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Millenials, FinTech, and the Power of AI Bots

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

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 the 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 people of baby boomers that amounts to about 74.9 million. Moreover, in approximately 30 years, the people of baby boomers is expected to fall to less than 17 million.

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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.

Even though Generation Y is often described with labels such as “egotistical,” “self-serving,” and even “swanky,” Millennials are also more inclined to absorb the latest innovations and conceptions compared to the previous cohort.

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

These properties are the guidelines for businesses to pay attention to stay competitive under the conditions of Generation Y's growing role in the market. Moreover, implementation of these approaches is vitally necessary for the FinTech sector that has already shown stable dynamics is becoming more nigh at hand, outer-directed and entertaining by digital transformation including Artificial Intelligence robotization that has 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. 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 change. Most of FinTech companies have already adopted mobile applications 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 individual staff as the financial robot 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.

The experts believe the FinTech startups, to keep abreast of Millennials' behaviorism, have to possess the range of individual 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 wishes. The profile database has to be flexible to match the transformations in the client’s business activities or personal life along with simultaneous delivering a broad set of propositions the client might be interested in, too, so no potentially significant chances will slip out his focus.

Furthermore, when declaring disruption of traditional market patterns due to Millennials' altered needs, it is essential to note the 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 a fantastic fact: more than seventy percent of Generation Y representatives are not entirely 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 fantastic, especially taking into account the fact that Millennials tend to direct these funds into real assets investment such as education, buying real estate, or starting their 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's research, on average, for Generation Y representatives, it takes about 4 hours per week to process their financial assets being both time-taking and exhaustive. Simultaneously, the 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 unfortunate. And about 70 percent of Millennials declare that worrying about their assets leads to health state worsening. Therefore, business management and advisory optimization won’t lead just to wellness increase but also 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 at individual credit 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 small 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

Even though 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 the future anyway belongs to the robotic replacement of individual staff. The ventures expecting to leverage on Generation Y market role enhancement have to keep pace with digital transformation trends 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 severe collapse risk.

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