Author: David Webber
Understanding a child’s perception of banking
July’s ‘Wired Money’ event saw a range of innovators, entrepreneurs and start-ups 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 detailed 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 also offers a card linked to a debit account but combines that 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 tracking spending.
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 are seeking to do, we need to understand the perceptions young people have of digital banking. For instance, our research found that over a quarter (26%) of 18-24 year olds said they are 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.
This frustration is something I’ve encountered with my teenage son, who complains every time he has to log onto 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 are even 10 years old.
Here 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 technology 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 Millenials 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 account via Facebook or Google+?