The news: Youth and teen banking has exploded in popularity over the past year, but banks and fintechs are approaching the six- to 18-year-old cohort with a slew of different strategies. We take a closer look at the landscape to see what is and isn’t working.

What do they offer? Generally, youth- and teen-focused banking apps offer a savings account, a debit card, and financial literacy learning modules. They may also include features that let parents control their child’s spending and transfer money to them from parental accounts.

Apps geared toward older teens may introduce investment options, like mutual funds, ETFs, and stocks.

No monthly subscription fee: Some of these apps are offering their services and products completely free, though some may charge for ATM withdrawals over a certain amount.

Who’s doing it? France-based Vybe, US-based Step, US-based Till, and Germany-based Ruuky are some apps that don’t require any subscription fees.

Pros: Users might be more attracted to a free app—at least at first, to see what it’s all about. This could help them grow a large customer base in a competitive space.

Cons: The lack of subscription model could cause customer engagement to drop over time, since they aren’t losing money for not using the app. The lack of fees also means one less source of revenue for the apps in a space that already doesn’t generate much direct revenue—children tend to spend less money than adults, which means fewer interchange fees, and they can’t use credit cards, another major revenue source.

In practice: Apps that don’t charge a subscription-based fee have met with mixed success. Ruuky filed for insolvency earlier this year, and Vybe, though still active, was recently acquired by recommerce platform Twig. Alternatively, Step gained over one million users in its first four months and is still growing.

Monthly subscription fee: Many youth banking apps rely on monthly subscription fees to generate revenue. Some even have different tiers that offer other services, like tracking and crash detection.

Who’s doing it? Some major youth banking apps that charge a monthly subscription fee include France-based Kard, UK-based GoHenry, US-based Greenlight, and US-based Copper.

Pros: A subscription model offers a valuable revenue stream to these apps, and it could help keep users engaged since they’re paying for the services.

Cons: The subscription fees could be a deterrent to some consumers who don’t think it’s worth it to pay for their child to have a bank account. Apps that use a subscription model must demonstrate the value they add to a family’s financial conversation and how the tools they offer let children learn by doing while still giving control to parents.

In practice: All of the apps we’ve mentioned are still thriving, with Copper recently raising $29 million to offer new products, and GoHenry expanding through its recent acquisition of French-based PixPay. But Greenlight has differentiated itself the most with its various subscription models offering investing for parents and cash back rewards for kids.

Aimed at parents: Many of the youth banking apps cater toward parents and their desire to maintain control over their childrens’ accounts.

Who’s doing it? GoHenry, Greenlight, Copper, and many more apps start with parents.

Pros: Apps that give control to parents are likely to appeal to parents of younger children just learning about financial concepts. The ability to transfer money between parent and children accounts can help teach young ones about earning money by doing chores. Parents can also teach their kids about budgeting and saving by blocking frivolous purchases.

Cons: Older teens that have started working will likely be embarrassed to have their accounts linked to their parents’ accounts. They also don’t want to be told what they can and can’t buy with their own money. Apps that start with parental controls must find a way to keep their youth customers engaged as they grow older.

Aimed at kids: Some apps market their products and services to teens in a way that makes them feel like an adult, taking parents out of the picture. The target age is typically 16 and older, since there are various age requirements for opening a checking account.

Who’s doing it? Many UK-based apps use this tactic, including Monzo, Starling, and Revolut.

Pros: Advertising accounts with capabilities similar to almost “everything that adults can do,” as Monzo does, can bring in older teen customers at a key time. These customers are on the cusp of their adult life, and building a relationship with them at this stage could lead to long-term trust and stickiness.

Cons: Apps that have an “adult lite” version must figure out how to carefully transition young customers from a more junior version without also alienating parents who feel like they are losing control. These apps must demonstrate to parents that their financial literacy tools provided a good foundation in the junior version of the app, and potentially explore ways to help teens feel connected with their parents, but not controlled.

Engagement through gamification: Nearly all youth- and teen-focused banking apps offer some type of financial literacy program. The main approach to these programs is gamifying the learning process. Users are often monetarily rewarded for completing a task like saving or investing, or they play games and level up to learn new financial information.

Who’s doing it? Nearly every youth banking app offers some type of financial learning game. Some examples include US-based Zogo and UK-based tendy.

Pros: Games and rewards can be a huge motivator for young people to save and invest money.

Apps that let users earn something new each day, compete against other users, or achieve and unlock new levels will keep those users coming back for more.

Cons: A gamified banking experience could unintentionally promote undesirable, addictive behaviors in younger cohorts, like gambling. This concern has caused regulators to step in and warn banks to be careful of the gamification tactics they use in their apps. This is especially important in apps that let teens invest—and more importantly in apps like Step, that allow teens to dabble in the crypto markets.

What’s next? FIs are still figuring out what works best when it comes to youth and teen banking. It will take some time for them to learn if these tactics will entice younger customers to stick around into their more profitable adulthood. But still, as this cohort grows up, all FIs must consider what changes they’ll need to make to their future customer acquisition plans.

• Fintechs and digital banks must stay up to date with youth banking regulations, as crackdowns on gamification may be coming. They must also ask if their financial literacy modules are truly teaching financial lessons or just bright, shiny objects that attract more users. Will the customers-in-training learn enough to fully utilize all of the products and services the FI can offer in the future? Or will they play the games, earn rewards, and then move on?
• Incumbent banks should also have a game plan around these future customers. They’ve been slow at digitization and less nimble at making changes to their operating models. If they can’t quickly and effectively offer similar services to younger customers, they should consider partnering with or acquiring a youth-focused fintech.
• All FIs vying for young customers must also look at how these cohorts differ from earlier generations. For example, work/life balance is becoming much more important to younger generations than remaining loyal to one company. Gen Z is now changing jobs at a pace 134% higher than in 2019, and 75% of Gen Zers say they're willing to switch career paths entirely and look for jobs in new industries. Their approach to banking may be similar. FIs must constantly assess how their services make these consumers’ lives better, rather than relying on the intangible sense of loyalty that kept their parents around.

This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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