The hottest sub-genre of tech innovation right now, financial technology or fintech as it is popularly known, has set the financial industry ablaze. Financial institutions are opening up their highly treasured APIs, local governments are rallying support, and VCs are offering truckloads of cash. The driving force behind this fintech revolution is its ability to cater to a key demographic, millennials. Individuals born between 1982 and 2004 make up almost a third of the entire world population. Most of them entering their prime working age, companies and institutions need to cater to this demographic or risk facing obsolescence.
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Being born into a digital era, millennials are more than accustomed to digital products – they demand it. They are deeply ingrained in technology – 87% own two to three tech devices. Many industries have already changed the way they operate in order to cater to the changing needs of this generation. The interconnectivity that the Internet provides has propelled new consumer behaviours evident in the millennial generation such as review-based purchase decisions, and shared access in place of ownership.
Fintech presents a new way to approach banking, investing, and all things finance. In an industry dominated by red tape, bank-client relationships and conversations behind closed doors, millennials are looking for a more open alternative that, above all, is efficient. This generation of consumers are holding off big purchases (homes, cars, marriage) in favour of savings. Innovation in financial technology is providing consumers with cheaper alternatives to wealth management by swapping out financial advisors with algorithms and robo-advisors.
The strong support for fintech among millennials is especially strong in the US. In a survey conducted by The Millennial Disruption Index, around 70% of respondents believed that the way we pay and access our money will completely change in the next 5 years. The same percentage of American millennials believe that fintech is making financial transactions easier than ever, according to another study done by Blumberg Capital.
In Singapore, the support for fintech by government and financial institutions has been clear-cut. In 2015, The Monetary Authority of Singapore appointed Sopnendu Mohanty as their first Chief Fintech Officer, and even launched their inaugural Singapore Fintech Festival in the following year. Big banks like DBS, UOB and OCBC are backing fintech accelerators and incubators. The important question is, how do Singaporean millennials feel about the fintech wave? Here are some comments from a few millennials on fintech and what it means to them.
Based on these responses, trust and security is still a concern that presents a barrier to the adoption of fintech solutions. Unlike the US, Singaporeans are still more cautious when it comes to money, preferring to stick to traditional banks to manage their savings accounts. The general consensus is that fintech will be a boon to society – financial services begin to improve due to heightened competition, as well as providing access to untapped markets.
The fintech revolution is well underway. Will fintech surpass banks as the go-to platform for financial services? Or will we see an alignment of the two industries? What’s your take on fintech? Let us know in the comments section below!
Also, check out our list of some of the hottest fintech start-ups in Singapore right now.