Financial Wellness Goals

October 1 2020

COVID-19 has accelerated the digitization of finance. Nearly 20 percent of consumers who opened an account in the past six months did so at a purely digital bank. But beyond the spike in online banking by existing customers, “shelter in place” is also accelerating the early banking adoption of an entirely new customer base: Gen Z.

Financial education has always been an important part of coming of age. Gen Z, who is currently going through this process, also has something else that made them the perfect candidate for this banks-for-kids trend- Millennial parents. Millennials have gong through the financial crisis as a young adult, understood the importance of financial education at an early age.

A number of companies tackling this challenge have seen a recent surge in demand: Greenlight is a prepaid debit card that enables kids to track savings goals and allows parents to set spending controls and allocate cash for chores.

Traditional plays have been waiting for important inflection points in people's lives to onboard new customers, usually at college graduation. Very young customers are usually seen as unprofitable. However, that might be changing.

An increased focus on boosting kids’ and teens’ financial literacy — spurred, in part, by COVID-19 — is now pushing parents over the inertia hump. In the future, as more and more companies offer financial services, non-fintech companies are likely to make a play for the loyalties of younger and younger customers, as well. This means that your child’s first bank may someday look more like a debit card with loyalty points, rather than a piggy bank.

In the Spotlight- Banks for Kids:

Greenlight, Atlanta, Ga.-based startup, is trying to solve a problem that any parent of an elementary or junior high school student can well understand: how to give kids money without worrying that they’ll lose it or spend it on something they shouldn’t. Greenlight is the first card with store-level controls — in other words, the ability for a parent to give a child a specific amount that he or she can spend at a specific store or website — like Starbucks, Chick-fil-A, the neighborhood market store, Amazon.com.

Current Bank is an online-only bank that you access using a mobile app. It offers some unique features competitors don't, including fast direct deposits, instant credits for gas holds, special accounts for parents and teens, and Savings Pods to make putting money aside for a variety of goals easier.

Chime’s checking account, known as a Spending Account, prides itself on its lack of fees. It charges no monthly account fees and doesn’t require a minimum balance. Chime offers a program that accelerates your direct deposits, making them available up to two days early. Once you establish a direct deposit into your Spending Account, you’re eligible and can choose to receive your payment up to two days early, as soon as your employer deposits it.

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