From Piggy Banks to Fintech: How the Financial Revolution is Targeting Kids and Teens

E-money institutions (EMIs) and neo-banks have significantly disrupted traditional banking systems, leveraging technology to reinvent and democratize financial services. This revolution, however, is not confined to adults and established consumers. As fintech companies continue to push boundaries and chart unexplored territories, they are setting their sights on an entirely new demographic – children and teens.

By Augustin Dobre, CEO Twispay

While banks have traditionally targeted mature audiences with a steady income stream, offering them a diverse suite of products, their neo-counterparts are shifting the focus towards the younger generation. I often mention the critical role of Generation Z, but now it’s about much more than that: the fintech industry is casting a wider net, reaching out to those even younger. Fintech pioneers are investing in educating children as young as six, creating products and services tailored specifically for them.

To some, this might appear as a risky gamble. But let’s unpack this further and delve into why addressing children at a tender age is not just a strategic but also a socio-economic necessity.

While most of the world is financially illiterate, children form their financial habits by 7 years old

Statistics show that 66% of the global population is financially illiterate, a staggering figure translating to 3.5 billion adults who lack an understanding of essential financial concepts. Young adults are not exempt either – just 27% are financially literate.

While these numbers are alarming, research suggests there is much to do about it. A 2018 study by psychologists at Purdue University shed light on the fact that children can comprehend basic financial concepts as early as three years old. And surprisingly, by seven, many have already formed their financial habits.

The fact that you can address children and audiences so early in their lives creates a significant pool for financial brands that want to make a difference. The opportunity is even bigger in developing countries, where the population is predominantly young. Take India, for example, 25% of the people are aged between 0-14 years, with a median age hovering just below 29.

Fintechs are targeting both children and teens and their parents to improve financial literacy

Given the above data, it is unsurprising that leading fintech apps and neobanks are pioneering products targeting kids and teens. A growing number of startups are now exclusively focusing on offering financial learning modules, banking services, prepaid cards, and wallets to underaged demographics.

Some of the most successful, well-known brands include names like GoHenry, a UK startup that offers money management and financial education services targeted at children from 6 to 18 years old, and Step, the American next-generation fintech that wants to offer the best banking experience and help teens and young adults achieve financial independence and knowledge at an earlier age.

Through their platforms, they allow children to access educating content and complete financial quizzes to test their knowledge, get paid for specific chores they fulfill, create and track saving goals, split bills, and support charities.

They also offer parents peace of mind by enabling them to set up weekly allowance transfers, set spending controls, track expenses, and more.

The top startups focused on educating teens attracted almost a billion in investments between 2019 and 2022

This initiative hasn’t gone unnoticed by venture capitalists, who have shown keen interest in backing such endeavors. According to Dealroom, approximately 43 startups and scaleups have collectively managed to secure funding of $998 million across 100+ rounds between 2019 and 2022. Six neobanks, including giants like Revolut and Starling Bank, offering services for underage consumers, successfully raised $5.9 billion in the same period.

Of course, market movements are also taking place. In 2022, GoHenry bought a French fintech app for teenagers, PixPay, while in April 2023, U.S.-based savings and investing startup Acorns acquired GoHenry.

This surge of investment and consolidations signifies that the market is very active and that stakeholders see the direct and indirect benefits of educating audiences.

Addressing young audiences early is a must in a world where Gen Alpha members may never set foot in a brick-and-mortar bank

Both investors and fintech founders recognize that many members of Gen Alpha may never interact with a traditional brick-and-mortar bank. This makes it even more crucial to connect with them at the inception of their financial journey. By cultivating relationships early, fintech companies are not just nurturing financial literacy but also acquiring customers at an early age, amplifying their lifetime value.

In conclusion, the fintech industry is transforming the notion of childhood, molding it into a lifelong financial learning curve. This shift is not just a business strategy but a path toward a more financially aware and empowered generation.

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