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Understanding Millennials Ė The Kings and Queens of Payments

Understanding Millennials Ė The Kings and Queens of Payments

The millennial generation, those born between 1981 and 2000, are the most important market for any company in the payments industry. There are two parts to this story; the payment behaviour and trends amongst millennials, and the demographic forces associated with millennials.

Millennials will Dominate the Economy in the next Decade

First letís look at the demographics. For years the baby boomer generation dominated the economy, chiefly because it was such a large population cohort. But, in the US as of 2011, millennials overtook the boomer generation in terms of numbers. In America, they now make up 24 percent of the population. In Asia and Africa, millennials now make up over 30 percent of the population in most countries. On both continents, the middle class is growing rapidly, and millennials are the age group most likely have the social mobility to join the middle class.

What all this means is that over the next decade millennials will come to be the dominant cohort within each economy. The trends we are seeing now are likely to accelerate and persist. While those of us over 40 may think that making payments with a wristwatch or eyewear is a gimmick, we should be aware that our opinions will matter less and less in the future.

Now letís turn to the way millennials make payments. Itís important to realise that someone classified as a millennial could be anywhere between the age of 17 and 37, and their experience of technology and financial services will be quite varied. The oldest amongst them turned 18 just as online banking was emerging, while the youngest turned 18 the same year that Bitcoin went mainstream.


App Culture

Itís also important to realise that this is not so much about online services, as it is about mobile services. Younger people do everything they possibly can on their phone – smartphones are therefore a central element of the payments industry. In the UK as many as 46 percent of millennials own an iPhone, and in many western countries, as many as 98 percent own a smartphone.

Younger millennials have been interacting with mobile apps from an early age. Apps like Uber, Airbnb and even Tinder offer very focused services. They donít have a menu offering a confusing array of options Ė just a very specific service which can be executed with two or three clicks. When it comes to payment services, young people expect the same thing. They are not interested in building a relationship with a service provider and they are not interested in all the other services they have to offer.

A research report on millennials and payments in the US market, conducted by Fico in 2014, highlighted some interesting numbers. For instance, millennials are ten times more likely to make use of peer-to-peer lending platforms than those over 50 are. Millennials are already twice as likely to use non-traditional payment methods than those over 50. And, they are four times more likely to use mobile payment apps.


A New Way of Working

Millennials are also less likely to have a job in the traditional sense. Itís been said that in the future people will not have a job and earn a salary, but complete tasks and get paid for each task they complete. This may seem foreign to people over the age of 30, but for younger generations, itís already quite normal. However, when people give up the security of a regular salary, they demand prompt, efficient payment in return. They will, therefore, gravitate to payment methods that are quick and low cost.

In many cases, young workers must still accept payment by cheque. But, give them another alternative and theyíll quickly take it.


Security Matters

The millennial generation are aware of the growing occurrence of financial fraud and security breaches at large institutions. For many, security is the number one factor when choosing an app or service provider. They will think twice about using a service if they have any doubts about the providerís approach to security.

While older generations will naturally turn to banks for financial services, millennials are quite happy to do their banking through the likes of Apple and Google, as well as start-ups Ė provided they believe the service is secure.


Millennials are Demanding

Most young people have used apps like Uber that can get a cab to you in less than five minutes. Many have also made use of same day delivery services from e-commerce vendors. They know that with Google Maps they have access to real time traffic reports.

As a result, they have little patience for inefficient banking services. If they must wait five days for a cheque to clear, theyíll look for a faster alternative. If their balances donít update in real time, they will look for another service provider that can offer up to date information. And, if a FICA or KYC process is drawn out and tedious, theyíll quickly lose interest in opening an account.

The mechanism for making a transaction is less important than the ease of use and security.

Is Africa Different?

Most of the data on the millennials market comes from Western countries. So, how does Africa differ? Africaís millennials are open-minded when it comes to technology and commerce, but still routed in cultural tradition.

In the more developed economies like South Africa, the emerging trends are very similar to those in Europe and North America. In other countries, the major difference is the number of people who have never had access to traditional banking services. In those countries thereís an even bigger need for new, mobile payment services that arenít connected to a bank account. So, in many ways, Africa is the ideal market for non-traditional banking services.

Where Africa differs, is with smartphone penetration which is lower. Research firm, Ovum says in 2017 there were 293 million smartphones in Africa in 2017. But, they see that growing at over 50 percent per annum which will take that number to over 900 million by 2021. That means the dynamics in the market in Africa will change significantly in the next five years.


Traditional methods of making financial transactions are by no means dead, even amongst millennials. But this growing generation are eager to try new services, and whenever they get to replace a traditional banking service with something better, they will.

Over the next decade, a new ecosystem of financial services will emerge, and it wonít necessarily belong to the banks. It will belong to whoever can offer the fastest, most efficient and safest means of transacting. It will also be fragmented, with consumers using a different service provider for each service. In other words, the market isnít restricted to the established players, but to anyone who can build a better application or service.



  • Lucas Marcus
    Posted at 12:19h, 22 March Reply

    It is quite true and evidently right that in real life people want prompt, fast and secure means of transacting and it is evident that online and mobile payment platforms offer the most reliable and efficient solution. Africa is fast developing and technology is shaping the way and changing the trend of things. Telecommunication and the internet have become now vital in the way people work, learn and do business. With the right, secure and reliable fintech solutions and applications available majority of people will automatically shift from the traditional methods of payments to most modern ones.

  • eebest8
    Posted at 09:56h, 27 March Reply

    “Fantastic blog article. Much obliged.”

  • P.
    Posted at 10:28h, 18 April Reply

    Very true,efficient,reliable fintech solutions is the way to go for any banking services.

  • Suhas
    Posted at 14:07h, 18 April Reply

    While this is true millinneals are quick to adopt new technology to serve their financial needs but regulators need to spruce up their acts around customer protection as cyber crime figures are never published in public domain. We also do not know what are the security gaps in the infrastructure of most of the banks as Cybersecurity awareness is low leading to lack of best practices.

  • Tendayi Mnemo
    Posted at 14:33h, 24 June Reply

    Whilst it is true the millennials could be the tech-savvy when it comes to fast mobile transacting, it can equally be true for the older generation in Zimbabwe for instance. Since the start of the decline of it’s economy from 2003 to the hyper-inflation of 2008 which saw the majority of banking account holders losing millions of dollars, the launch of EcoCash Mobile Money (Econet Wireless) in Zimbabwe in 2011 ushered in a new era in FinTceh. To date even the oldest grannies in rural Zimbabwe rely on this innovative and other subsequent mobile money payment methods (Telecash, OneMoney etc.) to receive money directly into their eWallets locally and from their children in the diaspora (from WorldRemit, Mukuru, EcoCash Diaspora, Mama Money etc.), and use their eWallets for buying anything from foodstuff from supermarkets, shops and even taxi and bus rides. The concept has been widely accepted to the extent companies are even paying their workers via EcoCash, including the operator Econet itself, due to issues associated with cash shortages and long bank queues.

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