The news: Traditional banks risk missing out on building long-term relationships with Generation Alpha as their digital native parents “take them to the bank” for the first time.
Our report, How millennial parents will bank Gen Alpha kids, highlights the new ways in which neobanks and teen and kid banking apps are helping parents and their children master the financial literacy learning curve.
There’s an app for that: Millennial parents—the first cohort to grow up in a predominantly digital environment—are now looking for ways to introduce financial and banking concepts to their children. Kid and teen banking apps are stepping in as the main facilitators of this rite of passage. These apps are focused around three features:
How does it work? Kid and teen banking apps are popping up from teen-focused neobanks, traditional neobanks, incumbent banks, and even nonbank entities partnering with a banking as a service (BaaS) provider. But all of these apps tend to have a similar structure with similar functions.
The teen and traditional neobanks are generally built from the ground up. By contrast, incumbent banks will typically add teen banking features to their existing banking apps, or will outright purchase a kid or teen banking app and rebrand it as their own.
What does it cost? Kid and teen banking apps approach fees in a few different ways. These are the most common fee structures:
Will it work? Kid and teen banking is a new market, and neobanks and incumbents are still figuring out how to attract these digitally minded young customers for life.
Continue reading: To learn more about what we think is next for kid and teen banking, as well as our comparison of some of the players in the space, click here.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.