Millennials are known for their critical stance towards established industries – driven by a sense of fairness, environmental and other concerns. Just like napkins, plastic bags, straws or even golf, traditional finance is under review.
Now, as crypto continues to rise, it seems this generation is ready to leave the world of banks for good. With a passion and optimism to do things differently, $200 billion in value has already been freed from the banking system and now resides in the alternative crypto market. Bitcoin is not a threat, it’s an opportunity.
Traditional finance and millennials got off on the wrong foot
It’s always been a bad relationship between millennials and service providers in traditional finance such as banks and stockbrokers. Just when millennials were graduating and entering the workforce, the 2008 global financial crisis hit which impacted financial prospects for several years to come.
If the financial burden of student loans weren’t enough, the Fed lowered interest rates to 0% so bank deposits generated no returns, while banks continued to charge customers double-digit interest rates on credit cards. As most people struggled to make ends meet, bank executives were still raking in record earnings and bonuses causing the rift between millennials and financial services to deepen.
Even today, there is still a distaste or disinterest in traditional finance which has more to do with systemic mismatches between what millennials expect and the way financial services are offered. Most millennials feel that financial services companies deliberately make the purchasing process confusing and frustrating, leaving customers feeling unsure and out of depth.
When it comes to banks millennials simply do not trust them. The Edelman report Millennials with Money found that 77% of millennials said the financial system is designed to favor the rich and powerful. They also worried about their personal information being exploited and the majority also believed it’s only a matter of time before bad behavior leads to another global financial crisis.
Trading on stock markets has also left millennials in general unmoved. Setting up accounts through stockbrokers is time-consuming as it involves filling out many forms and sometimes even taking assessments. Some of the newer players in the field have managed to generate millennial interest, but then there is still something off with the way stock markets operate. The idea that stock markets have open and closing times doesn’t work well with the millennial mindset which is shaped by living in the digital world and shopping online – a service that’s available 24/7.
Crypto markets are open every single hour of the day and the concept of Bitcoin seems far more natural to a millennial. It is a currency made for the digital world.
Millennial interest in numbers
According to the same Edelman report, 25% of wealthy millennials own crypto, with a further 31% interested in crypto and 75% say technologies such as blockchain make the global financial system more reliable.
A different survey by Sustany Capital found that 88% of millennials want to own crypto for investment purposes and 42% want to use crypto as savings.
The difference in attitudes towards traditional finance and the alternative crypto ecosystem shows just how different these two worlds are in the eyes of millennials.
Coins with values worth sharing
Crypto trading comes with all the traits of what millennials expect of a digital service. Opening an account on a crypto exchange is a lot simpler than going through a stockbroker. All you need to do is visit the website of a crypto exchange, open an account, provide some basic KYC information and you’re ready to trade. You can open an account any time of the day but more importantly, you can trade at all times. Crypto markets never sleep, they don’t close for weekends or holidays.
There are also no branch offices, portfolio managers or relationship managers which only add to overhead costs i.e. fees charged to the customer. That’s not to say millennials don’t have a relationship with crypto and the service providers in the space, but the way those relationships are formed is different. The relationships between millennials and crypto is based on shared values.
They are not interested in buying shiny metals and storing them in boxes made of a different metal. They aren’t interested in buying shares of a company that could be cooking their books or one day fire hundreds of hardworking people so their stock can go up a few basis points. Instead, they are putting their trust into a digital world of unbiased mathematics and digital scarcity.
Crypto is practical to use, with low transaction fees and no middlemen. When you buy a coin, you truly own it – no central authority can take it from you. It is available for everyone across the world, without discrimination based on social status. It can help funnel capital to the most promising projects that are shaping the future of the digital world. Advanced services like lending and borrowing are available even with minimal funds.
Fractional ownership through tokenized commodities, real estate or other assets makes perfect sense for a generation that has embraced the sharing-economy of Airbnb, Uber and the like.
For the millennial generation, crypto is the right mix of the practicality and passion.
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AAX is the world’s first digital asset exchange to be powered by LSEG Technology. Offering OTC, spot, and futures, it provides a highly secure, deeply liquid and ultra-low latency trading environment; and a meeting point between crypto and global finance.