A commentary at Digitaltransactions.net by Peter Jensen, chief executive of RocketFuel Blockchain Inc., explores the reasons the Millennial generation are not only unintimidated by cryptocurrency, but also prefer it as the digital payment of choice:
As the generation that grew up during the financial crisis and the expansion of the Internet, Millennials realized the shortcomings of banks and credit cards (high service fees, fraud, and annual charges). Instead, they sought to promote a digital currency that was more apt for the age of the Internet. Indeed, a Sustany Capital study found that around 88% of Millennials want to own cryptocurrencies as an investment. As the age group that constitutes the largest portion of the current workforce, Millennials will shape the future for all-digital payments.
A recent study from Piplsay observed that Millennials were most likely to adopt cryptocurrencies as a form of payment, with 53% stating that they were very likely to purchase products and services with crypto. Meanwhile, a report by PaySafe found that 53% of Gen Z preferred shopping in stores offering contactless payments. These statistics all point toward a digital future where, eventually, credit cards and the technology they run on could be rendered obsolete.
Jensen goes on to note that crypto-payment services offer some worthwhile features to discerning Millennials, including:
- Lower fees
- Blockchain technology that makes them resistant to fraud
- Cross-border payments that bypass FX conversion rates are possible
Still, even Jensen will admit cryptocurrency will need a bit more "polish" before it's ready for prime time and widely adopted:
The promise of cryptocurrency is simple: a globally connected, decentralized payments network that allows fast, secure payments, including cross-border payments. Have we been able to create such a system? Yes and no. The industry has developed the means and technology (blockchain), but there are very few services that can actually make direct payments via cryptocurrencies, despite all the clever marketing that makes it seem that way. So, Millennials recognize that cryptocurrency offers all the convenience and streamlined transactions of modern credit cards, but without high interest rates and risks.
As we've noted previously, JPMorgan & Chase has adopted blockchain and cryptocurrency technologies with its JPM Coin, and Facebook has entered the fray with its Libra Coin. Still, the banking industry is being cautious with adoption of blockchain, as there are government regulations to navigate, along with the need for mass adoption in order for the technologies to make a meaningful impact.
Cryptocurrencies indeed have the potential to be the preferred payments method of the future for millennials and beyond. Banks and financial institution must be proactive with this trend or be left behind.
However, this does not mean that traditional payment methods will be eliminated -- particularly when it comes to business and large expenses. It's important for banks to optimize their processes for traditional business channels like checks, modernizing their platforms through technology like artificial intelligence while integrating new payment methods to adjust to their customer's preferences.