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Friday
- October 27, 2000
Young Net Surfers Tomorrow's Financial Consumers
Young consumers will quickly shift their focus from entertainment
to finance and grow into prime financial customers. According
to a new Technographics Report from Forrester Research, Inc.,
today's Web-savvy 16- to 22-year-olds will send shockwaves
through the online financial industry and bring with them
the unique expectations and needs of a Net-powered generation.
With technologies such as Napster, young consumers
are catalyzing a revolution in the entertainment industry.
Today, the battleground is music because that's what kids
care about. But as they mature, young consumers will rapidly
shift their focus to online financial services including
loans, insurance, and investments.
"Having grown up in a digital world, young
consumers are not simply ahead of adults, they're different
from adults," said Ekaterina O. Walsh, Ph.D., analyst
at Forrester Research. "The Net generation is just beginning
to show financial potential, but it will quickly grow into
a prime market. And this group's reliance on the Net will
impact its financial choices."
It may appear that young consumers simply live
on the edge of the technology adoption spectrum but there's
more to it. Instead of just adopting technology faster, young
consumers actually have internalized it -- because they have
grown up with the Net, they use it instinctively. Ninety
percent of online 16- to 22-year-olds do something else while
surfing on the Net, like listening to music, watching TV,
or chatting on the phone. Wired young shoppers also engage
in more sophisticated online activities, such as demand-driven
pricing and file sharing. More importantly, many applications
today are not only widely used by young consumers, but they
are often created by young people as well. Napster was created
by a 19-year-old college freshman who realized technology
could make his life easier.
As young consumers zip past a series of life
changes in their late teens and twenties, their lives become
loaded with financial responsibilities. At 22, virtually
all consumers have bank accounts and 83% have credit cards.
Key milestones in young consumers' lives often involve a
financial aspect, such as school or car loans. And although
16- to 22-year-olds are just starting to dabble in investing,
they have little fear -- they are 23% less likely to say
that they don't like taking investment risks. These Net-powered
investors are almost four times more likely than adults to
trade with an Internet-only firm.
As soon as young consumers start adding financial
complexity to their lives, the Net plays an integral part
in how they will research and transact. The propensity to
research financial products online is stronger in young consumers
than adults. The gap with adults opens widest with credit
cards, which young consumers are three times more likely
to research online. And while fears about security and privacy
dampen adults' desires to apply online, young consumers click
away -- they are four times more likely to apply for financial
products online. And digital transactions have already taken
off among wired young consumers. One-third of bank account
holders make account transfers, a quarter pay bills online,
and of those with brokerage accounts, 55% trade stocks and
12% trade mutual funds.
"Although it's impossible to predict how
these kids will revolutionize financial services, it's not
too early to examine how their technology attitude shapes
the universe of brands they will consider when managing their
financial lives," added Walsh. "These consumers
already consider technology and Internet companies as financial
providers and trust Yahoo! and Amazon as much as Fidelity
and E*TRADE to hold their money."
For the Report "The Next Financial Consumer," Forrester
drew on data from three surveys, with a combined total of
117,000 consumer responses in North American households.
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