{"id":2393,"date":"2015-06-12T11:00:04","date_gmt":"2015-06-12T05:30:04","guid":{"rendered":"http:\/\/gtm360.com\/blog\/?p=2393"},"modified":"2021-11-08T16:32:25","modified_gmt":"2021-11-08T11:02:25","slug":"millennial-obsession-will-bankrupt-neobanks","status":"publish","type":"post","link":"https:\/\/gtm360.com\/blog\/2015\/06\/12\/millennial-obsession-will-bankrupt-neobanks\/","title":{"rendered":"Millennial Obsession Will Bankrupt Neobanks"},"content":{"rendered":"<p><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn-fi.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-2401 size-medium\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn-fi-200x89.jpg\" alt=\"\" width=\"200\" height=\"89\" srcset=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn-fi-200x89.jpg 200w, https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn-fi.jpg 630w\" sizes=\"auto, (max-width: 200px) 100vw, 200px\" \/><\/a>Personally, I don&#8217;t find too many serious shortcomings in the digital banking offerings from my banks.<\/p>\n<p>On the contrary, virtually every neobank \/ fintech I&#8217;ve come across is little more than a leadgen tool.<\/p>\n<p>But that&#8217;s outside the purview of this blog post, the purpose of which is to do a reality check on the following founding premise of neobanking:<\/p>\n<blockquote><p>Gen Y and Gen Z (collectively &#8220;Millennials&#8221;) are digital natives. Ergo they will choose digital interactions over physical interactions in all facets of their life, including banking.<\/p><\/blockquote>\n<p>Let me begin by sharing a couple of personal experiences.<\/p>\n<p><strong>EXAMPLE 1\u00a0<\/strong><\/p>\n<p>My tenant called me in the middle of the night, requesting me to pay his electricity bill immediately. He explained that he was traveling in the USA &#8211; where it was middle of the day &#8211; and hadn&#8217;t carried his credit card.<\/p>\n<p><strong>EXAMPLE 2<\/strong><\/p>\n<p>I listed my apartment on Housing.com, a leading real estate portal in India. Founded by a team that recently graduated from my <em>alma mater<\/em> IIT Bombay, the startup has built an awesome map-centric housing portal. A potential tenant viewed my listing on Housing and called me to ask if my house was situated within 5 kms radius of his workplace and child&#8217;s school. (In case you&#8217;re wondering why I&#8217;m talking about a real estate portal in this context, Housing has been included in Finovate&#8217;s latest <a href=\"http:\/\/finovate.com\/fintech-unicorn-list-36-companies-34-more-closing-in\/\" target=\"_blank\" rel=\"noopener\">FinTech Unicorn List<\/a>).<\/p>\n<hr style=\"width: 70%;\" \/>\n<p>I was a bit intrigued with the aforementioned interactions.<\/p>\n<p>I&#8217;m not a Millennial but<\/p>\n<ul>\n<li>I regularly make online payments without having the plastic credit card in my possession. All I need are the credit card&#8217;s 1s and 0s aka credit card info<\/li>\n<li>I could easily use the map on Housing.com to find out the distance between my apartment and the prospective tenant&#8217;s workplace and child&#8217;s school.<\/li>\n<\/ul>\n<p>As Millennials, why weren&#8217;t these guys able to do the same?<\/p>\n<p>Lest you think it&#8217;s only me and my tenants, let me share some insights from the mainstream media from all over the world:<\/p>\n<ol>\n<li>Millennials are not as tech savvy as you think (Source: <a href=\"http:\/\/blogs.wsj.com\/experts\/2015\/05\/13\/millennials-arent-as-tech-savvy-as-you-think\/\" target=\"_blank\" rel=\"noopener\"><em>Wall Street Journal<\/em><\/a>).<\/li>\n<li><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn01.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-2405 size-medium\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn01-200x116.jpg\" alt=\"mwbn01\" width=\"200\" height=\"116\" srcset=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn01-200x116.jpg 200w, https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2015\/06\/mwbn01.jpg 273w\" sizes=\"auto, (max-width: 200px) 100vw, 200px\" \/><\/a>Previous generations in India used to flock to &#8220;blade companies&#8221; offering 150-200 bps higher interest rates without worrying too much about\u00a0the credit risks associated with informal and unregulated lending (see my blog post <a href=\"https:\/\/gtm360.com\/blog\/2014\/08\/15\/calling-b-s-on-banking-the-unbanked\/\" target=\"_blank\" rel=\"noopener\">Calling B.S On Banking The Unbanked<\/a> for more). While Millennials are attracted to tech-mediated versions of informal lending, they&#8217;re not so aggressive when it comes to taking risks. They still want to know the old-fashioned CIBIL scores of borrowers. (For the uninitiated, CIBIL is India&#8217;s equivalent of FICO scores.) Since they&#8217;re not to able to get CIBIL scores of most borrowers on online P2P sites, they&#8217;re shying away from them. Apparently, &#8220;borrowers far outnumber willing lenders&#8221; on these portals (Source: <a href=\"http:\/\/economictimes.indiatimes.com\/wealth\/savings-centre\/analysis\/need-a-loan-p2p-portals-can-help-you-borrow-at-lower-rates\/articleshow\/36541500.cms\" target=\"_blank\" rel=\"noopener\"><em>Economic Times<\/em><\/a>).