The payment preferences of millennials

With their preference for the latest technology, millennials have different habits and expectations when it comes to payments and traditional banking compared to previous generations. Now that Generation Y is about to enter their prime spending years, the pressure on banks and financial services to understand millennials' preferences is increasing.The more digital, the more sophisticatedGrowing up in a digital and connected world, millennials expect a seamless and frictionless payment experience, with a focus on speed, convenience and security. Today's market is meeting these needs with the introduction of ever more innovative payment methods and financial services. According to Juniper Research mobile contactless payments are expected to break the 100 billion euro mark by 2018, with Apple Pay leading the way. That is approx.  three quarters of US contactless payments. But Apple is not the only tech giant trying to attract millennials via fintech. This year saw the launch of Facebook's Messenger payments, Amazon has been offering loans to its SME clients (small and medium-sized enterprises) with Amazon Lending since 2012 and Google Wallet has been involved since 2011. In fact, a number of services have been established that allow money to be lent, shared and invested in a completely new way. For example Square Cash Send money quickly and easily. With SplitWise invoices and other expenses can be documented and tracked. In the event of problems with loan repayments CommonBond a platform for refinancing and companies such as SigFig, Wealthfront and WiseBanyan offer users financial advice for wealth management. However, with the emergence of all the alternative financial services, the question arises as to how banks stand for millennials?The bench on the launch pad?Of course, millennials also have a traditional bank account, but their loyalty to their bank is dwindling: more than 46 percent state that they are unsure whether they will stay with their bank in the next six months. According to the Cassandra Report as outdated and unable to meet the needs of their generation. This notion is also confirmed by a report by First Datawhich revealed that 71 percent would rather go to the dentist than a bank and that 33 percent are convinced that they will no longer need a bank in five years' time.Collaboration as the key to successBanks are therefore facing a new challenge and need to start thinking about innovative strategies for this increasingly demanding generation in the age of GAFA (Google, Apple, Facebook, Amazon), Square and Bitcoin. One way to polish the image of banks and successfully address the needs of millennials is to collaborate with fintechs. Side by side, banks and fintechs can give GAFA a run for its money, which - given its enormous market reach - is likely to expand further into financial services. The key to success with millennials is the customer experience: full integration, usability across multiple channels and a high level of security are crucial. Finely selected strategic partnerships between traditional banks and fintechs could result in further innovation by leveraging the respective strengths of all parties. Banks would offer fintechs their large customer base, expertise in financial regulation and a robust global infrastructure, while fintechs could help banks to build more innovative, faster and cheaper services that make them an even more important part of everyday life. Recent examples show that many banks are open to these ideas. Among others JP Morgan and The Bank of England with fintechs, whether individually or through incubators - collaboration is the key to appealing to this tech-savvy generation.