Recent news reports show that more millennials are turning to alternative financial products, such as prepaid cards, payday loans, signature loans, and check cashing. Financial experts believe that this growing market is influenced by two factors: (1) the portfolio of millennials and (2) the flexibility and benefits of the alternative financial products.
What the Figures Say
Forty-five percent of millennials are choosing alternative financial products over institutionally supported loans as they find it more convenient and reliable, according to statistics. In terms of satisfaction with using the products, 83% claims they have a positive experience. Some even reported that they consider payday loans, cash advances, and other forms of emergency cash to be an important tool in reaching financial goals.
Portfolio of Millennials
While many attribute this growing number of alternative financial product users to the conventional perception that millennials simply want instant gratification, we at Utah Money Center believe that it goes beyond that. Millennials have witnessed major economic crises in America, such as the Great Recession and various conflicts overseas. This historical milieu has shaped their perception about managing finances.
A UBS Investor Watch research says that 34% of millennials surveyed described themselves as conservative when it comes to handling money, saving at least 52% of their wealth in cash. Other studies show that 67% of millennials are pessimistic about the status of stocks because of the fluctuating economy. Eighty-two percent says they foresee a decline in financial institutions in the future. This conservative outlook on finances and disbelief in established financial institutions are compelling more millennials to choose alternative financial products.
Allure of the Alternatives
Aside from millennials’ perspectives about finances, the actual benefits offered by non-bank products are also the reason why millennials are choosing them. With alternative financial products, the fees are easier to understand and the qualification process is much easier. For instance, in our company’s application process for signature loans, submitting an application can be done either online or just over the phone. In just 15 minutes or less, our clients are able to complete the whole application process and get their money.
Alternative financial products complement the manner in which millennials manage finances. As these products offer more relevant benefits for the generation, more millennials are making the switch.