How Technology Is Changing The Banking Industry For Gen-Y

by Jessica Oaks

When was the last time you went to the bank, walked through the main doors and actually spoke to a teller? Weeks ago, maybe? Or months, if you're like most people whose birthdays place them in the mighty Generation-Y.

Technology has changed banking forever, and it's no secret that Millennials love their gadgets. Younger members of this generational cohort may just become the highest earning adults in 10 years, and despite gloomy economic prospects, most Gen-Yers are optimistic about their financial futures.

This means banks are going to need to get on board if they're going to keep these digital natives happy; a clunky website is no longer going to cut it.

After The App

Mobile banking – via an actual bank or otherwise – is on the rise according to a recent Federal Reserve study, which explains why most of us haven't set foot in a bank in ages.

More traditional banks are placing their bets on apps and hoping the next generation comes along for the ride. But, considering how many awesome indie banking apps there are right now, big banks may need to predict what's coming next to keep customers happy after the app craze settles down.

Take Venmo, an app that makes sending and receiving money, splitting checks, paying rent with roommates and collecting on debts easy among friends.

Or newcomer Coin, an app and physical card that works like any debit card, but stores the information from all your debit and credit cards so you can streamline your wallet.

Then there's Isis Mobile Wallet from T-Mobile, which lets you use loyalty cards and even pay with a wave of your phone at a growing number of retail stores.

Banking Without Banks?

For those not satisfied with the offerings of traditional banks, new alternatives are popping up every day. T-Mobile's Mobile Money program is there for people who either can't use traditional banking institutions or just don't want to.

Peer-to-peer lending platforms that offer interest rates near zero take retail banks out of the lending equation and put people back in control.

Simple is a bank without a bank (though they have a "partner bank" so user funds are FDIC insured). To put it another way, it's a full-service banking app that's more app than a bank.

With options like those mentioned above, some people are choosing to look outside of big banks for financial services solutions.

Millennials On the Move

As of December of last year, more than half of all US smartphone users had done some or all of their banking on their Android phones and iPhones. In the UK, rates of mobile banking transactions doubled over the course of a single year.

According to the most recent xAd/Telmetrics Mobile Path to Purchase Study, Millennials, with their love of technology, are leading the charge with more than half of all mobile banking customers being under 35. Sound like you?

You're obviously in good company when it comes to depositing checks by snapping a photo, or in the case of young entrepreneurs, accepting payments with a card reader attached to a phone.

As for what banks need to do, the answer is pretty simple: Step up that mobile game to attract non-bankers or lose out on a generation that may not have a lot of money right now, but is well on its way to financial success.

Photo via We Heart It