonder then that we are seeing companies such as Trine, a Swedish startup that allows people to invest in loans to finance sustainable businesses around the world.

Enfuce, a payment service provider in Finland, has developed an app that shows the carbon footprint of any purchases made after payment, and offers this service to global digital payments companies too. The list goes on, and it is fintech that is both enabler and facilitator.

To summarise with an analogy, Archimedes once said, “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” In the finance sphere, digital technology has proved to be that lever that enables innovation. And the corresponding traits of millennials – the largest demographic cohort – provide a firm fulcrum against which fintech innovations can pivot towards, hopefully, the greater good.