Youth Banking an Opportunity to Attract Clients, Educate Kids
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Youth Banking an Opportunity to Attract Clients, Educate Kids

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By Yael Israeli - Mozper
Co-founder & CFO


The world’s under-18 population is not yet responsible for most day-to-day expenses, but already represents tremendous spending power. Through their direct purchases and the funds spent by adults on their behalf, the global youth demographic makes up a huge portion of the broader economy.

In 2021, Generation Z was estimated to be worth approximately US$360 billion in spending. Furthermore, Generation Alpha (born in 2010 and onward), is expected to reach a total population of more than 2.5 billion by 2025, the largest in history. These two generations combined present an enormous and lucrative economic force.

While their direct purchase power typically comes in the form of a weekly allowance or pocket money they earn on their own, an even larger proportion of these generations’ spending impact is indirect via adult family members transacting on their behalf. This includes food, school tuition, gifts, subscriptions, etc. What’s more, kids today are influencing their parents’ purchasing decisions like never before, with 87 percent of parents reporting that their children have a major effect on their shopping habits.

Companies around the world are taking note and leveraging the overwhelming opportunities of catching kids’ attention. Brands are deploying novel marketing tactics aimed specifically at these youngsters, even extending their reach literally inside the virtual games they play and socialize in.  

A great example is Nike’s “NIKELAND” collaboration with Roblox, which resulted in a whopping 68 percent increase in male players reporting Nike as their favorite brand.

So naturally the next big question is: who will bank this population and facilitate their spending? An entirely new banking segment has emerged focused on just that - Youth Banking. Within the sector, there are two main acquisition approaches that these companies can take: attract the child directly or through the parent.

Some Youth Banking apps, like Step in the US, aim their message at teens. They believe that giving them full control from the beginning of their financial lives results in creating a more immersive experience. Such youth-focused banking companies capitalize on capturing their customers before they are old enough to get targeted by traditional banks or other financial institutions. With less competition in the under-18 segment, these companies benefit from a lower customer acquisition cost (CAC) than the adult banks.

Other Youth Banking services, such as Greenlight in the US, GoHenry in Europe, and Mozper in Latin America, communicate predominantly to parents, ensuring extensive value that caters to their concerns. These companies are aware that parents serve as the gatekeepers and can provide access to a wider range of kids of varying ages. Additionally, they understand that parents can create a more wholesome and personal starting point for their children to learn about the money-powered world around them. This approach holistically encompasses the family as the core customer and tends to its internal dynamics regarding money.

Today’s parents are also naturally more adaptive to using innovative apps that harness the advantages of technology with their children. With the assistance of these Youth Banking platforms, parents are able to guide their kids by using specialized functionalities such as spend-category limits, automatic savings allocations, and real-time notifications every time the card is used. Further, the cards cannot be used for any illicit purchases such as online gambling or adult-only sites. As a result, children learn to save, stick to a budget, and spend smarter, all within a safe environment.

This model also makes great business sense and yields solid unit economics, since it allows for the acquisition of three users on average (parent + 2 kids) for the cost (CAC) of just one. Further, by capturing all the members of the family upfront, it lays the ground for increasing the average annual revenue per user (ARPU) by offering a greater array of products and services to all of them.

A clear show of this is Greenlight’s recently-launched credit card for parents, boasting features that are especially relevant to their needs (such as cashback for college savings). That's a huge leap from debit into the lucrative credit space. Interestingly, they even expanded their product offering outside the financial scope and into the safety realm, another major concern for every parent. With Greenlight’s new “Infinity” plan, parents can get real-time information on the whereabouts of their children as well as crash detection alerts.

Mozper recognizes how tightly intertwined the family unit is and believes that parental involvement is crucial to creating a more appropriate tool for kids in Latin America to develop competencies of financial wellness early in their lives. Therefore, this approach allows for a more complete value proposition – not just a remittance solution but an integral financial operating system solution for the family.


About the Author:

Yael Israeli is an executive with 15 years in investment banking, consulting, and entrepreneurial ventures. She is currently the Co-founder and CFO of Mozper and serves as treasurer of a foundation helping women entrepreneurs develop their businesses. Mozper is where Yael’s professional expertise and personal life experiences converge, addressing issues such as financial technology, parenting, and financial education. 

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