Millennials and Their Untraditional Approach to Banking

By FICO, Special  for  USDR

A comprehensive survey of U.S. bank customers conducted for FICO (NYSE: FICO), the predictive analytics and decision management software company, found that Millennials are embracing alternative banking services in greater numbers than older generations. Twice as many Millennial respondents (32 percent) report that they are likely to use mobile wallet services like Apple Pay or Google Wallet in the next 12 months as those who are 35 and older (16 percent). Additionally, 56 percent of younger Millennials (18-24) report that they are already using or very likely to use alternative payment services like Venmo and  PayPal.

The survey asked respondents about their use and projected use of non-traditional banking services, such as mobile wallets, alternative payment services, and peer-to-peer lending. Among all respondents, 18 percent said they intend to use a mobile wallet in the next year, whereas just 5 percent reported that they currently use a mobile wallet. 39 percent expect to use an alternative payment service in the next year; and 21 percent said they currently use alternative payment  services.

Only 1 percent of respondents currently use peer-to-peer lending services like LendingClub and Prosper, which match individual lenders with borrowers. However, 23 percent of Millennials said they will consider peer-to-peer lending services this year. The survey found that Millennials are 10 times more likely to consider peer-to-peer lending services than Baby Boomers, and twice more likely than Generation  X.

“We already know that Millennials are inclined to conduct common banking activities through the digital channel,” said David Vonk, who leads the North American banking practice at FICO. “While alternative banking may still be in its infancy, it has the potential to grow rapidly, especially as the Millennial generation enters its prime and pushes these services to the forefront of its banking  agenda.”

The online survey of 908 U.S. banking customers was conducted in August  2014.

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