With a proliferation of apps on the market aimed at millennials, in one sense, this age group has never been so well-served by the financial services sector. The stars of the sector include saving apps such as Moneybox, investment advisers such as Moneyfarm, while digital banks such as Monzo and Atom Bank are reshaping the world of financial services.
But how many millennials are actually using these apps? While data is patchy in such a new field, recent research by US firm SoFi on nearly 2,000 consumers found that just under a third (29%) of millennials had used a finance app in the past year. Of these, 39% used one at least once a month, while a further quarter used them rarely. So, while it’s a growing solution for financial services, those making use of apps, rightly or wrongly, remain in the minority.
What is behind the limited take-up? When this is compared with other mobile apps, the figures are much higher. The average smartphone user has 27 apps downloaded onto their phone. Of course, the fact that apps are a relatively new concept has something to do with it – not only are some millennials likely to be unaware of the availability of these apps, many providers will be new to the market and still developing the most effective marketing strategies to reach the people who matter.
Could it be that financial apps simply aren’t appropriate for serving millennials’ needs? It is certainly true that many apps encourage a DIY approach, rather than direct support from a financial services professional and this could simply leave would-be millennial app users confused.
“Bank to the hipsters”
To counter this, the most successful apps and banks combine a blend of sophisticated technology as well as clever use of ‘the human touch’. Monzo Bank, for instance, a digital only bank, which requires you to download an app in order to sign up, delivers consistently excellent customer service through high quality technology. But it also has a very hands-on, interactive style, which includes the recent launch of Monzo University, an online feature which aims to explain financial concepts, and also organising regular meet-ups in and around the start-up powerhouse of Shoreditch, cementing its position as the bank to the hipsters.
So what is stopping millennials from engaging more fully with the apps on offer? One possible answer is simply a lack of trust in the entire financial services sector. Apps might come to market with a novel solution to solve a particular issue, for instance, Moneybox allows users to save as they pay, by rounding up purchases and investing the change. But to millennials, they are likely to still be seen as part of the hostile world of financial services. Only 27% of UK consumers report trusting financial services according to one study – which is largely a legacy of the financial crisis.
A little more understanding
Equally, the other obstacle is the fact that many don’t understand finance. One recent study found only 24% were able to demonstrate basic financial knowledge. If they don’t understand their finances, they are less likely to engage in it.
The good news for apps however, is that millennials who do use finance apps report very high levels of satisfaction. Anecdotal evidence suggests that the retention rate for apps downloaded is very high, as is engagement among these users.
In order to fully transform the financial life of a millennial, and to set them on the right path, a much more rigorous solution could be needed to get millennials through the door and into the world of finance apps. While technology is essential to this, it is only as an enabler to the skills that can be delivered. It should form part of a balanced diet of habits, outlook, as well as a clear idea of how and what they want to save towards.