Why are fintechs and banks placing their bets on tech-savvy teens as a growing new customer segment
India is witnessing a phenomenal growth in digitisation coupled with fast-paced adoption of financial products and services. This has facilitated path-breaking financial solutions and renewed old business models, processes, and even customer touchpoints.
Its ability to offer quick, innovative, and scalable solutions to legacy problems of the financial system at competitive prices has enabled a transformation of the financial landscape – this makes banks and other financial institutions more efficient.
Youth and fintech
The rise of fintech in recent years, a young population, and improving technology infrastructure in the country have contributed greatly to the growth of fintech in India. They have greater access to the internet and smartphones than any generation before them and as such form a demanding segment for financial products and services.
With access to smartphones and one of the cheapest data costs in the world, they are uniquely poised to access and demand solutions for their financial needs. The pandemic has further acted as a catalyst in fuelling rapid adoption of technology, with education going mostly online.
A large segment accesses digital devices on a daily basis for online classes, interactions with friends and peers, and leisure activities. Many have also taken on the role of family’s online payments manager.
Teens and their consumption of technology
Today’s teen group gets more pocket money than its predecessors and is known to shop online for apparel, cosmetics, and smartphones, order food, and also spend money on gaming. This has created the need for parents to educate their children about money management at an early age. This also leads to the need for early initiation of children towards financial literacy and independence.
Young people's attitudes toward digital technologies are vastly different from those of their parents and grandparents.
The majority of today's youth have never known a world without digital technologies, which has an impact on how they connect with others, form friendships, learn new things, interact with society, and interact with the financial services industry. Children and teenagers increasingly manage their own finances in fundamentally different ways because of the shift to digital.
Need for financial education in formative years
Financial independence, when accompanied by parental guidance, can empower children and improve their sense of wellbeing. It is also influenced by their needs and economic status. This is indicative of the benefits of financial literacy imparted at an early age to promote responsible financial behaviour in later years.
Consequently, banks and fintech firms are rapidly adopting and developing services or products in order to appeal to the youth.
The innovations range from types of accounts, wallets or cards linked to parental-controlled programmes that monitor children's spending habits to applications that encourage children to save.
Teenagers and their impact on family decisions
Teens nowadays are influencing a lot of purchase and lifestyle decisions for their family, which means teenagers are now quasi decision makers and a target segment that brands, across any segment, cannot ignore anymore. This makes them an incredibly important, crucial, and lucrative target segment.
The future customers of banks
Due to the inevitable fact that teens are everyone’s future consumer, it makes a lot of sense to build products that cater to them and can help make banks or these fintechs are the gateway for brands to their future customers.
It is the same reason why WSJ provides free copies to business school students (their future customers) and Amex provides credit card approvals liberally without a stringent credit check to business school students, who are highly likely to be their future customers.
Traditional banking products are unable to meet the needs of teens or ‘pre-adults’, which makes the opportunity even greater for fintech firms to rapidly move in and target this segment.
The stage is set for them to cater to this unbanked segment, which remains unexplored by traditional banking channels, and provide customised and cost-effective solutions that are user-friendly and secure. It is imperative that they come up with quick innovations and offer adaptable solutions to the tech-savvy next gen.
The right spending and saving behaviour during teenage could pave the way to responsible financial planning and savings in later years, leading to upward economic mobility. This is a unique responsibility for fintech firms and a great opportunity to expand their market to add a new and exciting segment.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)