Millennials are pushing aside bank mobile payment apps in favor of third-party offerings such as Venmo, according to the results of a new survey, adding to concerns over how credit unions and other financial institutions are faring with the demographic technologically.
The study of 2,170 U.S. millennials, done by education loan company LendEDU, found that 44% of people born between 1981 and 1997 say PayPal-run Venmo is the mobile payment app they use most often. Another 1% and 4% said they most often use Square Cash or some other mobile payment app, respectively.
Only 14% of millennials in the survey said they used their banks’ mobile payment app most often; 35% said they don’t use a mobile payment app at all.
“Mobile payments are increasing the quality of life for many Americans. They are making accounts payable and receivable in your friend group faster. And, mobile payments are helping the unbanked population in the United States gain greater access to financial technology,” LendEDU said in its survey report.
Peer-to-peer mobile and online payment platforms have mushroomed in the last decade, crowding the field in a market estimated to be worth more than $1.2 trillion, according to research from Aite Group. And more join the fray every day.
Scottsdale, Arizona-based Early Warning, for example, recently announced its peer-to-peer Zelle Network, which enables participating institutions to send money to anyone with a U.S. credit union or bank account. Mountain View, Calif.-based First Tech Federal Credit Union, which has $9.5 billion in assets and about 465,000 members, played a direct role in that network’s official advisory council.
Compounding the millennial issue may be the trouble some credit unions seem to have getting millennials through the door. A 2016 study by CUNA Mutual Group and TruStage showed that 69% of millennials were open to joining a credit union, but only about a quarter actually had any product or service from a credit union, and only 14% said a credit union had their primary accounts, for instance.
That same study also found that millennials like to manage their money online. Half of non-credit union millennials said they were comfortable using banks that were entirely online, and 54% of non-credit union members (versus 40% of credit union members) said they want to make payments using their phones.
“Credit unions must make critical investments in online functionality, minimize or eliminate the need to come into a branch for most — if not all — functions, and meet the demands of millennials’ busy lives with things like nontraditional branch hours and locations (for instance, a mini branch at the grocery store),” the study warned.
But beware of putting an overzealous focus on millennials, AARP warned in a study also released this month regarding how consumers use financial technology. Digital tools are falling short for the 50-and-up demographic, which accounted for $117 billion of revenue in the traditional banking industry in 2017 and is expected to hit $124 billion by 2021, it said.
“Financial services has seen no shortage of breathless enthusiasm for the millennial generation, with banks and startups clamoring to be the first to understand and serve the needs of young ‘digital natives’ and ‘the mobile-first generation,’” it said. “But what about the rest of Americans?”
