Dear banks, here’s the thing: millennials (a.k.a. Gen Y) and Gen Z love blockchain and cryptocurrency. They love doge. Banks? Not so much.
So you have an uphill climb. It’s not just about digitalization, which, let’s face it, most of you have just been paying lip service to for years before the COVID-19 pandemic forced every company to finally move faster than Internet Explorer — which, apparently, some of you are still using. You’re dealing with a different mindset altogether, because while millennials and Gen Z sometimes hate each other, one thing they hate more is traditional banking. And when I say “traditional banking”, that includes what passes for digital banking these days, where many of you are just porting existing processes and experiences to your websites and mobile apps. So you still have legacy products and services, and legacy people and processes, and you’re just replicating the same inefficiency and bad customer experience on digital platforms. That’s not innovation. That’s marketing BS.
Dealing with digital natives
Unfortunately, you can’t fool millennials and Gen Z the same way you can convince your executives and board members with decks, and your existing Boomer customers with band-aid digital banking solutions. They’re digital natives. Mobile banking and e-wallets like GCash and PayMaya are already old school to them. They have already embraced blockchain and cryptocurrency, even if you haven’t.
Blockchain. Cryptocurrency. Bitcoin. Ethereum. Decentralized finance (DeFi). You know, all those words that the digital people at your bank have been telling you about for years, while your eyes glazed over.
You know you’re in trouble. Even before — what’s that word again? Blockchain. Yes, before you even heard of blockchain, it was already hard to convince customers to open a savings account. And we’re not even talking about millennials and Gen Z. The truth is that the main reason most people open a bank account is because they’re forced to. Because these are payroll accounts that their employers require them to open. Otherwise, no one would willingly want to go to a bank and open an account, because the process is so tedious and painful.
So can you imagine how even more painful and tedious banking is for millennials and Gen Z? They are digital natives used to multitasking. Who love apps that provide instant gratification. Who live every day in virtual worlds that break down geographical borders and unite them based on common interests, whether they’re video games or K-pop.
They don’t need to be part of your world. You want to be part of theirs.
Who’s the snowflake now?
So you banks need to change the way you do things, and you need to understand millennials and Gen Z, who have a different mindset and relationship with money. Your future literally depends on the young people that many Boomers and even some Gen X keep dismissing as snowflakes.
“According to 2019 Morgan Stanley research, millennials are the largest driver of net new loan demand and will continue to be for the next eight years. Gen Z will age into the key 25- to 40-year-old lending sweet spot next. And while many in Gen Z are still kids, they could set the pace for how banking evolves. That’s because, according to Morgan Stanley, up to 80% of smartphone-carrying Gen Z members are already using mobile banking.
“To lead and grow, banks must rise to the challenge of engaging these younger, massively consequential consumers through innovative new approaches to traditional banking. Getting it right will require more than adding digital features to legacy offerings. I don’t believe simply digitizing current experiences will drive growth.”
Blockchain is the asteroid
The funny thing is that while I’m Gen X, I find a lot to admire about millennials and Gen Z. I’ve been a digital immigrant since the last millennium, and enjoy reinventing myself and learning from younger people. I have a lot of respect for the younger generation. Particularly since they’re the ones I’m usually working with to change the world and clean up the mess that Boomers have left behind. I also empathize with them, because if I can’t stand digital dinosaurs, then I can only imagine how much more frustrated they are. By the way, while my daughter is Gen Z, I’m the one who actually got her addicted to TikTok.
As digital natives, they’re more aware that, really, money is a collective fiction the world believes in, even more so now that everything is becoming virtual and cashless. As one of my favorite authors, Yuval Noah Harari, has said, what makes humans different from other animals is the ability to create and believe fiction.
“All other animals use their communication system to describe reality. We use our communication system to create new realities. Of course not all fictions are shared by all humans, but at least one has become universal in our world, and this is money. Dollar bills have absolutely no value except in our collective imagination, but everybody believes in the dollar bill.”
No wonder then, that new fictions are being created, in a world where money is data, and stock markets can be driven not by “fundamentals”, but by memes.
There is no bubble
Bubbles are for Boomers. Young people don’t panic when the value of cryptocurrency falls, because they know it will rise again. So it’s like riding a wave. Like playing a video game. Which is exactly how day traders disrupted Wall Street, trolling the Gordon Gekkos of the world. And why the initial public offering of major cryptocurrency exchange Coinbase has exceeded all expectations.
As Garry Tan, the 40-year-old co-founder of Initialized Capital who previously co-founded Posterous and was a partner at Y Combinator, said in this interview with Bloomberg, crypto investors already have diamond hands.
And here’s how he painted the big picture in the interview.
“You know, if all of crypto is worth two trillion today, you know all of gold is 10 trillion. You know we are sort of maybe further along in that journey, but that’s really only one of a whole bunch of use cases that are coming online that I think are really going to remake all of society.
“And to you know weave the story together, I think it’s really fitting that [Coinbase CEO] Brian [Armstrong] learned about startups at Airbnb.
“That was software eating hospitality. Bitcoin and crypto via Coinbase is software eating all of finance.”
Everyone has different motivations. Some want to revolutionize finance. Others love the technology. Some are sticking it to Wall Street. Others are motivated by greed. Some want to earn a living. Others want to donate to charity. Some are doing if for the lulz. Hello, Dogecoin!
If all this sounds messy and scary to you, well, it should. This is DeFi. Disruption. Revolution. And some of you will be the aristos headed for the guillotine.
This is the reality. You might delay it, but you can’t stop it. Because the next generation won’t let you.
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