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Millenials, FinTech, and the Power of AI Bots

Within last few years Generation Y, or also called Millennials, has been tending to overturn the marketing models since the businesses compete for the most efficient tactics to involve top-class digitization experts for conducting complex industry transformation and robotization via Artificial Intelligence, Big Data and the Internet of Things integration.

Being the biggest consumer category, the companies are more inclined to take into account the way how Millennials are thinking, feeling and acting, especially when we are talking about making investments. To make this area more attractive for Generation Y, that grew up with a laptop on their knees, Artificial Intelligence, in the form of chatbots and robotic financial analysts, is a higher perspective instrument. Since the beginning of 21st century, the growth of investment in venture capital related to AI was six-fold and the overall dividends from “robotic” solutions are predicted to skyrocket from about 1.6 billion dollars in 2018 to more than 30 billion dollars by 2025.

As more Generation Y representatives are becoming grown-ups passing over baby boomers, they are obtaining stronger job opportunities and purchasing ability. According to the recent study conducted by Pew Research Center, supplemented by the U.S. Census data, the population of Millennials amounting to 75.4 million has already left behind the population of baby boomers that amounts to about 74.9 million. Moreover, in approximately 30 years the population of baby boomers is expected to fall to less than 17 million.

As long as more representatives of Generation Y get jobs and actively increase incomes, companies are promptly acknowledging the necessity to transform behavioral models and tools to be ably responding to this population challenge considering Millennials’ specific values and requirements that are, indeed, completely changing the traditional market environment perception. Otherwise speaking, today’s situation is not as simple as in the case of the previous generation’s all-about-smartphone world.

Despite the fact that Generation Y is loudly attributed with the insulting labels such as “egotistical”, “self-serving” and even “swanky”, Millennials are also more inclined to absorb latest innovations and conceptions compared to the previous cohort.

In a nutshell, Generation Y appreciates clarity and comfort as a couple of basic values being the bedrock of their market interaction. In other words, Millennials want to obtain the tech, products or services ready at hand, so they can utilize it anytime and anywhere they wish. Besides, any solution they get has to be ultimately easy-to-use, to make certain it won’t take much time to figure out how it works, so more time is saved to enjoy core benefits of the product. In fact, this tendency is proved by the study in the financial industry called to understand how the banks are going to be changed in order to please the Millennials’ challenge.

These properties are the guidelines for businesses to pay attention to in order to stay competitive under the conditions of Generation Y growing role on the market. Moreover, implementation of these approaches is vitally necessary for FinTech sector that has already shown stable dynamics in becoming more nigh at hand, outer-directed and entertaining by virtue of digital transformation including Artificial Intelligence robotization that has literally quaked the industry.

Lots of FinTech ventures have plunged into the new cooperation format as they were sufficiently capable of realizing the regular financial business patterns and approaches are not corresponding with the recently rising aspirations of Generation Y. Basically, more than half of American respondents, who participated in the issue-related poll, think that within the next 20 years today’s banking business model will be completely changed. Most of FinTech companies have already adopted mobile applications in order to keep pace in serving young clients who are more leaning towards financial operations complete digitization. Yet, even the most cutting-edge mobile apps can’t assuage Millennials’ enthusiasm for digital advances. So, FinTech ventures progress ahead by employing chatbots to substitute human staff as the financial robotic advisors show better performance thanks to utilizing the latest achievements in Artificial Intelligence, Big Data processing and the Internet of Things.

More FinTech startups owners, who have practically assessed the depth of AI bots potential, confirm the crucial role of taking into account the interests and needs of Generation Y marketing group as nowadays it is dynamically taking leading positions in market orientation influence. Thus, as the Millennials’ investment share is growing, more FinTech businesses are getting the younger look, and this look is more robotic than human.

Specifically saying, the experts believe the FinTech startups, in order to keep abreast of Millennials behaviorism, have to possess the range of certain characteristics. One of them is providing a customer with the possibility to make investments in the preferred companies using ML mechanisms via structuring stock exchange profiles depending on the client’s personal wishes. The profile database has to be flexible in order to match the transformations in client’s business activities or personal life along with simultaneous delivering broad set of propositions the client might be interested in too, so no potentially important chances will slip out his focus.

Furthermore, when declaring disruption of traditional market patterns due to Millennials altered needs, it is important to note lack of interest Generation Y shows in conventional financial models, yet namely, this group is just around the corner to play a principal role in the industry. For instance, the research conducted in 2015 shows an amazing fact: more than seventy percent of Generation Y representatives are not completely interested in receiving the information from banks that are usually promotion emails, phone calls with the new products offer etc. Nonetheless, Millennials are expected to manage about 7 billion dollars in two years and to receive almost half of the total income in the United States by the middle of the next decade. This forecast seems to be really fantastic especially taking into the account the fact that Millennials tend to direct these funds into real assets investment such as education, buying real estate or starting own business.

Since using AI tech, including financial robotic advisors and chatbots, in the financial sector, is expected to bring benefits to different customer groups in terms of demographic classification, Millennials have bigger chances to raise their profits thanks to robotization. According to Bank of America Merill Lynch research, on the average for Generation Y representatives it takes about 4 hours per week to process their financial assets being both time-taking and exhaustive. Simultaneously, PWC study shows that more than 1/3 of Millennials evaluate their financial solvency level as dissatisfactory as long as almost 20 percent consider their financial situation as poor. And about 70 percent of Millennials declare that worrying about their personal assets leads to health state worsening. Therefore, financial management and advisory optimization won’t lead just to wellness increase but also to personal well-being improvement.

Some companies, like Upstart, consider Generation Y to be a target market niche where AI chatbots powerful potential can be put into practice to the full extent. The venture, aimed to credit individual clients, was created by former Google executives and successfully combines Artificial Intelligence and ML techs to robotize loaning procedures and to increase banking effectiveness.

The difficulty in crediting Millennials is that the given generation is used to processing their investment in fast-moving and changeable mode, therefore, the investment planning horizon is rather short. Therefore, companies like Upstart assist Generation Y representatives with short loans reinforced with profound study and use of education and career data.

From the technical point of view, the FinTech IT solutions vendors are elaborating specific software characteristics to adapt their products for the use by Millennials which are:

  • Light-touch UE
  • Usable analytical data
  • Compatibility with various FinTech applications
  • Cross-platform operability using different devices, progressive web applications, the Internet of Things
  • AI and Machine Learning
  • Blockchain safety features
  • Individualization

Despite the fact that there can be different opinions on the best way to adapt AI and ML technologies in FinTech to drive on the Millennials, the experts are on the same page believing that future anyway belongs to the robotic replacement of human staff. The ventures expecting to leverage on Generation Y market role enhancement have to keep pace with digital transformation trends in order to match the most exclusive customers’ needs. The companies that have not begun the process of AI chatbots integration to fulfill clients’ aspiration for clarity, comfort, and easiness yet, still may take few more years to launch necessary transformations to catch the last train, otherwise, their business is exposed to serious collapse risk.

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