Story Highlights:
Youd think people would have more to talk about during their senior year of high school, but for my class it always seemed to be the stock market.
Even if we didnt know much about what was happening, we felt it.
Our parents were losing their jobs. We watched the family savings accounts start to dry up. And we even started to question if college was the right move after graduation, especially with potentially no jobs waiting for us after.
I later realized we were in the heart of whats now known as the Great Recession.
This time in our history affected my entire generation.
How could we trust anything having to do with money after that?
That distrust has lasted especially when it comes to our banks. Big banks are a symbol of corruption and greed today.
Millennials even listed all four big United States banks (Wells Fargo, Bank of America, JPMorgan Chase and Citigroup) in their top 10 least-loved brands, according to a new study.
Why would anyone want to put money in the hands of those who would lend it out to people who cant pay it back? Especially when we hardly get any part of the interest.
Oh, and the fees! Things like getting charged to use another banks ATM, sending money or everyones favorite: the overdraft fee.
But the latest and greatest is the fee for talking to the teller.
In fact, millennials are so sick of this outdated system that a lot of us have discovered a new way to bank.
And you stand to make huge gains by following the money in this transformation of old-world banks.
Instead of traditional banks, were starting to keep our money in payment apps like Venmo and Squares Cash App.
Venmo just hit the 40 million user mark, and Square Cash is now closing in on 20 million. That’s millennial money at work.
But more importantly, were slowly starting to see these turn into bank accounts. Both now offer debit cards for your account. Square even allows direct deposit.
Apps like these take all the hassle out of using banks.
The next step is moving fully into digital-only banks, or neobanks.
This new wave is setting out to capture the trust of millennials all over the world. With features like no minimum balance, no fees and the ability to invest directly from your bank account, theyre already at an advantage over traditional banks.
And the numbers speak for themselves.
One bank called Chime now has over 3 million accounts, which has tripled from 1 million since last January. The U.K.s top digital bank, Monzo, has doubled its customer base from 1 million to 2 million since October. It also recently got a gigantic $144 million worth of funding, and its now valued at $2.5 billion.
Of course, banking is one of the largest industries in the world, so moving away from traditional banks is going to take some time.
But that also means even more upside for the next wave of companies.
When neobanks start dominating the market, its going to be a disaster for the banks being disrupted.
Right now, the four big U.S. banks hold an incredible $5.15 trillion worth of deposits.
However, only 2% of that turns into profit. So, it wont take much for these companies to really feel the impact. And when you consider that this disruption is being caused by an entire generation, I dont think were far off from a money revolution at all.
Like I said, neobanks are extremely new, and as a result there arent many ways to invest yet.
But theres one investment that I think is close. Its the ETFMG Prime Mobile Payments ETF (NYSE: IPAY). This exchange-traded fund (ETF) invests in things like Square and Venmo, which are really the intermediaries of this huge transition.
The ETF is already up almost 40% year to date.
But I think it will climb even higher with the entire millennial generation leading this wave.
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