Saving is a good habit that should be inculcated in children from a young age. Piggy banks and savings accounts for kids are still favored by older generations for imparting financial literacy. Late Gen Z and early Gen Alpha, however, now have the option of banking with neobanks. Neobanks are digital banks that provide specialized services and optimal customer experiences. They are known as challenger banks as they offer stiff competition to established players in the financial landscape.
The FinTech ecosystem experienced some disruptive changes over the past decade. For example, neobanks came to the fore with simple yet efficient solutions for millennials and the working Gen Z population. These banks are now focusing on children and teenagers.
Neobanks Now Focusing on Kids
Recent figures suggest that neobanks have an estimated worldwide user base of 39 million. Neobanks, known for their innovative and value-added services, are now targeting the next generation of users. According to WhiteSight, globally, more than 50 neobanks offer products and services to youngsters below the age of 18. Of these, almost 40 neobanks exclusively cater to children and teenagers, indicating the popularity of these financial solutions. Inspired by kids-focused neobanks, other popular brands and some traditional banks have started developing financial products and services for children. Major neobanks in this segment include US-based Current, UK-based Revolut, South Korean Kakao Bank, and South Africa’s Bettr. These neobanks impart financial literacy to young users through interactive apps.
Why Neobanks Are Targeting Youngsters
Though youngsters have always considered saving an important aspect of their financial well-being, it is only with the influx of smartphones and the internet in recent times that banking solutions have gained traction. Mobile platforms now offer a host of FinTech products and solutions, and neobanks have taken this opportunity quite seriously. From offering reward-based pocket money to youngsters to developing AI-based, hyper-personalized solutions that cater to the new generation, neobanks are targeting digital natives and smartphone savvy youngsters. The younger generation finds it much easier to access information and sign up for innovative solutions, thanks to a variety of interesting apps and services available at the tap of a finger. New-age apps and FinTech models popular on social media appeal to youngsters and incline them toward neobanks.
The pandemic has only emphasized the need for savings and moderating financial outflows. Neobanks have recognized the gap between what youngsters want and the available financial products and services. Neobanks leverage interactive apps to inform, educate, and help youngsters develop healthy financial habits. Intuitive and innovative financial services will only make customers more loyal to neobanks.
Popular Business Models
In India, some popular neobanks are managed by traditional lenders and card issuers such as YES Bank and Visa. Take, for example, Fyp, a numberless prepaid card that imparts financial literacy to teenagers. Users can make online and offline payments on the card without even setting up a bank account. Fyp uses gamification to keep users engaged and allows them to check their spending regularly.
Asia has a wide variety of neobanks catering to the next generation. For example, Singapore-based Yodaa, makes financial journeys seamless for teens. Yodaa’s smart money card and app make spending, managing expenses, and learning about personal finance easy for teens. Yodaa cards can be used online and in-store, and the companion app allows users to send and receive payments, split bills, chat, earn virtual YoCoins, and access educational content on personal finance.
Africa is home to a number of neobanks that are now attracting the young African population. Fingo and Bettr are among the startups that offer free savings and transaction facilities to create a new generation of young earning people who keep their spending in check and grow their savings faster.
The time is ripe for saving and financial wellness, and intrepid neobanks have recognized this opportunity. With youngsters becoming increasingly aware of their financial health, neobanks targeting this segment have tremendous potential for growth.
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