Millennial Risk or Reward? Alternative Approaches Required

By Dave Dague

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With millennials said to be a decade behind their parents in traditional adulting activities such as getting married, having children and moving to the suburbs – many are just starting to tap into or focus on building their credit. The largest generational cohort today (those born from 1982-2000 and currently 17-35 years old) is one that came of age during The Great Recession. Generally speaking, Millennials trust technology over banks and – thanks to the recession and rise of the gig economy – ­many are expected to make significantly less money than their parents. This can be a big problem for the teams that need to appeal to this large group yet are responsible for determining their likeliness to buy and intent to pay – prior to making an offer of credit.

Compounding this is the changing landscape of consumers’ identities. With the accessibility of financial services online, banks and lenders need to quickly verify the identities of inbound, consumer-initiated inquiries and/or applications. For previous generations, this type of verification relied on social security numbers and purchase histories to determine likeliness to buy, intent to pay, among other things.

For millennials, however, big ticket purchase and credit histories are notably thin. Some estimates say more than 30 percent of millennials are unbanked or underbanked. This is pushing credit and risk professionals to look at alternative identifiers to accurately verify that the millennial consumer who is calling in or submitting an online application is who they say they are, underscoring the importance of using on-demand inbound identification and alternative identifiers for “thin file” consumers. Just as a social security number has long been the identity lifeblood for financial services, many millennials’ identity and financial stability is more appropriately confirmed and initially assessed by non-traditional identifiers.

Mobile a Key Identifier for Millennials

Millennials today most likely haven’t cut the cord because there was no landline cord to cut. Even the oldest set of millennials never connected via a traditional landline phone in their adult years and grew up with a mobile phone as their primary means of communication. For many millennials, their mobile phone number is an effective and consistent identifier that can go back to their teen years. Also, many prioritize mobile accessibility over other necessities and therefore have maintained the same phone number and/or wireless carrier relationship for many, many years. Similarly, this group is the first generation that grew up with email, which also can be a helpful identifier for millennials.

Looking Beyond Identification to Likeliness to Buy and Intention to Pay

Once millennials’ identity can be confirmed, what about the intention to pay and likeliness to buy – a financial services marketers’ goldmine.

With notably thin credit files, common substitutes are work history and income identifiers – both of which are complicated to ascertain for this group. Many millennials joined the workforce in the midst of the recession – limiting their entry-level hiring opportunities and earning history – which affected how they support themselves. In part because of this experience as well Go to the full article.

Source:: Business 2 Community

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