March 14, 2016
Millennials constitute more than 25% of the US population and are exceeding the baby boomer generation by 3 million. Talking about India, it is a very young country. India’s young demographics include 65% of the population under the age of 35 and half of the country’s population is under 25. Across the countries we studied for this article, we figured out that this segment is the key to the success of any consumer-facing FinTech product. What is quickly becoming common knowledge is that millennials are a very different customer segment as compared to their previous generation. Thus, millennials are becoming an important segment to build for. Following are 20 FinTech products we found are popular amongst millennials. We took them from four countries to remove any kind of bias. There is one common factor that makes them click with the millennials, which we will discuss it at the end of the article.
First, let’s look at these FinTech companies that appeal to the millennial generation:
Venmo: Venmo has gained significant popularity over the past year. By simply loading the app onto a smartphone, a user can connect to bank and credit card accounts and link up with friends to send money on the go. It makes scenarios such as splitting restaurant checks and paying rent quite seamless. The rising use of peer-to-peer applications is improving the prospects for apps like Venmo. The growth of Venmo can also be attributed to PayPal, which owns Venmo.
Acorns: Acorns connects to a user’s primary checking account along with credit/debit account(s) including other spending accounts (PayPal). It rounds up each purchase to create investable savings into an Acorns investment account. Additional savings amounts can be added at any time to an Acorns account either as a lump sum or recurring transfers. An investment portfolio is developed by Acorns based on the Modern Portfolio Theory based on your investment profile and invested in ETFs (low-cost funds) either in BlackRock, Vanguard or PIMCO based on five diversified portfolios. The app is available only to US citizens and residents with plans to deploy globally.
Robinhood: Robinhood, one of the hottest Silicon Valley startups, has been in the sights of FinTech enthusiasts for a while now. Built on Plaid’s infrastructure, Robinhood is a trading app that allows young investors to try out investing skills with as little as a few dollars. The company charges for the ability to buy stocks on margin or credit and also makes money by collecting interest on users’ cash balances. Robinhood was listed among the top US FinTech startups of 2015 and various other rankings.
Founded in 2013 by Vladimir Tenev and Baiju Prafulkumar Bhatt, Robinhood went live last March with 800,000 people who signed up for the wait list. Since the launch, the Robinhood team went from 14 to 50 and is growing in an attempt to democratize access to the stock market.
BillGuard: BillGuard’s mission is to empower consumers to control, protect and do more with their money. BillGuard’s proprietary transaction monitoring technology pioneered the use of crowdsourcing and big data analytics to help consumers detect the $8 billion in wrongful payment card charges missed by banks each year. Downloaded over a million and a half times since release, BillGuard’s five-star-rated mobile apps have won almost every industry award in their category, including being named one of the top banking innovations of all time by Online Banking Report. The company was founded in 2010 and was acquired by Prosper Marketplace in October 2015.
Moven: Moven, a New York-based FinTech startup, is a real-time mobile money tool that lets individuals spend money from their mobile device and provides instant feedback on their transactions and spending patterns. It works as a debit account that tracks the user’s money for them instantly. Thus, it provides them with the information they need to spend, save and live smarter. Moven acts just like a bank account with features like free account, free ATMs, pay friends, transfer money, FDIC-insured and tap-to-pay. It can be used on any Android or iOS mobile device.
SoFi: SoFi helps graduates of top-tier universities refinance student loans. The company focuses on student loans, mortgages and personal loans.
Affirm: Affirm offers loans for mainly retail products that an Affirm partner-merchant sells. The Affirm account holder can choose to pay with Affirm at checkout and instant approval is given. Affirm offers rates from 10–30% APR based on credit checks with repayment plans of three months, six months and 12 months.
Credit Karma: Credit Karma develops tools and maintains information resources that help users manage the credit aspect of their financial health. It helps 40+ million consumers track, maintain and improve credit health with valuable, free tools and information.
Credit Sesame: Credit Sesame is a free online personal finance tool that provides the best way for consumers to save money on loans and credit needs. Credit Sesame provides a free monthly credit score and a complete view of your credit and debt, all in one place. Its patent-pending analytics engine automatically reviews all of your debt, home loans and credit, and then evaluates thousands of lending products to bring you unbiased, personalized recommendations for maximum savings.
Monese: Monese is a digital banking service that let users open a UK banking account on their mobile in minutes regardless of their citizenship. Monese is a UK-based startup that targets immigrants who experience daunting tasks in opening a UK bank account as a foreigner. The mobile banking service established by Estonian Norris Koppel lets users open a current account and get a Visa debit card in just three minutes with a snapshot of their passport and a selfie. Monese’s technology is based on the cloud and removes many of the barriers that legacy banking systems impose.
Yoyo Wallet: Yoyo Wallet is an app that enables mobile payments and automated loyalty. The app collects consumer loyalty points automatically and users can receive offers and promotions that are relevant to them, from the retailers they favor. Yoyo Wallet is the fastest-growing and largest multi-retailer mobile wallet in the UK and recently won Retail Systems’ 2015 Mobile Technology System of the Year. Yoyo provides insight and integrated marketing tools for retailers to reach targeted customer segments, drive sales, increase revenue and offer an elevated customer experience.
