Urjanet announced today the results of a nationwide consumer study that suggests that Gen X, millennials, and Gen Z are more willing to share alternative data with their financial services providers than previous generations. One of the clearest conclusions from this research is that across all three generations, consumers are more digitally-driven than ever before. Respondents were also willing to share their information in exchange for value. From basic personal information to social media profiles and even utility bill history, over a quarter of Gen X, and over a third of millennials and Gen Z responded that they were comfortable sharing personal data with financial institutions and other service providers.
Worldwide, 2 billion adults and 160 million small businesses lack banking access, according to Global Findex, with nearly 51 million adults in the U.S. falling into the “underbanked” category. Until recently, these groups have been ignored by most banks because they typically have poor or no credit rating, and are unlikely to generate meaningful deposits or banking fees. But as more services go digital, financial services providers have a huge opportunity to tap into the potential of this group.
In order to help financial institutions and fintech companies better understand the impact specific generations have on their business models, Urjanet conducted a survey of nearly 700 American consumers aged 18-40 and gathered valuable insights into how Gen X, millennial, and Gen Z demographics interact with their financial services providers.
“The results of this survey underline why there is a strong need for financial services providers to consider the use of alternative data to redefine their risk models, marketing and distribution approaches to target these demographics,” said Sanjoy Malik, CEO at Urjanet. “As younger generations begin to stake their claim in the economy, businesses will need to turn their focus toward re-establishing their market approach.”
Gen X, millennials, and Gen Z also share similar sentiments around the importance of reputation and reliability when working with a financial institution. Two-thirds of Gen X, 62 percent of millennials and almost three fourths of Gen Z respondents ranked reputation and reliability as the most important aspects of their relationship with a provider. Only eight percent of Gen X and millennial and just seven percent of Gen Z respondents said they would stay with their current provider if their perception of account changes made by the institution were negative, such as additional fees or poor user experiences.
While these generations do have plenty in common, there are varying nuances between each demographic:
- 60 percent of Gen X respondents said they had at least five financial products, and nearly 15 percent said they had over 11.
- 71 percent reported having an online account for utility bills, and nearly 40 percent said they were willing to share information about their utility accounts.
- The most common accessible alternative data from Gen X respondents were mortgage payments, electricity bills, and internet bills.
- Less than 50 percent of millennial respondents said they have at least five financial products.
- Sixty-eight percent of millennials reported having an online account for utility bills, and were almost twice as likely to share alternative data than Gen Z.
- The most common accessible alternative data from millennial respondents mortgage payments, electricity bills, and internet bills.
- Only 10 percent of Gen Z respondents have five financial products, with nearly 70 percent have at least one.
- Only 50 percent of Gen Z said they owned a credit card.
- Student loans, car loans, and mobile phone bills are this demographic’s most accessible alternative data points.
- Twenty percent of Gen Z are willing to share information about their utility accounts, and almost a quarter of Gen Z reported having an online account for utility bills.
Though, according to the survey, each demographic is in a different phase of their financial maturity, each group supports distinct access to alternative data that could be used to enrich their financial profiles.
Alternative data is quickly becoming a cornerstone to not only understand emerging generations, but to also verify consumer identity, model risk for financial products, and to maximize go-to-market strategies. By using a more comprehensive set of data, financial services and fintech providers can build a 360° view of their target customers and gain a competitive edge in a very crowded market.
Fortunately, accessing this data is well within reach thanks to technology that automates and aggregates alternative data sources. The Urjanet Utility Data Platform leverages powerful machine-learning technology and thousands of connections to utility providers across the globe to capture payment history for telecom, cable, satellite, electric, water, and natural gas bills. The automated platform supplies accurate and timely access to data delivered on demand, with expansive potential to enrich consumer risk profiles.
To read the full report click here.