The arrival of new competitors, from online-only banks to the likes of Apple and Facebook beginning to offer financial services such as mobile payments, could very well influence and capture this substantial market from traditional providers, says CEB.
Some financial providers are already making progress in this area. One bank’s mobile app calculates the average income for customers with fluctuating pay, automatically setting aside a certain amount in savings during high-income months and balancing it out during low-income months. Another app helps consumers make small ‘sacrifices’ – such as not buying a morning coffee – and then tracks how these sacrifices can add up to bigger purchases.
Yet only a fifth (21%) of 18-29 year olds are managing the bare minimum of their personal finances. This marks a 5% drop in personal financial management in the last six months, at a level significantly lower than any other UK age demographic.
Despite the economic recovery and growth in employment and wages, around a third (30%) of young people continue to feel the pressures of high debt, and have resorted to their savings to pay bills in the last year.
Younger people also continue to be disillusioned, with only 18% taking any practical steps to managing their finances such as budgeting, planning for the long-term, or using a financial adviser.
Young people are also choosing to hold off on working towards milestones like getting on the property ladder which feel too unrealistic to afford, despite the demographic borrowing more.
Peter Aykens, Financial Services Research Leader at CEB, said:
“The urgency for banks to engage young people and create loyalty has never been greater. Guidance through the better use of technology is critical in helping to engage this generation and take ‘baby steps’ to start saving for the future.
“It is practical guidance in conjunction with the effective use of technology that these younger consumers expect, that will aid financial institutions in engaging and instilling loyalty among Generation Pause.”
