Banking for the iGeneration

Generation Z, or as we like to call it at Mintel, the iGeneration, is already gaining a lot of attention and considered by some to be the next big thing for marketers. Mostly in their tweens and teens, the iGeneration can loosely be defined as kids between 8 and 20 years old, deeply entrenched in technology and social media, brought up in a real-time world with instantaneous information available at their fingertips, and considered to be more pragmatic about their futures than their Millennnial counterparts. All of these characteristics present a unique opportunity for banks to reach this growing segment of the population – their customers of the future and the children of their customers today.

17% of US teens have a debit card to access funds in a bank or savings account

Banking opportunities for kids come in a variety of formats. There is the financial literacy aspect, which assumes that kids who learn more about how finances work now will be more likely to make smarter financial decisions and be more involved in their financial well-being in the future. And there is a need for parents to monitor their kids’ financial activities and offer the ability to provide them with funds in a convenient way.  Either way, there is a need to reach these impressionable youth. According to Mintel research, three in five teens have a bank or savings account with an average of $931 tucked away; however, only 17% have a debit card they can use to access those funds. These accounts were likely opened by their parents or relatives in an effort to teach them how to save. Yet when kids are discouraged from tapping into their savings, it takes away the opportunity to really let them experience proper financial management.

BANKS USE TECH TO REACH YOUNGER GENERATIONS

A number of banks are starting to reach out to these technologically savvy kids, mostly with online and mobile offerings. Just recently, Barclays in the UK began promoting its mobile banking app specifically for 11-15 year olds with a BarclaysPlus account. Some of the key functions promoted include the ability to check balances and transfer money.

Union Bank goes a step further and offers a free PFM (Personal Financial Management) app for kids. Launched in 2014, Union Bank’s app called Yuby, promises to help kids learn how to manage money by teaching the relationship between earning, savings and spending. Based on the idea of paying kids money for doing chores, Yuby keeps a chore list, tracks activity so they can see what they have earned for doing those chores, and lets kids create a wish list so they can compare costs of their most wanted items and how much progress they have made towards getting there.

Capital One offers an account specifically for teens called Money, which is a debit card and bank account that parents manage together with their teen online or with the mobile app. Capital One really tries to speak to this younger generation be acknowledging that they are always on the go so they can take advantage of digital services such as mobile check deposit with CheckMate™ or set up direct deposit if they have a job.

Having grown up in a post-9/11, post-recession world, the iGeneration is likely to be a more conscientious, hard-working and pragmatic group of consumers than those before them. Mintel research indicates that instead of working, teens appear to be participating in other types of activities, such as sports camps, volunteer opportunities and other extracurricular activities that will provide a well-rounded foundation for the future. This shows a change in mindset toward a more forward-looking strategy that would be receptive of financial educational opportunities. And what better way to solidify customer loyalty than by becoming a trusted name during someone’s most formative years?

Lily Harder is the Vice President of Research for Mintel Comperemedia. Lily specializes in the financial services industry, researching and presenting on the latest industry trends, competitive intelligence insights and newsworthy developments.