5 Reasons Why Millenials Love Peer to Peer Lending
1. Distrustful of banks
Millennials are a generation brought up during the midst of the UK’s financial crisis. Leaving university at a time when job opportunities were few and far between and student debt was through the roof, it’s fair to say that they’ve have had their share of bad experiences when it comes to finances! It’s therefore easy to understand why there is such cynicism and antipathy when it comes to traditional financial institutions and the advisors that support them.
With banks offering derisory low interest rates to savers and with no prospect for young people to be able to save enough to buy a house or provide for their old age, something had to give. As with any problem, there’s always an appropriate solution close behind. In other words, when life gives you lemons, people make lemonade! With technology now disrupting almost every industry, it’s no surprise that new fintech companies offering a better way of banking and investing, and capturing the imagination of a younger generation in the process.
With needs comes a desire and with desire comes action- which is why many young people are now looking to crowdfunding and peer to peer investments as an alternative way to build their finances. As awareness of the new opportunities grows, savvy millennials are starting to use them to their advantage.
2. Higher returns, more flexibility
In contrast to the more rigid, traditional financial institutions peer to peer lending is offered almost exclusively online and via mobile apps, providing their investors a level of flexibility and rates of return that traditional institutions can’t. To tech-savvy millennials, when something is “online” it simply translates (in their mind) as something that’s intuitive and easy to use i.e. there’s no complicated paperwork to worry about. While the borrowing and lending process is already simple it’s made even simpler with cutting edge automation, user-friendly dashboards, and other user-based tools.
3. It’s a generation thing
According to research conducted by Thin Cats, those aged between 18-34 are more likely than over 55s to have invested in a peer to peer lending platform. P2P Finance News reported that more than half of the p2p lenders are millennials. Some platforms even outlined that as much as 53.9% of their investor base identified as millennials. It’s definitely not a shrinking minority!
4. It’s not you, it’s me…
When have you ever heard a millennial complain about a lack of face to face communication? There’s a reason for that. Millennials have grown up with technology, making texting and instant messaging a much more preferred way of communicating. These days even shopping online is favoured over physical shopping. Who wants to speak to a cashier anyway! It’s all about instant gratification. It would make sense then, that this trend also applies within the world of finance. P2p lending platforms have long since cottoned onto this trend and have found themselves investing a lot of time and money into their user interfaces, making them both easy to navigate and intuitive.
With the industry’s massive online presence, knack for flexibility and little to no need for face to face interaction, fintech is exceptionally matched to the average millennial.
Traditional investing institutions aren’t always so open minded when it comes to who and who can’t invest their money. There are various criteria that you must first fulfil before being eligible to invest. Minimum investment levels are often too much for some to get started as is the high price of getting independent financial advice. Just because you’re not as ‘financially well off’ as somebody else, doesn’t mean you shouldn’t start planning for your future as soon as possible. After all if you only plan to start investing when you are well off you will probably never get there!
Thanks to the emergence of micro-investing platforms this all changed. Investors are now able to invest smaller amounts of money than ever before, making investing with attractive stable returns much more accessible to a larger (and ever-growing) pool of people. With the introduction of new and exciting apps (like Chip, Moneybox or Nutmeg for example), smaller-scale investors now have a means to save their money in new and innovative ways.
Once the preserve of the wealthy, the world of investing is experiencing a monumental shake up. Pioneering peer to peer lending platforms and micro-investing platforms continue to challenge the status quo, leaving banks and other traditional institutions well and truly in the dust. The future of investing has already begun. Is it time you jumped aboard?