Millennials’ Need for Credit and Financial Inclusion Offer Opportunities for FinTechs

Finance


Alternative data and scoring models can help deepen financial inclusion.

There is an old saying that young people belong to young people.

So is the future of financial services.

PYMNTS data reveals a wealth of possibilities for providers (such as fintech and FI) to meet their financial needs through digital channels for millennials.

In doing so, these providers use advanced technology to help serve as a “gateway” for younger subprime consumers to access services and products that were traditionally out of reach.

In a report just released,Use of Credit Cards in Times of Economic Turmoil” A study jointly produced by PYMNTS and Elan found that young consumers are shifting more of their spending to credit cards. This includes his 43% of millennials. Of course, inflation is the main culprit here. Still, it’s worth noting that the proportion of younger cohorts who increase their spending on cards outnumbers the same activity in the general population. Among the general population, 33% of cardholders found that they increased the percentage of their spending with credit cards in the last six months. This indicates a level at which young individuals are comfortable using credit.

As mentioned in our report American Express Earnings, Millennials now represent a significant percentage of card volume in payment networks. That contribution is now about 30% of volume, management said in his Amex call, and spending he’s up double digits.

Overall, the PYMNTS data shows that consumers prefer credit cards with rewards and financial control features during times of economic uncertainty. This will enable forward-thinking providers to deliver these capabilities digitally.

good at using credit

At the same time, 73% Millennials pay paycheck to paycheck live, As the latest “reality check” confirms. Our latest survey reveals that the millennial reported an average savings of $11,000 as of March, compared to his $7,300 in March 2022. 87% of millennials have at least one credit card, 84% of cardholders maintain credit card balances, and 44% of cardholders pay off credit card debt with an installment plan doing.

Millennials’ willingness to spend money on non-essential items is supported by the fact that nearly 8 in 10 millennials had purchased a non-essential item or service worth $100 or more in the three months prior to the survey. It is shown in This percentage tops her 62% of the overall sample across all types of demographics.

Seventy-two percent of millennials report experiencing at least one event of financial hardship, up from 62% overall. Having credit ready can be your lifeline in dealing with these financial stressors.

As reported here, According to Federal Reserve data, 40% of millennials have a subprime credit score. 57% of American millennials said they were unable to receive a financial product in the past year. Different scoring models and different data points could help broaden access to credit. These data points include everything from phone bills, electricity bills, and other utility bills to rent and personal loans. To name just a few: Available in the US and recently launched in Canada, Sezle Up allows users of the company’s Buy Now Pay Later (BNPL) solution to choose to report their payment behavior to an agency. Additionally, SoFi and LendingClub are leveraging the platform to create a trust-building ecosystem. They offer savings accounts and personal loans that support building a credit history that lenders can use to underwrite cards and other traditional financial service offerings.



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