Banks have discussed ways to target the youth market for years. Capturing a customer under the age of 18 builds brand loyalty at a young age, increases a customer’s potential lifetime value, leads to cross-selling opportunities as they age, and increases the parent users’ engagement.
While these benefits are well-known across the fintech space, the youth market can be difficult to tap into; banking tools for minors are not yet widespread. Things may be changing, however. Developments in the youth banking market have been peppering the news this year, starting with Acorns’ acquisition of GoHenry in April. Things have really started to pick up this fall, however. Here’s a timeline:
- August 10: Greenlight launched a new solution to help teens begin building credit.
- September 22: Invstr launched Invstr Jr., a digital bank and investing account for users under the age of 18.
- September 25: The Reseda Group partnered with financial literacy platform Goalsetter to offer a white-labeled version of the app for its members.
- October 3: Acorns announced the launch of a new premium tier that integrates access to GoHenry.
- October 3: Youth investing platform Stockpile teamed up with Green Dot to offer debit cards to its users under the age of 18.
It appears that youth banking tools may be having a moment. But why now? Below are a few reasons behind the recent flurry of activity in the space.
Transfer of wealth
It’s been well-publicized that the largest transfer of wealth in history is currently taking place. In fact, Cerulli Associates estimates that in the next 25 years, older generations will transfer a total of $84 trillion to younger generations. As a result, these young recipients– many under the age of 18– will need a safe account to hold and grow their newfound wealth. Youth savings accounts and investing tools are a good starting place.
Millennials maturing as parents
A decade ago, much of the discussions in the fintech industry centered around how to serve new millennial clients. Millennials are a digital-savvy generation and now range between 27 and 42 years of age. This mobile-first generation is more likely to seek out banking tools for their kids online rather than take them into a branch to open their first savings account. The recent spate of banking and investing tools all suit the need for digital-first accounts for minors.
Competition
Success invites competition. As more companies succeed in gaining users in the youth banking space, more will join in. That’s why we’ve seen not only new players enter into the space, but also established institutions create new tools to serve the market. As these tools continue to generate attention by launching new features, entering new partnerships, and adding new clients, other fintechs will begin to enter the market.
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- Source: https://finovate.com/3-reasons-youth-banking-tools-are-having-a-moment/
