December 22, 2010 |
People around me are probably tired of hearing me repeat the message that younger people have different behaviors and attitudes relative to awareness of their finances. I feel compelled to keep drumming this message because of scant evidence of it being sufficiently incorporated into the offerings from financial companies and tech vendors. We all know the examples of how millenials are different in terms of everyday communication with other people, but are we grasping how this translates to payments, online financial services, security or mobile? I see an unmet need, and future potential changes such as reduced interchange for debit the implications could portend even greater significance.
Earlier this week I browsed a recent survey just to be sure that my drumbeats hadn’t parted ways with my data, and came back with nothing but reassurances. I pored over a November survey of over 5,000 US consumer’s payment preferences, zeroing in on one particular question about what adults would value in alerts (e-mail or text/SMS) from their financial company (question 24, in case Javelin subscribers which to see for themselves). Respondents could select from among 14 responses, which I divided among these among three over-arching categories: a) security b) everyday or c) “other”. What the data told me is that younger people are significantly more likely to value particular electronic updates from their bank that fall within the ‘everyday’ category ‘b’, while older Americans place significantly higher value in just the opposite “a” or security updates. This explains a disconnect I see with the typical higher-age banking or payments executive, who must design products for younger people that they wouldn’t personally see a whole lotta’ value in. It also neatly demonstrates a parallel between younger people preferring debit over credit because the former works in more real-time fashion, or preferring communication with others based on texting or facebook updates rather than e-mail.
At the onset of the recession Javelin was the first voice to announce that credit card usage was plummeting, debunking a popular belief to the contrary in the consumer media. The point of this blog is that there’s an underlying trend that is driven by age-based information preferences. We’ve cautioned industry leaders to understand how credit card recovery is likely to be constrained by young adults’ preference for debit, and with potential interchange regs the impact on profits is profound indeed. When it comes to payments and e-finance the younger half of the adult population are simply different, and disproportional gains await companies that fill many of today’s unmet needs.