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Millennials: Verifying the Underbanked Generation

Millennials: Who Are They?


Millennials are those born between 1982 and 2000, making the oldest of the generation 36 and the youngest 18


There are over 83 million Millennials, which is one quarter of the population of the United States


Millennials outnumber the baby boomers by nearly 8 million people


One of the most diverse segments of the nation’s population, with 44.2 percent being a part of a minority or ethnic race

*United States Census Bureau, 2016

Enormous potential, but at what risk?

Of course you want to do business with Millennials…

This huge bubble of consumers, roughly defined as the cohort born between 1982 and 2000, is an essential source of prospective customers for financial services. The oldest among them are in their mid-30s, entering their peak earning years, while the youngest are now starting college and forming their preferences in financial services.

They’re important for two reasons: First, their sheer numbers. There are 83.1 million of them – exceeding the number of baby boomers by almost 8 million – and they represent more than a quarter of the U.S. population.

Their financial clout is even more eye-opening. They are already spending roughly $600 billion every year. By 2020, it’s estimated their annual spending will reach $1.4 trillion.

For risk managers, though, Millennials are a double-edged sword. For all their enormous potential, they also present significant challenges, because they behave differently enough from their predecessors to make the usual tools for risk evaluation either unreliable or irrelevant in far too many cases.

Fortunately, there are techniques and data available to enable risk managers to address two of the most fundamental challenges in evaluating Millennials :

Identifying them
It may seem surprising that this most fundamental element of risk evaluation can be uncertain – but the identifiers that worked for other generations are not nearly as reliable for this one.

Evaluating their likeliness to purchase and intention to pay
As with core identifiers, the traditional tools used for these basic calculations are too often not useful for a significant percentage of Millennials.

Millennials: Spending Money


They are already spending roughly $600 billion every year


By 2020, it’s estimated their annual spending will reach $1.4 trillion


They represent nearly 30 percent of total retail sales.


Why Are Millennials so Challenging?

You’re likely to first encounter a Millennial prospect through your website, because they are far more comfortable with seeking out financial services online than previous generations have been.

The first challenge, then, is verifying their identify on the fly – and reliable identifiers are not always easy to come by. Far fewer Millennials have landlines tied to their residence, for example. At the other extreme, an individual may have too many, unlinked identifiers such as multiple email addresses, introducing uncertainties into the verification process.

But identity is only the first hurdle; evaluating risk can be even more difficult. For many Millennials, big-ticket purchases and credit histories are notably thin. Many are as much as a decade behind their parents in traditional “adult” behavior, such as getting married and having children – and many simply do not place the same value on home and car ownership as their predecessors. At the younger end of the cohort, they are only now beginning to build their credit.

In addition, Millennials are far less likely to have a strong relationship with a traditional bank. According to some estimates, more than 30 percent of Millennials are unbanked or underbanked, making reliable data traditionally used for risk evaluation hard to come by.

This combination of challenges requires risk professionals to look at alternative identifiers to accurately verify that millennial consumers are who they say they are – and, once identified, to find new approaches to evaluate their intent to purchase and pay. Fortunately, alternatives are available to enable your company to do business confidently with these important consumers.

Millennials: Going Mobile


of Millennials have never written a paper check


of Millennials would consider a branchless digital bank


Millennials account for 41 percent of the total time that Americans spend on their smart phones

*Statistics from Firstdata

Look to Mobile and Emails

The stereotypical image of a Millennial is a young adult glued to a smartphone.

There’s a reason for that. Landlines are relics for even the oldest Millennials; they haven’t cut the landline cord because as adults they have never had one to cut.

They grew up with a mobile phone as their primary means of communication, and have maintained that preference into adulthood. Moreover, consistent mobile accessibility is a priority – for many, almost a necessity.

For that reason, a substantial percentage of Millennials have maintained the same mobile phone number, and for some the same wireless carrier relationship, for many years.

Consequently, if traditional identifiers like landline phone numbers are harder to come by, you can look toward that mobile phone for an answer. For many Millennials, their mobile number is an effective and consistent identifier that can reach all the way back to their teen years.

Similarly, Millennials are the first generation that grew up with email. And while most have not maintained their email address with the same focus they have dedicated to preserving their mobile number, an email address can be a useful identifier for Millennials – as long as the email data you use to confirm identity is current and correctly linked.


On-demand access to the most comprehensive identity data available is essential for real-time identity verification – and for Millennials it must include mobile phone number and email addresses.

