The Bold War

Smells Like Tween Spirit

Tweens…There are nearly five million of them in the UK alone.  Aged between 10 and 16, they play a significant role in most family financial decisions.  They directly influence up to £100 billion in spending annually, and have access to the internet, money, and smartphones.  With the advent of new technology, and greater freedom from parents, they are ready and willing to spend online.  They have formed the ‘pre-banked’ generation - a growing number of kids with banking needs but no banking relationship.

So how do we define ‘pre-banked’?  I would define this new category as children in the tweens age group.  In marketing terms they are defined as the in-between years.  Not quite a child and not quite an adult.  On average they get access to their first mobile at the age of ten.  This is also the same age they start buying goods online, using their parents debit or credit card.  Around 50% of them are active on social media.  According to an AVG Technologies report on Digital Maturity most tweens online activity mirrors that of their parents. 

You see, the accessibility and availability of rich technology means today’s kids are more mature than ever.  They get exposed to more, rightly or wrongly.  As mobile and online commerce has grown, kids have become comfortable, in some cases more so than their parents, in purchasing goods online.  This is why the gap has emerged.  Picture a child walking into a store and trying to purchase a new television set on their own.  They wouldn’t get very far.  They can however do the equivalent of this on their mobile.

Put simply, the average age a child gets access to a mobile and starts purchasing online is 10.  The average age a child gets access to a bank account is 16.  This is a six year gap that is currently being filled with a mixture of borrowed cards and piggy banks. At present, the banking industry has no uniform policy on setting up accounts for minors.  This has left the door open for competitors to enter. The Prepaid Industry for one has pursued this segment aggressively.  Most offer cards to anyone over the age of 13 and they are popular with parents because they are easy to manage.

The future threat to banks of not servicing this age group goes far beyond the Prepaid Industry.  Tweens are often called the triple-threat consumer because they drive primary, influence and future market potential. As a primary market, tweens have access to increasing amounts of spending money.  As an influence market, tweens directly impact more than $100 billion in annual spend. As a future market, tweens have more market potential than any other demographic group simply because they have all their earning power ahead of them.

The future market is where the biggest threat and opportunity lies for the pre-banked segment.  Tweens are currently interacting daily with services and products provided by the likes of Apple and Google.  They are already developing a strong bond with these brands that will continue into adulthood.  This is where it gets interesting for banks.  In the past children established relationships with brands like Disney, McDonald’s and Nickelodeon.  These brands were not a threat in the financial services or payments space.  Apple and Google are.

Every time a child downloads the new Disney movie to their iPad, or search for Nickelodeon news on Google, these brands are building reputational equity.  Bank reputations, already tarnished, won’t stand a chance.  With the likes of Facebook looking to open its service up to a younger demographic the future is clear. This is the reason Mark Zuckerberg is willing to fight for kids under 13 to go on Facebook.  The younger they become attached, the more loyal they will be from cradle-to-grave (quite literally).

Look most areas of the bank, under attack at the moment, because banks have left a gap, others have begun to encircle.  Services such as SmartyPig have already been well established for some years, essentially replacing the physical piggy bank.  New entrants such as Tykoon and Pocket Money are making traction.  Investors are agreeing that there is life in the space and money is being made available.  Local UK offering, Squid, has grown rapidly by delivering an ‘engaging, closed loop, local community payments service to selected communities’. 

Most banks will struggle with the concept of investing in something that isn’t likely to pay off for another 5 – 10 years but there is some evidence that some banks are starting to think differently.  Perennial shining light, Commonwealth Bank of Australia, has refreshed the very successful Dollarmites campaign run in Australia during the 80’s.  Dollarmites was a school program that gave children a basic bank account.  For a generation of young Australians the Dollarmites campaign has meant that they are Commonwealth banks customers for life. 

Besides the potential of a new generation of customers, the bank will also benefit from the strengthening of ties with parents.  Banks can look to deliver services that allow parents to monitor their children’s spending, provide allowances and set tasks for kids to complete all with the tap of a finger.  It could even be parents to pay for school events, uniforms and stationary.  Services could also start to bring into play gamification and education elements.  These can encourage the right behaviours and improve financial literacy amongst this age group. 

The significant growth of the pre-banked population has meant that this segment can no longer be ignored.  With impressionable kids forming an emotional attachment to popular technology at a young age, the brands of today are more likely than ever to be the brands of tomorrow.   The current generation of bank customers grew up thinking it was their duty to store their money in a bank account.  The future generation is unlikely to feel the same. It’s time for banks to protect their future now before it’s too late.

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