Osper: The London-based Osper is a prepaid debit card and mobile banking service that empowers young people to manage their money responsibly. It offers a safe MasterCard prepaid debit card and a simple mobile banking app with separate logins for young people and parents. All money on Osper is safely managed by a European regulated bank.
Atom Bank: Atom is a startup bank. It hasn’t been launched yet but has been authorized with restrictions by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. As a mobile-only challenger bank, Atom will bring biometric banking to the UK, using biometrics instead of passwords in their innovative mobile app. Atom Bank was listed at number eight in KPMG’s Global FinTech Innovators 100. Spanish bank BBVA owns almost 30% of Atom’s stakes. Founded over a year ago and based in the City of Durham, Atom is working with its partners to bring pioneering technology to Europe for the first time. Atom is building the UK’s first bank designed specifically for the digital realm, offering easy and convenient banking along with unique and engaging ways to manage money.
Algomi creates the network that enables all market participants to intelligently harness data to make valuable financial trading connections.
TransferWise: Till now, the company has taken more than 2% of the London global remittance market over a period of four years since its launch. Banks charge high fees for sending money internationally. With TransferWise, anyone can send more at a fair rate. The pricing is transparent, the exchange rate is the real one and the small fee is easy to spot.
Azimo: Founded in 2012 and headquartered in London, Azimo is a global payment processing business providing Web and mobile-based inter-country consumer money transfer services. The company has raised $31.6 million in funding to date. Azimo believes that sending money abroad should be fast, easy and good value for everyone. Azimo claims to be up to 85% cheaper than the high-street banks and online money transfer companies.
Paytm: Paytm, an India m-commerce company which is owned and operated by One97 Communication Ltd., has investors such as Ant Financials (Alipay), Alibaba Group, SAIF Partners, Sapphire Venture among others. The company has more than 100 million wallet users, and the number of transactions carried out by these users is over 75 million per month.
MobiKwik: MobiKwik is India’s largest independent mobile payments network that connects 25 million users with 50,000 retailers. It enables users to discover retailers (brick-and-mortar stores, e-com websites, m-com apps, billers, telcos) and then start paying them with a single tap.
MobiKwik powers payments for IRCTC, Uber, Meru Cabs, Big Bazaar, OYO Rooms, Zomato, Café Coffee Day, PVR, Archies, WHSmith India, BookMyShow, Grofers, Big Basket, Domino’s, Pizza Hut, eBay, ShopClues, Myntra, Jabong, Pepperfry, Star Sports, GoDaddy, MakeMyTrip, Cleartrip, and Yatra. The company has raised close to $30 million in funding till now from Sequoia Capital, American Express, Tree Line Asia and Cisco Investments.
BankBazaar.com: BankBazaar.com is a neutral online marketplace that provides instant customized rate quotes on loans and insurance products. The platform allows the user to instantly search, compare and apply for loans, credit cards and insurance products. Since the company partners with India’s leading financial institutions and insurance firms, users have an access to a comprehensive range of policies and rates.
MoneyView: With the Free MoneyView app, it's easy to understand what's going on with your money. The app works by itself, auto-tracks and organizes your spend, bills and account balances to give a single real-time view of your finances.
No setup, no manual entry, no bank logins! Let MoneyView do the hard work of tracking the details so you can focus on making the smart decisions.
According to EY FinTech Adoption Survey of 10,131 digitally active consumers in Australia, Canada, Hong Kong, Singapore, the UK and the US, 15.5% have used at least two FinTech services—financial services products developed by non-bank, non-insurance, online companies—in the past six months.
Respondents between the ages of 25 and 34 years old used at least two FinTech products in the past six months the most (25.2%), followed by those aged 35 to 44 (21.3%), and those aged 18 to 24 (17.7%). Hong Kong has the highest rate of FinTech use of all markets surveyed (29.1%).
Cashyou: Cashyou is a mobile app which allows P2P payment through NFC, QR codes or online.
MoneySwap: Founded in 2009, MoneySwap is a licensed merchant acquirer and payment gateway provider for UnionPay’s online payment and points-of-sale. The company-certified payment gateways offer a cost-effective payment solution for UK merchants of any size to increase sales opportunities from the inbound Chinese visitor market.
WeLab: WeLab is disrupting traditional credit services in Greater China and operates WeLend.hk in Hong Kong and Wolaidai, a mobile app, in China.
One thing which we found common amongst all these companies that have been successful with millennials is that these products were built ground-up for millennials. From surveys and our discussions with the above startups we came to know about financial behaviors of the Millennials and that they are comfortable turning to products outside of the traditional financial sector and their social network for help making financial decisions. Another key characteristic we found was that they like self-serve products instead of going to advisors, etc. And as they live a fast-paced life they are what we call impatient ones and want things in 3-4 clicks on their phone. And rightly so. That’s where AI, machine learning and mobility has been used well by some of these popular products mentioned above.
In the US millennials spent close to $600 bn last year and are too big to ignore as a segment. Think about it!