The Positive Impact of Fintech (Financial Technology) on Company towards millennials consumers in Indonesia

Technology these days has grown rapidly on every generation as they often apply and use technology since it is simple to use just by a touch of a finger. Technology is a helpful tool for people both personally and professionally, such as to enhance their business, to look for some information or news and to provide some entertainments as well. Specifically for millennials as the generation with the most rapid growth of technology usage, the trend of the technological application according to Vogels (2019) millennials’ trends always increase on ownership of technology every year comparing to other generation that also grows every year but not in the same fast rate as millennials. Likewise, the millennials generation reaches the number of 86% in the utilization of social media. In fact, the millennials generation won’t do something complicated so technology in this 20th century has a big impact on society. According to Astandu (2019), fintech would be helpful for millennials consumers since they opt for cashless transactions and it is easier to keep records of their finance.

Other than consumers, technology also have a big impact on companies, it helps companies to increase their rating by adding Fintech feature such as cashback and promo so consumers who avoid something complex would be interested to download the application and use it as their payment method. Based on the research by Cooper (2018) financial technology cooperates with many business firms in various ways such as innovating accounting software to financial managers, insurance, and business valuation services. For instance, one of the fintech company called Funding Circle which has a huge impact on financial inclusion by granting loans to small-businesses faster than traditional banks. James Meekings as the co-founder of Funding Circles has claimed that “We created an infrastructure, where any investor, big or small, can lend to small businesses.”

In addition, according to a study from the University of Pennsylvania, there are 6 ways that fintech has an impact on small companies. First, payment processing such as online payment makes them easy to do transactions just by plug-and-pay option from their smartphone. Secondly, e-commerce enables small businesses to open up shops because they have an online payment system that makes it simpler. Thirdly, money transfer using fintech companies especially for overseas bank transfer will decrease the fee that used to be charged by conventional banks. Fourth, funding from online lenders makes it easier for businesses to secure the money that can be used to operate their shops. Fifth, accounting using fintech provides several businesses with accounting features that keep track of their financial spending. Lastly, fintech enables to increase customer insight & engagement by indicating patterns and consumer interests that will boost the performance of the company.

The aim of this paper is to evaluate the positive effects of the use of financial technology on the millennials generation. The methods of evaluation will employ strategic analysis through online surveys and analyses of journals. Therefore, the research question that is going to be used is :

1. Do millennials prefer cashless transactions compare to cash transactions?

2. To what extent are the impacts of Fintech on millennials

This study can help companies and business owners to develop the secure online application that most people are concern about and to maximize the benefit of fintech to gain more consumers.

Conceptual Frameworks

1.1 Financial Technology

As discussed in the introduction, these days fintech has grown dramatically by reason of millennials generation prefers to do cashless purchasing. Looking back to history according to Zigurat as certified by Universitat De Barcelona (2019), fintech has several phases which are Fintech 1.0, Fintech 2.0, Fintech 3.0, and Fintech 3.5. To begin, Fintech 1.0 about infrastructure which was established in 1866–1967 use the telegraph to permit people to send financial information from one place to another. Secondly, the establishment of bank marks the Fintech 2.0 during the period of 1967–2008 as the beginning of the modern fintech world, in which Barclays’ bank has introduced the first ATM and calculator. Thirdly, the era that is indicated by the emergence of new players is Fintech 3.0 which was founded in 2008 — now, this era begins due to the rise of distrust among the general public on traditional banking systems. Moreover, in this phase smartphone is the most important technology for the millennials generation because they often access the internet and financial services. Lastly, Fintech 3.5 is the current phase of online financial platforms where both fintech and banks collaborate with each other to provides better services on both parts.

1.2 Millennials consumers

Millennials are those people who were born from 1981–1996 they are usually stereotyped as lazy and selfish; however, they are also characterized as being tech-savvy and cool. Millennials are growing up as people who are able and understand more about technology so they are too used to getting everything easy by the command of technology. In addition, the millennials generation really matters anywhere such as e-commerce, financial services, and etc. Therefore, they are usually the main target market in any business (Page, 2019).