The New Money
Money management apps have grown in popularity with the surge of the tech generation — those who grew up and feel most comfortable with technology. Just over 40% of people in their 20s have downloaded these types of apps. Combined with the finding that 80% of millennials don't invest in the stock market, according to a 2016 Harris poll, this should force investment advisors to understand the new global order of investing, and see how technology can help them grow their firms.
In fact, the tech generation's actions have spouted new startups that meet their investing needs, such as Stash and Acorns. For example, Acorns "lets users automatically put spare change from daily purchases into a low-risk investment portfolio," says an Innovation Group/JW Thompson Intelligence research paper, "The Future of Money: New Payments, Currency, Banking and beyond." Noted the paper, "New apps are constantly popping up to solve new problems that go beyond the conventional framework of the big banks."
The study found that 87% of American consumers see building long-term financial security as a priority. However, the study also found that only 29% of Americans have an investment account — and the majority of those were age 35 and older.
Although the findings of the papers aren't surprising, the speed in which disruptive and digital financial products are being developed to meet the appetite of younger consumers is, and it's happening globally. In some ways, the U.S. consumer market is behind much of the world. The study, conducted in March, researched consumer attitudes towards money, banking, cryptocurrency and financial habits, and surveyed 2000 adults 18 and older, half living in the United States and half living in China.
According to the study, Chinese consumers are more familiar with up-and-coming financial offerings than Americans: 47% of Chinese vs. 12% of Americans are familiar with fintech, 39% of Chinese vs. 19% of Americans are familiar with blockchain, and 39% of Chinese vs. 25% of Americans are more familiar with open banking.
In addition, 72% of American consumers say recent data breaches, such as at Equifax, have hurt their overall trust in financial institutions. Therefore, it's not surprising that 76% of millennial respondents said they always were looking to try new and different forms of banking, saving, payment and currency. Furthermore, 79% of American millennials, versus 39% of Americans 55 and older, used a banking app. And 37% of millennials (versus 7% of the older generation) used savings apps.
Part of the financial and banking sector disruptions are due to the development of cryptocurrencies, not only as payment, but as an overall decentralization of these businesses, the paper found. The growth in cryptocurrencies, and their acceptance by the younger generation as a form of payment, is well known. For example, 52% of Chinese consumers and 48% of Americans are familiar with Bitcoin, according to the paper, and 58% of Chinese consumers versus 33% of American consumers are enthusiastic about cryptocurrencies.
Tech startups have jumped on this interest, introducing and implementing tokens as a mini-currency on their e-commerce platforms that could be used for anything from products to special objects in the video gaming community. The paper states that $5.6 billion has been raised in token sales in 2017, versus $1 billion raised by venture capital, according to Fabric Ventures, a British cryptocurrency fund.
