"Teenagers these days are really different than teenagers even 10 years ago. And the stark difference in terms of their life's experience, their opinions, is really quite remarkable.” -Shari Storm

It’s cliched to say that children are the future, but it’s amazing how many financial brands invest so little in connecting with their youth audience. Without these important customers, there’s no future for your brand.

John Lanza, Chief Mammal and Creator of The Art of Allowance Project featuring The Money Mammals and Shari Storm, CEO of Category 6 Consulting  recently teamed up to join the Banking on Digital Growth Podcast.

What a Difference a Decade Makes

Just 10 years ago, the world was a different place for children. 

Young kids now carry smartphones. They don’t know what network TV is because they’ve always watched Netflix and Hulu. They’ve never ridden in a taxi, but they’ve taken an Uber. They routinely go through active shooter drills at schools. And, of course, they’re living through the first pandemic in 100 years.

Take this a step further into buyer behavior. These are kids with extremely high expectations. Their iPhones give them all possible music and entertainment at a finger’s touch. They’ve always been able to order from Amazon anything they possibly desire, and see it on their doorstep practically the next day.

Unfortunately, financial brands are struggling to keep up with these extraordinarily modern kids. Banks might mail their young customers a cheerful letter every once in a while, but it probably goes straight in the recycling bin.

This is the first generation to use 100% mobile and at-home banking. To a child, a bank is, in a way, just another company that exists to deliver the stuff they want. For most children, their primary experience with an in-person bank branch is in line, holding a parent’s hand when they were very young. Maybe someone gave them a sucker or a sticker.

As banks struggle to understand their young customers, they often skip ahead from toddlers to young adults. It’s easier to connect with someone who wants their first car loan or home mortgage. But by zooming straight to adulthood, financial brands miss the opportunity to connect with young consumers and earn their lifelong loyalty.

Connecting With Parents First

There are safety and security concerns when it comes to connecting with children as customers. Parents must be involved in the process. But still, parents are surprisingly absent as a targeted customer group at most banks.

John suggests that a huge opportunity lies in connecting with moms. It’s not about ignoring dads, but research shows moms make the most consumer decisions in households. They’re more likely to be the financial guides for their kids from a young age.

Research shows moms make 80% to 90% of household financial decisions. They’re also a huge referral source, extending their reach beyond their children into their children’s friends’ lives. When their children are having a positive experience, they share this positivity with other families they know.

Kids can become involved with banking early through things like having an allowance, using a debit card, or learning how to budget for something they want. They may need an explanation about the differences between gift cards, debit cards, and credit cards. Mothers are often the financial stewards when it comes to everyday topics like these.

The Youth Audience and Brand Identity 

It’s important to define who we mean when we say “youth.”

Gen Xers and Millennials aren’t young anymore. Someone born in 1982 is turning 40!

And we’re not talking about young adults in their late twenties either.

When banking professionals talk about setting up “youth accounts,” the focus should be on young children aged two to their teenage years. In the broadest terms, it’s newborns to people up to age 24.

Research shows children begin to form brand alliances as young as the age of two. By the time they’re five or six years old, they can likely name brands they like and specify preferences. As they approach teenagerhood, they’re already entrenched in numerous brands.

This is why banks and credit unions should form comprehensive strategic initiatives to reach young people much earlier in life. Plant the seeds of the relationship earlier for a more fruitful partnership as time goes by.

Language is one of the first issues John and Shari address.

If you call it a “checking account,” most kids won’t know what you’re talking about. That’s because they’ll never write checks in their entire lives. So why call it that? Something like a “spending account” makes more sense to them.

Takeaways from Youth Interviews 

John and Shari’s research has focused on asking young people about their banking behavior in their own words. They wanted to get to the bottom of youth banking behavior and buying decisions.

One overwhelming finding has been that young people bank where their parents bank. It’s an ingrained assumption that they’ll choose the same place as their parents and that their parents will help them set up an account. 

While that sounds obvious, what’s surprising is found in the details. For example, kids like having snacks at bank branches and enjoy receiving free food. How many banks are doing that, beyond the old-fashioned free sucker? Maybe it’s time for a pizza party.

Another surprising finding was that although the digital world is deeply entrenched in these kids’ lives, there is an offline component to their banking. Sometimes they need live help to accomplish something quickly.

Companies like Zappos handle these kinds of inquiries skillfully. Zappos has a happiness team that handles inbound calls and provides for a spend of up to $200 for a gift when it seems right. The employee is empowered to make sure the customer experience is positive, which is a great model to follow.

It’s also important to look at the differences in everyday travel today’s kids are experiencing. Many of them have used Uber more often than the average bank executive. Uber is their point of reference for how easy and enjoyable it can be to get from one place to another. In many areas, kids are allowed to use Uber as young as the age of 14.

Shari and John’s research also revealed that Gen Z doesn’t have the patience for an arduous application process. The same process that feels routine for a Boomer or someone from Gex X might be intolerable for someone from Gen Z. There’s too much complexity - too much friction. They’ll abandon the process.

This is why a banking experience like Chime is gaining traction with the Gen Z audience. While a Boomer doesn’t feel confident using Chime, a Gen Z-er is fine with it. In this way, they’re the canary in the proverbial coal mine, serving as an early warning system for what’s ahead in banking.