Facebook Eavesdropped On Millennials To Learn Their Money Mindset
Facebook crunched data, conducted surveys and took cues from users’ financial conversations to learn how Millennials approach their finances, and came up with insights based on more than 70 million users in the United States ages 21-34. Findings revealed millennials don’t trust anyone to advise them on their money except their peers. They do their business on mobile devices, no surprise there. And they’re also operating with an abundance of caution, lots of debt, and want to save. (And if anyone is shocked at the thought of Facebook using their information, know that you pay “free” services such as social media channels and email accounts with your personal details so they can turn around and profit from it. This is old news.)
The report found that Millennials have two main financial priorities: paying down debt (43%) and saving for the future (38%).
Debt is a major theme for Millennials, the most educated generation.
A mountain of loans is a byproduct of all those degrees, but without the same employment opportunities as previous generations had. Facebook’s report showed that 46% of Millennials define the No. 1 indicator of success as being debt-free. The next indicators were being able to retire (13%) and owning a home (21%).
Millennials don’t trust banks
The study showed that a full 53% of don’t know where to turn for financial guidance: Only 36% talk to their parents about money and just 8% trust financial institutions—they also indicated they’d switch banks, credit cards and brokerage firms in a heartbeat if they got a better offer. And 33% know their money could be working harder for them, but aren’t sure whom to go for advice.
“For a generation disillusioned by the financial crisis, burned by the post-recession job market and burdened by crippling student loan debt, it’s not surprising that traditional financial institutions don’t carry much favor,” says Stefanie O’Connell, a Millennial finance expert and author of The Broke and Beautiful Life.
One thing is clear—and traditional financial institutions can reap the benefits if they take the correct and relevant actions—is that Millennials, overwhelmingly, trust tech more than their parents’ and grandparents’ institutions. They want to love them, but they just don’t know how.
“While over a third of Millennials currently describe their bank in unflattering terms (e.g., used car salesman or aggressor), the majority of Millennials (60%) express the desire for their bank to be a partner/friend. And the No. 1 way they say their bank can be a valued partner is by rewarding their loyalty,” the Facebook report says.
According to the report, the three things Millennials expect from their bank are:
- Rewards for loyalty (30%)
- Convenience and ease of use (29%)
- Honesty (28%)
O’Connell points to a study by Viacom Media in which 71% of Millennials said they would rather visit the dentist than listen to information from a bank. And 49% report a willingness to consider using financial services from companies like Google or Apple, which are trusted and favored brands. “I think these new findings reflect a similar tendency to favor mobile/tech alternatives over traditional banks, brokerages and credit cards,” she says. “These tech alternatives champion transparency, simplicity and accessibility – instead of hiding fees in paragraphs of fine print, they’ll tell you exactly what they charge and why – it’s this kind of paradigm that inspires the trust necessary to gain millennial business.”
Millennials give banks the stink eye; they do trust their friends. Crowdsourcing is par for the course for Millennials, from the simplest decisions (where to eat lunch) to the most critical (should I buy this house?)—and finances are no exception.
“Millennials go online to talk about everything that matters to them, and that includes financial issues, financial questions and financial services,” Facebook reported. “Millennials are 1.5 times more likely than Gen Xers/Boomers to discuss finances online.”
Some credit card confusion
Holding some revolving credit, such as credit cards, is important to a healthy credit score. But Millennials, according to the study, were more likely than their Gen X counterparts to operate on a cash basis. “Regardless of whether they currently own a credit card, 25% of Millennials describe credit cards as something that worsens their financial standing. And they are 1.3 times more likely than Gen Xers/Boomers to feel this way,” the report says. “Additionally, 30% of Millennials say that they are not sure how credit cards could be helpful.”
The Millennials who did hold cards, however, saw them as a “strategic tool” for building credit (46%) and to increase their financial flexibility (36%). Just 8% cited rewards such as miles or cash back as a primary incentive.
How Millennials can improve their financial lives
- Meet Millennials where they are: Align your solutions with Millennials’ priorities: Getting out of the negative, building a foundation and planning for flexibility.
- Be a partner for the Millennial era: Expand your competitive frame of reference to service Millennials in ways they’ll find invaluable.
- Elevate the conversation: Support financial literacy—and do it visually and on mobile.
- Bank on mobile: Put mobile at the center of your multichannel ecosystem.
“Many financial institutions have yet to realize that winning over the Millennial generation will require a transformative overhaul—from how each institution views its competition to how it connects with clients. Millennials have already begun shaping the future of financial services—reinventing the concept of financial advice as they increasingly put their investments in the hands of robo-advisors’ algorithms,” the report says.