Digital banks could dominate once baby boomers pass on their wealth

by Jeremy

Digital-only banks could dominate when millennials inherit trillions of pounds from baby boomers over the coming decades. In a warning to traditional banks, a survey by financial advisory firm deVere Group has found that huge numbers of millennials born between 1980 and 1996 only use digital banking services.

Digital banks could dominate once baby boomers pass on their wealth

These consumers cou ld control vast swathes of the money in the economy over the next few decades.

The survey of 550 millennials in North America, the UK, Asia, Africa, the Middle East, East Asia, Australasia, and Latin America revealed that 59% are already using digital-only banks or are planning to be this year.

Nigel Green, CEO at deVere Group, said the figures are bad news for traditional banks. “The poll’s findings are a big deal for old-school banks,” he said, adding that millennials are the fastest-growing customer base for banks and are becoming the beneficiaries of the most significant transfer of wealth in history as they inherit money.

Green said trillions of pounds in wealth will soon be passed down from the baby boomers, the wealthiest generation ever. At the same time, the millennial generation is tech-savvy, he added: “They have grown up on technology and are digital natives. Digital-only banks have increased in recent years, but they are a second bank used as spend accounts for many people, with the majority of their banking done through a traditional bank.

As a result, they have been unable to take many shares of banking business from the traditional high street players, and many are still unprofitable after years in operation. Fintech unicorn Starling Bank, which gained a UK banking license in 2016, became the first UK digital challenger bank to profit in October 2020. In March this year, following a £272m funding round, its value reached £1.1bn.

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