<\/li>\n<li>An overwhelming majority (73%) of Millennials wouldn&#8217;t consider opening an account in a branchless \/ digital-only bank (Converse of the finding &#8220;27% of Millennials would consider a branchless digital bank&#8221; by <a href=\"https:\/\/www.firstdata.com\/en_us\/all-features\/millennials.html\" target=\"_blank\" rel=\"noopener\"><em>First Data<\/em><\/a>).<\/li>\n<li>In some product categories, especially financial services, &#8220;consumers of all ages are still picking up the phone to talk to someone&#8221; (Source: <a href=\"http:\/\/digiday.com\/sponsored\/marchexbcs-283-328-phone-call-hanging-customer-service\/\" target=\"_blank\" rel=\"noopener\"><em>Digiday<\/em><\/a>).<\/li>\n<\/ol>\n<p>Millennials no doubt spend a lot of time on mobile devices. But that doesn&#8217;t mean that they&#8217;re savvy \/ comfortable enough to complete financial transactions or take financial decisions without some degree of physical interaction with objects or people. And, just because Millennials <em>can<\/em> do something digitally, doesn&#8217;t mean that they <em>will<\/em> do it digitally.<\/p>\n<p>Many digerati claim that banking is only data and can be completely digitized. Well, with my professional interest in fintech software, I wish that were true, but a combination of personal experience and anecdotal evidence signals that customers think there&#8217;s a lot more to banking than 1s and 0s.<\/p>\n<hr style=\"width: 70%;\" \/>\n<p>Ironically, the very same demographic that neobanks are banking on &#8211; pun intended! &#8211; might actually prove to be their undoing.<\/p>\n<p>Maybe it&#8217;s time they listened to the experts and pivoted to other market segments.<\/p>\n<blockquote><p>There\u2019s this obsession with millennials. The truth is millennials aren\u2019t spending any money with anybody because they don\u2019t have any.<\/p>\n<p>&#8211; Sucharita Mulpuru, Forrester Research, Bloomberg article entitled <a href=\"http:\/\/www.bloomberg.com\/news\/articles\/2015-04-09\/retailers-urged-to-ditch-millennials-in-favor-of-older-shoppers\" target=\"_blank\" rel=\"noopener\">Retailers Urged To Ditch Millennials In Favor Of Older Shoppers<\/a><\/p><\/blockquote>\n<p>and<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/Clagett?ref_src=twsrc%5Etfw\">@Clagett<\/a> <a href=\"https:\/\/twitter.com\/Geezeo?ref_src=twsrc%5Etfw\">@Geezeo<\/a> don&#39;t know why <a href=\"https:\/\/twitter.com\/hashtag\/fintech?src=hash&amp;ref_src=twsrc%5Etfw\">#fintech<\/a> targets only millennials. All the apple airs in cafe other day had very experienced owners<\/p>\n<p>&mdash; Stessa Cohen (@stessacohen) <a href=\"https:\/\/twitter.com\/stessacohen\/status\/587259753627258880?ref_src=twsrc%5Etfw\">April 12, 2015<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Nimble as they pride themselves to be, neobanks shouldn&#8217;t find it too hard to make this pivot.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Personally, I don&#8217;t find too many serious shortcomings in the digital banking offerings from my banks. On the contrary, virtually every neobank \/ fintech I&#8217;ve come across is little more than a leadgen tool. But that&#8217;s outside the purview of this blog post, the purpose of which is to do a reality check on the &#8230; <a title=\"Millennial Obsession Will Bankrupt Neobanks\" class=\"read-more\" href=\"https:\/\/gtm360.com\/blog\/2015\/06\/12\/millennial-obsession-will-bankrupt-neobanks\/\" aria-label=\"Read more about Millennial Obsession Will Bankrupt Neobanks\">Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":2401,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,6,10,1],"tags":[],"class_list":["post-2393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-b1-integrated-marketing","category-bfsi","category-mobility","category-mandatory-category"],"_links":{"self":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/2393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/comments?post=2393"}],"version-history":[{"count":21,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/2393\/revisions"}],"predecessor-version":[{"id":8623,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/2393\/revisions\/8623"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/media\/2401"}],"wp:attachment":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/media?parent=2393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/categories?post=2393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/tags?post=2393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}