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Banking the Millennial Way

Big banks aren’t keeping up with Millennials’ money managing preferences, and tech startups are filling the gaps to reinvent banking for the generation. 

Millennials’ financial goals are not the same as previous generations’, and their saving, spending, and investing behavior is heavily influenced by their debt. But big banks are slow to change, and aren’t evolving at a pace that matches up with these younger consumers, who will quickly outpace Boomers in earning and spending. A recent TechCrunch article breaking down Millennials’ banking woes observed:

“Almost all the products currently offered by banks are mostly irrelevant…Imagine if the first thing a traditional bank said to a college graduate and potential new customer was “open an account, and we can help you refinance your student loans with a lower rate and save serious dollars during repayment.”

Traditional banks aren’t necessarily innovating fast enough to meet Millennials’ needs, but mobile banking startups are rushing to find solutions that appeal to young consumers—and they could become a threat to banking as we know it. The head of JPMorgan Chase warned shareholders this year that “Silicon Valley is coming.” Ypulse’s monthly survey has found that seven in 10 Millennials currently have a savings account, and six out of ten hold checking accounts. But they’re eager to embrace changes that could threaten traditional banking: 40% over 21-years-old use an online service to help manage their money, and a recent study on the future of finance found that 33% of Millennials don’t think they’ll need a bank five years from now, and 50% are counting on tech startups to overhaul banks. 

We’ve covered some of the mobile tools helping Millennials take baby steps into investing, Now here are three startups working to reinvent banking, from loans to savings, the Millennial way: 


According to our 2014 research into Millennial spending, 57% of employed 13-32-year-olds say they live paycheck to paycheck. But currently banking is all about deposits and instant-pay, not necessarily smart ways to save. Swedish startup Qapital is a mobile savings assistant that wants to help Millennials reach their financial goals—whether it’s paying their student loans, or getting to Coachella. Users can set up savings accounts where they can automatically transfer funds from their existing accounts, create goals and rules, and save up amounts for specific activities (trips, dinners) in joint groups with other users. The app recently launched a “If This Then That” (IFTTT) feature that rewards users with savings when they do certain tasks. They can set up thousands of different IFTTT savings plans, stashing away small amounts into accounts any time it rains, they work out, they do something off their to do list, or anything else they can think of.


It’s graduation season, which means that thousands of diploma-toting Millennials will be coming face to face with their student loan debt. Earnest is an online-only startup that wants to help them deal with it, and navigate a system that “isn’t built right.” The site helps members to refinance and manage all of their loans to reduce their payments and create a payment schedule in just a few clicks. Earnest tells users that, “Lowering your student debt isn’t rocket science. It’s computer science,” and uses different data than traditional banks to analyze abilities to pay off loans. The startup reportedly saves users an average of over $12,000. They give Millennials more flexibility and control over how they repay their debt, and a host of online tools to control their payments.


Could Millennials be the generation that breaks America’s credit card addiction? Co-founder of PayPal Max Levchin thinks so. His finance startup Affirm lets consumers buy large items online with a payment plan over a set amount of time. The idea behind the venture is that Millennials “don’t want to burrow into debt” and are interested in credit card alternatives to make higher-priced purchases. Because many of Affirm’s customers are under 30-years-old with little credit history, the startup also uses Facebook and LinkedIn to gauge creditworthiness.