July’s Wired Money event saw a range of innovators, entrepreneurs and startups pitching their new financial technology business ideas. One topic that really captured my interest was firms addressing the poor uptake of bank accounts by young people. Kiboo, a US-based banking platform, and Robot Corp, an independent technology investment firm, described two distinct ways to offer financial solutions specifically aimed at the youth market.
Robot Corp has developed a secure online prepaid card with Mastercard to act as an alternative to children using their parents’ credit cards. Similarly, Kiboo offers a card linked to a debit account, but combines this with an online interface so youngsters can access advice about saving and budgeting. These targeted services are interesting ways to attract young customers, while giving parents peace of mind by being able to track spending patterns.
Children as young as 11 years old can open a digital bank account in the UK. However, for financial institutions to engage this youth market, as Kiboo and Robot Corp want to do, we need to understand the perceptions young people have of digital banking. For instance, our research found that 26% of 18-24-year-olds said they’re frustrated by using a pin sentry or card reader every time they set up a new payee. Moreover, one in five of this age group said they don’t use their digital bank account, because they’ve lost their pin sentry.
Opportunities for the industry
This frustration is something I’ve encountered with my own teenage son, who complains every time he has to log on to his digital bank account using a pin sentry. Although he has a better understanding of technology than a large proportion of my peers, he finds logging into his bank account exasperatingly backward.
There’s a big opportunity for the industry to tap into here by attracting this new generation of potential earners who will be forming their money habits before they’re even 10 years old.
In the UK, there are estimated to be over 7.5 million 16-24-year-olds. This ‘Millennial Generation’ offers a huge pool of potential customers for financial institutions. If we work on developing targeted services, where the banking software suits users’ needs, institutions will be on the right track to entice large numbers of new customers.
I’d like to think banks are keeping one step ahead, anticipating what the millennials want. Will we soon offer this generation the technology to bank on their Google Glass or new iWatch, or the ability to log into their bank accounts via Facebook or Google+?
Read Adrian Westlake’s article, How pocket money works in the digital age