In a Facebook study of those aged 18-34, analysts found that 92% of those surveyed do not trust financial institutions when it comes to handling their money. It is hard to blame them as well, seeing as it was the same financial institutions which told them to keep borrowing money for their education no matter what field they wanted to enter.
At the same time, only 5% of Millennials feel as though their bank understands them both personally and financially.
Relying Less on Banks in the Future
This may become a very real concern for both locally-owned and institutional banks in the coming years. The younger crowd has access to much more in the way of information than Boomers or even Generation X. More information will probably lead to better-informed decisions regarding what to do with their money, including where they can get the best interest rates for loans and deposits, as well as how to properly invest their money.
Much of this goes back to student loan debt, which has started to get out of control, forcing them into negative financial situations their parents had the luxury of avoiding. Fundamental problems have arisen out of the fact that both Federal and private lenders have freely given out student loans, knowing that they are about as close to risk-free unsecured lending as you can get.
While it might be difficult to limit student loan totals according to major, one option may be to take away the special status student loans receive in bankruptcy proceedings. Adding an element of risk for the lender may take away some opportunities for a few people, but it could potentially start to deflate the student loan bubble without it popping.
Financeography Tip: Adding fuel to this mistrust is the fact that about 24% of credit reports have some type of error. Reviewing your own credit report can help determine if an error exists and how it can be fixed.