Millennial Mashup: Young Consumers Mix GPR, Traditional Banking (Dec. 23, 2015)
Millennials continue to show high interest in GPR prepaid cards and other alternative financial services—but they’re not turning their backs on banks, according to a new report from the Federal Reserve Bank of Philadelphia’s Payment Cards Center. Millennials with Money Revisited updates a landmark study released last year that identified a consumer segment the report dubbed “Millennials with money”—those ages 18 to 32 with annual household incomes of $100,000 or more. That audience’s high usage of GPR cards and other alternative financial services (AFS) in combination with traditional banking shattered the myth that GPR and AFS are used only out of necessity by low-income and underbanked consumers who are shut out of the financial services mainstream.
The updated report is based on data from the 2014 Consumer Payments Monitor, an online survey completed last fall by 4,000 consumers selected to be representative of U.S. households. In the latest survey, 60 percent of millennials with money reported having a GPR card, up from 49 percent in the previous year’s poll. What’s more, millennials of all income levels appear to be quite comfortable combining traditional banking services with GPR. Ninety-six percent of millennials surveyed reported having a checking account, while 89 percent had a debit card and 85 percent had a credit card—all rates consistent with ownership levels among all demographics. However, nearly half—45 percent—of millennials with a checking account also had a GPR card, compared with less than one-third of banked consumers ages 33 to 48 (Gen Xer) and just 14 percent of baby boomers (ages 49-67) who reported having a checking account and GPR card.
Interestingly, millennials also were slightly more likely than other demographics to have obtained a GPR card directly from a bank; 18 percent of millennials did so, compared with 15 percent of Gen Xers and 11 percent of baby boomers. Banks also were the preferred provider of mobile wallets for millennials, over telecoms and tech firms, indicating the segment is open to using established providers for nontraditional services, the report said. And with millennials set to comprise a higher proportion of the overall population—one in three Americans by 2020, according to the Brookings Institution—their willingness to mix and match financial services likely will influence how providers tailor their offerings to meet the segment’s expectations.