Banks
How Affluent Millennials are Changing the Finance Industry
How Affluent Millennials are Changing the Finance Industry
We previously showed a set of nine charts that show the views of Millennials on debt, banking, and investing. We also recently showed what Millennials want in a first home.
Today’s infographic follows a similar thread, looking at the values of the 15.5 million affluent Millennials in the United States, and what the finance industry will have to do to appeal to this group.
Probably the most important fact worth considering is the sheer wealth that this group will command as they inherit money from the Baby Boomer generation. To start, they already control $2 trillion of spending power each year. However, it is estimated that when it is all said and done, they will command an additional $59 trillion in net worth with inheritances.
Through a survey conducted by LinkedIn and Ipsos Reid, the biggest finding about this group was that they view finance and banking differently. Most Millennials (69%) are open to non-traditional finance brands, while 32% view the future as being a cashless society and 27% hold a view that big banks will not be the primary financial institutions in the future. (Note: we previously also looked at the tech startups that are aiming to disrupt these dinosaur institutions.)
Even more important is that Millennials made it clear they are looking for a social connection to these institutions. They want a brand that they believe does good for the world, rather than just raking in bank fees and profits. For this, finance will have to change: it’s not just about being good with money anymore.
Millennials want their brands to align with their purpose and to be a part of their self-actualization.
Original graphic by: LinkedIn
Banks
Visualized: Real Interest Rates by Country
What countries have the highest real interest rates? We look at 40 economies to analyze nominal and real rates after projected inflation.
Visualized: Real Interest Rates of Major World Economies
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Interest rates play a crucial role in the economy because they affect consumers, businesses, and investors alike.
They can have significant implications for people’s ability to access credit, manage debts, and buy more expensive goods such as cars and houses.
This graphic uses data from Infinity Asset Management to visualize the real interest rates (ex ante) of 40 major world economies, by subtracting projected inflation over the next 12 months from current nominal rates.
Nominal Interest Rates vs. Real Interest Rates
Nominal interest rates refer to the rate at which money can be borrowed or lent at face value, without considering any other factors like inflation.
Meanwhile, the real interest rate is the nominal interest rate after taking into account inflation, reflecting the true cost of borrowing or lending. Real interest rates can fluctuate over time and are influenced by various factors such as inflation, central bank policies, and economic growth. They can also influence economic growth by affecting investment and consumption decisions.
According to the International Monetary Fund (IMF), since the mid-1980s, real interest rates across several advanced economies have declined steadily.
As of March 2023, Brazil has the highest real interest rate among the 40 major economies shown in this dataset.
Below we look at Brazil’s situation, along with the data of the four other major economies with the highest real rates in the dataset:
| Nominal Interest Rate | Real Interest Rate | |
|---|---|---|
| 🇧🇷 Brazil | 13.75% | 6.94% |
| 🇲🇽 Mexico | 11.00% | 6.05% |
| 🇨🇱 Chile | 11.25% | 4.92% |
| 🇵🇭 Philippines | 6.00% | 2.62% |
| 🇮🇩 Indonesia | 5.75% | 2.45% |
In general, countries with high interest rates offer investors higher yields on their investments but also come with higher risks due to volatile economies and political instability.
Below are the five countries in the dataset with the lowest real rates:
| Nominal Interest Rate | Real Interest Rate | |
|---|---|---|
| 🇦🇷 Argentina | 78.00% | -19.61% |
| 🇳🇱 Netherlands | 3.50% | -7.42% |
| 🇨🇿 Czech Republic | 7.00% | -7.17% |
| 🇵🇱 Poland | 6.75% | -6.68% |
| 🇧🇪 Belgium | 3.50% | -6.42% |
Hyperinflation, as seen in Argentina, can lead to anomalies in both real and nominal rates, causing problems for the country’s broader economy and financial system.
As you can see above, with a 78% nominal interest rate, Argentina’s real interest rates remain the lowest on the planet due to a staggering annual inflation rate of over 100%.
Interest Rate Outlook
Increasing inflation and tighter monetary policy have resulted in rapid increases in nominal interest rates recently in many countries.
However, IMF analysis suggests that recent increases could be temporary.
Central banks in advanced economies are likely to ease monetary policy and bring interest rates back to pre-pandemic levels when inflation is brought under control, according to the fund.
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