Millennials: Be Aware of Being Trapped in Fintech!

Technology is central to the lives of millennial and it is no different when it comes to managing finances. Millenial generation has been called “the always-connected generation.” The first thing to consider is that they are super oriented on mobile first solutions. They would naturally turn to technology to help answer their question even help to manage their money. They use online shop to buy some groceries, get online transportation, read news, buy a ticket etc. Financial institutions have been waking up to the fact that millennials are the next generation of investors for some time, despite perceptions that they are a demographic with less cash and a poor understanding of personal finance.

The size of the population of social media users and e-commerce shopping transactions in Indonesia which is predicted to reach 130 billion US dollars in 2020 makes many parties pour trillions of rupiah in funds to facilitate their experience of shopping offline and online. That is why, according to data from the Indonesian Fintech Association 43% of 140 fintech companies in Indonesia are engaged in payment.

43% of millennial find that it is easy to set up an account with a fin tech mobile app rather than a checking account in a bank. While elder generations more prefer the personal interaction in banks. Millennials think that they can access more services and products while watching a TV show rather than only a specific service for which they should visit a bank. They consider the products and services of FinTech startups more innovative compared to financial services provided by traditional financial institutions.

According to the report, woman age 25-34 are frequent e-money user and most common reasons for using e-money were paying for online shopping (84%), buying data vouchers for smartphones (47%), and paying regular bills (28%). However, usage rates were much lower for frequent offline purchases like in-store shopping for fashion, daily transport (Gojek & GRAB), or for paying for morning nasi goreng (fried rice)—digital transactions that are only possible when e-money providers partner with merchants.

Apart from the positive side of the economic increase due to the continued growth in the volume and value of shopping transactions, the culture of online and cashless shopping among the younger generation today raises other social problems, namely the increasing culture of consumerism. The growth of cashless transactions enables millennials to easily spend their money as there is no actual exchange of physical money. Fintech needs to be a catalyst for healthy financial behavior. While from the perspective of individuals, the weak culture of saving from an early age will reduce the opportunity of the millennial generation to accumulate wealth, which they should be able to enjoy when they are no longer productive and unable to work anymore.

Fintech financial planners may be an alternative solution for providing education and comprehensive integrated financial products aligned to the millennial lifestyle. Fintech financial planners not only offer connectivity among several bank accounts, which automatically allows users to have access to cashless transactions, but also offer financial planning services, or auto budgeting, that may help users to plan an ideal budget allocation for every category of expenditure. The main key to the success of financial education is a large, long-term commitment from all parties, so that people are not trapped solely in consumerism but can make wise financial decisions for future prosperity.

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