Resist the Rages of Sea Shanties & Bank for Teens
The allure of teenager customers for banks is strong. Teen tastes are luxurious. They spend a ton of time on their iPhones. But banks should resist the siren call to create a challenger teen bank.
Photo by Adi Goldstein on Unsplash
Yes, it’s been a while. Sometime during the winter, the 5 consecutive snow storms in February, 3rd Covid 19 surge, kid home unhappy in front of a screen all day, lack of sunshine and cold weather, I hit a pandemic wall. Until I recently got my first of two vaccine shots, I didn’t realize how much the pandemic consumed my peace of mind & sense of time. I know I’m not alone in this situation.
Rages Likes Sea Shanties and Banks for Teens Won’t Last
I had no idea that sea shanties were all the rage again. It all started with one guy, Nathan Evans.
The gift of TikTok is that the video doesn’t just go viral – other users can add their own touches. Which is how Nathan Evans kicked off the sea shanty trend worldwide. If you spend 15 minutes on TikTok or YouTube, you’ll find out that there are many kinds of sea shanties. You can quickly go down the sea shanty rabbit hole:
There were long and short-haul shanties for long and short rope pulling.
There were windlass shanties for pumping out water, and capstan shanties for raising and lowering the anchor.
There was also a fifth kind of ‘shanty’, which was more of a sea song, as they were not used for work. Foc’sle, forecastle or forebitters were songs sung after work was over for the day and it was time to relax.
Like sea shanties on TikTok, challenger banks for teens are also suddenly all the rage. Teenagers – hooked on their smartphones, so savvy about apps & digital trends, heads bent into games and watching sea shanties on Tiktok – look like the ultimate ‘get” for banks looking to win the youngest customers to a brand new challenger digital bank.
This is a big mistake.
The Siren Call of the Teenage Consumer Segment
Like the sea shanty, the allure of teenager customers for banks is strong. Teen tastes are luxurious. They use their money to purchase luxury goods. According to Piper Sandler 2020, Louis Vuitton became the top preferred handbag for teenagers. They spend a ton of time on their iPhones watching Netflix or creating TikTok videos. Teenagers (and younger tweens and children) have money to spend. For example, in 2018 in the UK, children and teenagers aged 6-18 collectively earned £4.5 billion from pocket money, ad-hoc gifts and payments for undertaking household chores, such as tidying their room or washing the dishes. On an individual basis, this equates to an average of £9, or £39 per month, depending on age and where they live. Source: Gohenry Youth Economy Report
So, it’s not surprising that teenagers, like any prospective customers adept with digital technology who have money, are attractive to banks. This allure holds even if, according to the Piper Sandler survey, teenagers have less money to spend. And, so both digital banking vendors and challenger banks are targeting teenagers.
Revolut, for example, has launched Revolut Junior. The promise is clear: This app will change your child/teen’s financial life.
Legacy banks like Wells Fargo and Bank of America are creating teen and student-branded products.
Digital banking vendors, like Agora, have begun to offer white label teen banks.
No doubt others are creating “teen banking features” as you read this. There are plenty of other examples. I’m sure I’ve missed many of them. (Feel free to contact me if you’re a founder or know of others.)
Why Your Bank or Provider Should Resist the Siren Call
Doesn’t all this point the way to challenger digital banks that can attract & profit from these teenagers?
There are 4 significant reasons that banks must resist the urge to create banks specifically for teenagers:
Traditional demographic. The pursuit of the same old demographics in a digital world will yield neither disruptive products nor the results – customer acquisition – the bank seeks.
Financial supply chain for teenagers – Acquiring teenagers is different than acquiring adult customers. Regulations may require parents or guardians to open an account. Teenagers are often dependent on those parents for at least some of their money.
Teenage brains. Teenagers are not yet adults; their brains are still developing and respond differently than adults to bank sales & marketing offers and risks.
Teenagers grow up.
The full analysis is at The Analyst Syndicate Rages like Sea Shanties and Banks for Teens Won’t Last
Me, Elsewhere
Digital banking transformation’s surprising secret for success in Entersekt’s ebook New Directions in Authentication
Yes, these pieces were written for clients and they may ask you for information before you can download them. If you’re interested in collaborating with me, contact me at stessa@pivotassets.co.
Who publishes this newsletter?
I’m an independent analyst & consultant & former Gartner analyst. I’ve worked in and covered the banking industry for over 2 decades. I think & write here about digital banking — but also indulge any other interests.
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