Twenty-somethings aren’t known for their appetite to invest. They don’t generally own homes or look for places to ‘park their cash’ because they often don’t have any. This isn’t universal of course, but it’s the situation nearly half of the US workforce find themselves in. Twenty-somethings are earning around 20% less than their parents did and are at the mercy of rising rent costs, so it’s little wonder they don’t have much to put in the piggy bank. But while they don’t have much, they do have some funds. So, why aren’t they choosing to invest like their parents did?
Why banks need to play catch-ups
Back in the day, you’d take your savings and ask your bank manager or accountant for advice on how best to invest it. High-interest account? Stocks and shares? Property? The were lots of options to choose from, all of which remain today, however, none are being sold to the younger generation in a way that appeals. This is a problem every bank faces. Facebook research tells us that a third of twenty-somethings don’t even believe they’ll need a bank in the future. And the mere mention of mortgage loans, home equity and pensions makes them immediately switch off.
A third of twenty-somethings don’t even believe they’ll need a bank in the future.
While banks are trying to bridge the gap, at this point they’re playing catch-ups, as new tools have already made their way onto the scene that speak a language millennials can understand. One being the Moneybox app, which launched recently in the UK.
Making investment more accessible
US and Australian readers familiar with Acorns will already understand the premise of Moneybox. It connects with your bank account and can (with your permission) automatically round up your purchases and invest the difference. Spent £2.30 on a cappuccino? That’s £0.70 into a pot that’s invested each week in a stocks and shares ISA. It’s a way for young people with mere pocket change to start doing something with their money. Within minutes of installing the app, young savers are set up and ready to start investing, without even thinking about it.
It’s a nifty system, but that’s not the half of it. The real genius of Moneybox isn’t what it does (some doubt the overall benefits of investing with the platform), it’s how it does it.
The real genius of Moneybox isn’t what it does, it’s how it does it.
Speaking a language everyone can understand
Speaking to the Financial Times this year, Moneybox founder Charlie Mortimer laid out the problem quite nicely: “People aren’t setting money aside in a structured way because they’re intimidated by investing, and they think you’ve got to have loads and loads of money to get started.”
This ‘intimidation’ is a very real problem. Young earners seem to be turned off by financial jargon, as if it somehow doesn’t apply to them. The world of investing feels alien and untouchable, something that only ‘real adults’ with houses and cars and children do. Moneybox are tearing down these preconceptions with direct and down to earth language that millennials can relate to.
Their strapline is ‘Invest your spare change’, by rounding up all of your purchases ‘from your morning coffee to last night’s Uber’. The whole platform is built around an app, with the desktop site serving as little more than an information hub. And given that 50% of millennial bank account holders use mobile apps exclusively, this ‘app-first’ approach is a real winner. What’s more, the app is colourful, modern and has an extremely simple user interface.
What sets Moneybox aside isn’t necessarily what it does, but how it speaks to the market. This is evidenced further in a series of informational videos they keep releasing.
Over half of the video content out there is less than 2 minutes long and published on mobile, and a staggering 92% of viewers actively share it. In other words, video is huge. Moneybox’s content capitalises on this appetite for video, and it’s clear they’ve done their homework when it comes to what does and doesn’t work when speaking to millenials.
What banks and other finance institutions should take away from this is the importance of conversation. We live in an age where dialogue flows both ways, and brands need to be open, dynamic and receptive in order to make a connection.