By Roche, Terence; Williams, Steve
American Banker , Vol. 171, No. 73
For the past three decades pundits have been predicting the "next generation" of banking customers would change the delivery of financial services as we know it.
Though younger consumers have typically been early adopters of new technologies, statistics show that the use of ATMs, debit cards, Internet banking, and bill payment services has been relatively strong among all age groups. To date there have been no differences in demographic groups that had the power to truly redefine our industry.
The generation that looks poised to bring fundamental changes to the way we deliver banking services is about to stand front and center. It's Generation Y, which thinks differently, acts differently, and is wired differently.
Here are some early signs that members of Gen Y - broadly defined as individuals born between 1978 and 2000 - are unique.
* Though many adults use portable electronic devices, most members of Gen Y are addicted to them. They use phones, personal digital assistants, iPods, or a combination of the three for music, movies, calls, text messaging, spreadsheets, word processing, and calendar/time management. They are entirely comfortable using one or all three devices simultaneously.
Observe the Gen Yers at a restaurant or riding in a car, and you'll see the constant interaction that dominates their lives, and then realize that this trend is in its infancy. Now consider that cell phone providers such as Verizon and T-Mobile estimate that within two years, 70 million to 90 million Americans will have phones that can perform most of the functions currently done on a personal computer.
Gen Y communicates as much with text as with voice, and statistics indicate that text may become their preferred mode of communication. Tout Media Inc. recently published a study that estimated that by 2008, annual text message volume will explode to 220 billion. Who will be writing them? Probably not the greatest generation or baby boomers.
* This generation lives and breathes in a world of peer-to-peer networks that grow through word of mouth. For example, the popularity of Myspace.com, a social network in which each person has his or her own Web site for interaction, has been largely driven by Gen Y. In a little over two years, with no advertising or marketing budget, Myspace.com has drawn over 60 million participants and is adding 4 million a month.
Another example of this peer-to-peer collaboration is Wikipedia, an online encyclopedia with articles on thousands of subjects that the general population can add to, edit, and maintain. In a matter of a few years it has become a more widely used information resource than the Encyclopedia Britannica and a staple among Gen Y students.
* Gen Y has also shown breakout adoption of Napster-like free software such as Skype, which allows anybody with home broadband service to have free, or very cheap, voice over Internet protocol phone service through the Web. Over 15 million users have signed up worldwide, and an additional 80,000 are registering daily, according to Niklas Zennstrom, Skype's CEO and a co-founder.
* Members of this generation are active users of "person-to-person" payment networks such as PayPal, which has 100 million registered users (roughly three times the number of Internet banking users today), and they are attracted to loyalty programs that reward credit and debit card transactions. …