The data you use for this function must also be up to date, and multiple email addresses must be correctly linked to the individual identity to reduce confusion and false negatives.

Proxy Models That May Help – But Not Always

To determine likeliness to buy and intention to pay, you typically start with credit history. For many Millennials, however, that measure is unreliably thin, so risk managers have turned to substitutes.

Work history and income

For some Millennials, this data can provide valuable insights into risk. But a significant percentage of them joined the workforce in the late 2000s, during the global recession. As a result, they faced limited job opportunities and a reduced earning potential. And even those who fared well entering the workforce share with their generation a strong interest in maintaining a balance between life and work.

These factors have influenced how Millennials choose to support themselves. Many have turned to freelance and consulting work, for some because it is their best employment option, and for others because it offers more freedom and flexibility than a conventional job.

Regardless of the reason, this approach to work does not provide the solid, reliable income history you prefer for risk evaluation.

Home ownership

Once again, this information is helpful for Millennials who have purchased a home. But the same economic downturn that challenged Millennials entering the workforce affected their home-buying options; they faced reluctant lenders and difficult loan requirements.

As a result, many older Millennials entering the traditional home-buying years were prevented from buying. Moreover, they do not place the same importance on home ownership that other generations have, so that even as the housing market has recovered, many still choose to rent, attracted by the freedom and flexibility of not having a mortgage.


For this generation, even the tested non-traditional methods of evaluating purchase interest and intent to pay may not provide the answers risk managers need.

Fortunately there are additional approaches – although they do require richer, more detailed consumer data, accurately linked to identity data.

Alternatives to Proxy Models That Will Help

As we’ve seen, traditional pre-credit approval and even proxy scoring models may not deliver sufficient insight to make an accurate risk assessment – or may characterize Millennials as poor risks when in fact they are good prospects for your services, offering significant revenue potential without undue risk.

The solution is to dig deeper into their history and behavior to uncover insights into long-term stability. Using consumer data for specific attributes, you can create an identity profile that is almost as powerful as traditional credit indicators in predicting willingness to purchase and intent to pay. Your profile could include:

Housing history and address longevity

Even without a history of home ownership, you can consider rental history, length of time at current address, and the number and frequency of address changes.

History for automobiles and other assets

The type of automobile an individual is driving and how long they have owned or leased it can provide insights into stability – as can the history of other significant assets such as a motorcycle or watercraft.

Mobile phone ownership and plan

Mobile devices are important to Millennials . How long they’ve owned their phone and whether they have a traditional or a pre-paid plan can shed light on their stability.

Demographic and lifestyle attributes

Factors such as the presence of children, estimated wealth score, and education can be strong indicators of stability.

Consumer purchasing and lifestyle behavior

Attributes such as regular clothing purchases, interest in technology, interest in food and wine, vacation travel, and even charitable donations can help gauge a consumer’s stability, and intent and ability to pay.


To evaluate Millennials that fall between the cracks of traditional risk evaluation tools, you need on-demand access to complete and up-to-date demographic and attribute data, covering online and offline behavior and purchases in as much detail as possible. This attribute data must also be correctly interlinked with authoritative identity data.

Deeper Data is the Key to Millennials

As Forbes noted in a report summarizing the 2015 ABA National Convention:

“Millennials aren’t coming – they’re here. Given their dominance, banks must now prioritize their approach to attracting constituents of this key demographic.”

They’re simply too important to the future of every financial services provider to ignore – your business included. Unfortunately, it is more difficult to verify their identity and assess the risk they present. The traditional measures of creditworthiness simply do not work as reliably with this generation, because those measures rely on attributes – such as credit card history and home ownership – that do not accurately reflect Millennial priorities, or their degree of financial responsibility.

As a result, you may be rejecting prospective Millennial customers who would in fact be profitable, valuable contributors to your business. Fortunately, by using measures that more accurately reflect Millennials priorities and behavior, you can make accurate predictive determinations that expand your opportunities while protecting your risk exposure.

The key is having access to accurate, complete and up-to-date consumer identity and attribute data with the depth to provide the insights you need – and a data partner with the experience to help you identify how to use it to meet your company’s growth strategies and risk profile.


While Millennials may not have the strong, traditional paper history to indicate purchase intent, key stability, behavioral and lifestyle indicators can provide banks and financial institutions with the additional means needed to successfully evaluate the potential spending power of millennial consumers.

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