Millennials' distrust of banks is spawning a new breed of startups

For anyone who came of age during the 2008 financial crisis, it's hard to forget the names of thebanks who needed bailouts or the tents of Occupy Wall Street.Older millennials likelygraduated college into an environment where jobs were scarce, andyounger millennials are currently saddled with hefty student debt, so it's no wonder young people are feeling distrustful of existing financial institutions.That's according to Rick Yang, a partner at New Enterprise Associates, one of the world's oldest venture capital firms. Yangis focused on consumer and fintech companies, and he's noticed some big changes over the past few years: mainly, that more and more consumer finance startups are springing upwith millennials in mind."Theres a massive shift in consumer behavior and consumer trust," Yang told Business Insider. "I think coming out of [the financial crisis], millennials have a massive distrust of existing financial services. They tend to trust technology more than the recognized stalwart brands, like a J.P. Morgan Chase or a Wells Fargo."While Yang said he hasn't seen any startup "crack" what it means to be a consumer bank quite yet, plenty of companies are already giving it a shot. Startups like Simple and Chime are encouraging millennials to spend and save through a mobile app rather than keep their money in a more traditional bank. And Venmo, which allows users to more easily transfer money, just addedan option to pay in other appsusing Venmo, much like Apple Pay.But services like Chime and Simple are "layered" on top of FDIC-insured, existing banks, which means there needs to be collaboration between big banks and the startups that want to disrupt them."I think its really hard to offer a full suite of banking and I think companies and startups, as well as the existing financial institutions, dont really understand what the right amount of collaboration is yet," Yang said. "Its one of those things where at the end of the day, both sides are going to realize that they need each other but both sides are a little wary of each other."And much like the transportation industry, Yang said, more established companies are going to be slow to adopt to the latest trend. While smaller banks and financial institutions are going to be motivated to make changes toattract young, lower-earning customers, it's going to take longer forthe giants to come aroundand by then, it may be too late.SEE ALSO:This Australian was shocked at how terrible American banking was, so he created a company to disrupt itJoin the conversation about this storyNOW WATCH: How different camera lenses affect how you appear in photos
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