Money is the most challenging aspect of my nomadic lifestyle. The ability to access, move and receive money for the work I do is a simple problem that is buried in complexity. Ridiculous fees, long waiting periods, and inconsistency in services plague me daily.
As a millennial, my generation will be the first of an increasingly mobile and dynamic demographic traveling with no fixed address or working as self-employed freelancers. We will require flexibility in how we earn money. We will require faster and lower cost alternatives to paying remittances if we are from the developing world. And most importantly, we will need better guidance to save for the long-term with a severely weakened economic head start.
“Millennials are often forced to focus on the short term—paying rent, paying off student debt—rather than the long-term, due to macro forces,” says Vicki Zhou, co-founder of Wise Banyan, a startup that aims to provide financial advice at no cost to the customer. While it may appear that my generation struggles with finances, the real struggle is "with a system that has been uninterested in providing good options to better their financial lives," Zhou says.
I agree with her. I’ve been travelling and working through Asia for more than three months now, and I’ve been constantly frustrated with money interactions. These are the four main problems I’ve encountered that need to be solved:
Access to my money is expensive
At best, current mobile financial services provide basic transactions that don’t require me to be in a proper branch. I can monitor accounts, pay bills, and move money around to some extent. But access to my funds—in its physical form—is still far from being a viable option. Banks are still bound by regional limitations, and their answer to this problem is simple: pay us a lot of money to get a hold of your money.
A two-week vacation may not make ripples in your bank account, but if you’re like me and living abroad for a prolonged period of time—and unable to open a local bank account—it’s a crippling expense.
If I want to take out money from an ATM, I have to consider the large cost associated with that action. A fee from the machine I use on my end, a fee from my bank to convert my money into two different currencies (my Canadian dollar is converted to US dollars before it’s converted into the local currency), and then a fee from my bank for their “help” in the transaction. I’m forking out close to $10 per swipe. It’s insane. I can’t even begin to imagine what this transaction is like for immigrants sending remittance payments to their families back home—it’s no wonder much of the developing world is still warming up to basic banking services.
There are a handful of startups that want to genuinely solve this problem: BitPesa, Simple, and even telcos like Airtel. But in most instances, these companies have to partner with a regulated financial institution—which is usually a bank—to broker the payment. The result is just another middleman.
Tech has made banking primarily about transactions
The money management technology I’ve encountered is mostly geared toward short-term transactions. Pay a bill; send a transfer; review your data; make a budget; track your expenses; spend your money in ways you couldn’t before. That’s it. You can find a variety of speculative financial apps that promise to make the inexperienced person into a smart market player—but those are just scams, to be honest. No app will magically make you an Oracle of Omaha. I don’t think digital currencies like BitCoin are easy enough for the majority of people to understand. This doesn’t mean I dismiss the innovation taking place. I think it’s a great starting point, but still a very complex one. At this point, I’m in the camp that believes Bitcoin will do to money what Napster did to music.
This is where I point the finger at technology, too. Outside of a group of promising startups aiming to provide simpler, cheaper money management services for the "recession generation," the software being developed isn’t doing enough to focus on long-term wealth growth. But in my discussions with Zhou, she reminds me that millennials need to take responsibility for their choices. “Whether the focus is on investing, mobile payments, or alleviating student debt, there is a growing group of technology-driven companies intent on making our financial futures stronger. It’s up to millennials to make their financial decisions a priority, which will have the long-term effect of making financial services better for everybody.”
Getting paid is expensive
My clients pay me via PayPal or direct transfers to my bank account. The money I earn for my Forbes work also comes to me digitally. It’s unfortunate that fees—a recurring hurdle—can eat such a big hole into my sources of income. Why does it have to cost nearly $20 to put money into my bank account? Does the server technology and automated algorithms managing my money really cost that much?
There’s no consistency, and that can be a problem for forecasting my earnings. I’ve been unable to understand how vendors like PayPal or my bank decide to charge me for their services. Some weeks the fees are higher, and some weeks I don’t get charged at all (which is a welcomed miracle).
“There is a lack of transparency, which makes it hard for anyone really to figure out exactly how their products or services work,” says Zhou. “Combine this with the fact that many started their careers during a financial crisis, and the ease at which they can uncover information on the Internet, it’s no wonder millennials are skeptical of the current financial system.”
The most important services take forever
It takes five days to move money around. Paid invoices from clients sit in my PayPal account, then a week later appear in my bank account with a sizeable fee chopped off. Moving some of that money into a long-term savings account then takes an additional two weeks. If I need that money for an emergency, I have to wait five days for the bank to clear it and give me access.
The services I use have the appropriate legal relationships in place for these transactions to move quickly. So why is my money still held for long periods of time? To say these are security assurances makes me question the service. I want my money to be secure, but I also want to access it with ease for moments that matter.
In the end, it comes down to relevant options
A 2014 financial education survey by TD Bank had most millennials pining for a bank that placed emphasis on local, small-town atmospheres. Everyone knows your name, and you somehow trust the person who is managing your money because of it. I think this is standard customer service where you’re a person, not a number, but I don’t see this changing the way my generation can strengthen its wealth.
“The financial sector needs to look at where people are going, rather than just where they are today,” say Zhou. Banks provide options, but they aren’t the options I need. I want my bank to have services that understand my mobile lifestyle and work in different local currencies. I want my bank to charge me a fair rate for their services—not high fees for every transaction. I want my bank to make moving money easier. I want my bank to protect my money. And I don’t want to pry my own money out of my bank’s hands.
I’ve given up on established financial institutions to crack this problem. Real innovation in banking will mean affordable access to my funds when I need it the most. To the startups out there: I don't need a solution that lets me deposit a cheque via my smartphone by taking a picture. I want services that actually help me manage my money for tomorrow, not today.
