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Millennials likely to embrace nontraditional services

Mobile wallets, peer-to-peer lending attract younger customers

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Millennials likely to embrace nontraditional services Chukcha / Shutterstock.com

Millennials are embracing alternative banking services in greater numbers than older generations, according to a survey of U.S. bank customers conducted for FICO.

Twice as many millennial respondents (aged 18-34) (32%) report that they are likely to use mobile wallet services like Apple Pay or Google Wallet in the next 12 months as those who are 35 and older (16%). Additionally, 56% of younger millennials (18-24) report that they are already using or very likely to use alternative payment services like Venmo and PayPal.

The survey asked respondents about their use and projected use of nontraditional banking services, such as mobile wallets, alternative payment services, and peer-to-peer lending. Among all respondents, 18% said they intend to use a mobile wallet in the next year, whereas just 5% reported that they currently use a mobile wallet. Thirty-nine percent expect to use an alternative payment service in the next year, while, while 21% said they currently use alternative payment services.

Only 1% of respondents currently use peer-to-peer lending services like LendingClub and Prosper, which match individual lenders with borrowers. However, 23% of millennials said they will consider peer-to-peer lending services this year. The survey found that millennials are ten times more likely to consider peer-to-peer lending services than baby boomers, and twice more likely than Generation X.

"We already know that millennials are inclined to conduct common banking activities through the digital channel," says David Vonk, who leads the North American banking practice at FICO. "While alternative banking may still be in its infancy, it has the potential to grow rapidly, especially as the millennial generation enters its prime and pushes these services to the forefront of its banking agenda."

The online survey of 908 U.S. banking customers was conducted in August 2014.

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