How teens will bank in the future may depend on how they bank now
- Financial products designed for teens are increasingly hitting the market this year.
- Teens want financial education as part of their banking services.
With malls no longer a spot for regular hangouts, teens are shopping less than usual. In comparison, though, their spending activity online is still high, with 90% reporting shopping online during the Fall, according to Piper Sandler’s biannual “Taking Stock with Teens” report.
With cash almost out of teens’ everyday vocabulary, there’s now an increased need for tools that help these Gen Zers manage and budget their spending habits in a digital setting. Parents want their teens to be aware not only of how much they’re spending but also how they’re spending.
Consequently, we’re seeing an increase in teen banking solutions from all over. Banks like JPMorgan Chase and Wells Fargo are offering teen banking solutions. Revolut launched its subaccount Revolut Junior back in March and added a new savings goals feature to it in October.
There’s also a flood of new banking apps aimed directly at teens, including Step and Copper, which launched their services this year. These new apps could change the way teens bank — both now and in the future.
Step, a teen banking app which just became available to the public in September, markets itself to 13 to 18 year olds. Its aim is to be its customers’ first banking experience, said co-founder and CEO CJ MacDonald. MacDonald was a guest on our podcast this month where he discussed the trends producing the tailwinds into teen banking. The fintech also puts a lot of weight on financial education. On Step’s site, there’s a ‘Banking 101’ tab that includes blogs about budgeting, saving and how to spend money wisely.
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“Money is one of those things that often gets overlooked, where you’re just kind of expected to figure it out on your own. A lot of people make costly mistakes in their younger years around credit card debt, student loan debt, and credit,” said MacDonald. “And it’s tough to dig out of that hole.”
It’s not just parents who are turning to these apps. Teens themselves are expressing interest. 63% of Gen Zers would show preference to financial institutions that incorporated financial literacy into their services, according to a study by Raddon, a research and analytics company.
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