American Marketer


Mobile banking and tweens

July 16, 2012

Michael Nuciforo


By Michael Nuciforo

Tweens – there are nearly 5 million of them in Britain alone. Aged between 10 and 16, they play a significant role in most family financial decisions. They directly influence up to $155 billion in spending annually, and have access to the Internet, money and smartphones.

With the advent of new technology and greater freedom from parents, they are ready and willing to spend online. They have formed the pre-banked generation – a growing number of kids with banking needs but no banking relationship.

So how do we define “pre-banked?” I would define this new category as children in the tweens age group. In marketing terms, they are defined as the in-between years. Not quite a child and not quite an adult.

On average, they get access to their first mobile at the age of 10. This is also the same age they start buying goods online, using their parents debit or credit card. Around 50 percent of them are active on social media. According to an AVG Technologies report on Digital Maturity, most tweens online activity mirrors that of their parents.

You see, the accessibility and availability of rich technology means today’s kids are more mature than ever. They get exposed to more, rightly or wrongly.

As mobile and online commerce has grown, kids have become comfortable and, in some cases, more so than their parents in purchasing goods online. This is why the gap has emerged.

Picture a child walking into a store and trying to purchase a new television set on her own. She would not get very far. She can, however, do the equivalent of this on her mobile phone.

Put simply, the average age that a child gets access to a mobile and starts purchasing online is 10. The average age a child gets access to a bank account is 16. This is a six-year gap that is currently being filled with a mixture of borrowed cards and piggy banks.

At present, the banking industry has no uniform policy on setting up accounts for minors. This has left the door open for competitors to enter.

The prepaid industry for one has pursued this segment aggressively. Most offer cards to anyone over the age of 13 and they are popular with parents because they are easy to manage.

The future threat to banks of not servicing this age group goes far beyond the prepaid industry. Tweens are often called the triple-threat consumer because they drive primary, influence and future market potential.

As a primary market, tweens have access to increasing amounts of spending money.

As an influence market, tweens directly affect more than $100 billion in annual spend. As a future market, tweens have more market potential than any other demographic group simply because they have all their earning power ahead of them.

The future market is where the biggest threat and opportunity lies for the pre-banked segment.

Tweens are currently interacting daily with services and products provided by the likes of Apple and Google. They are already developing a strong bond with these brands that will continue into adulthood.

This is where it gets interesting for banks.

In the past, children established relationships with brands such as Disney, McDonald’s and Nickelodeon. These brands were not a threat in the financial services or payments space. Apple and Google are.

Every time a child downloads the new Disney movie to their iPad, or searches for Nickelodeon news on Google, these brands are building reputational equity.

Bank reputations, already tarnished, will not stand a chance.

With the likes of Facebook looking to open its service up to a younger demographic the future is clear. This is the reason why Mark Zuckerberg is willing to fight for kids under 13 to go on Facebook. The younger they become attached, the more loyal they will be from cradle-to-grave, quite literally.

Look at most areas of the bank, under attack at the moment because banks have left a gap. Others have begun to encircle.

Services such as SmartyPig have already been well established for some years, essentially replacing the physical piggy bank. New entrants such as Tykoon and Pocket Money are making traction.

Investors are agreeing that there is life in the space and money is being made available. Local British offering, Squid, has grown rapidly by delivering an “engaging, closed loop, local community payments service to selected communities.”

Most banks will struggle with the concept of investing in something that is not likely to pay off for another five to 10 years, but there is some evidence that some banks are starting to think differently.

Perennial shining light, Commonwealth Bank of Australia, has refreshed the very successful Dollarmites campaign run in Australia during the 1980’s.

Dollarmites was a school program that gave children a basic bank account. For a generation of young Australians, the Dollarmites campaign has meant that they are Commonwealth banks customers for life.

Besides the potential of a new generation of customers, the bank will also benefit from the strengthening of ties with parents.

Banks can look to deliver services that allow parents to monitor their children’s spending, provide allowances and set tasks for kids to complete all with the tap of a finger. It could even be parents to pay for school events, uniforms and stationery.

Services could also start to bring into play gamification and education elements. These can encourage the right behavior and improve financial literacy amongst this age group.

The significant growth of the pre-banked population has meant that this segment can no longer be ignored.

With impressionable kids forming an emotional attachment to popular technology at a young age, the brands of today are more likely than ever to be the brands of tomorrow.

The current generation of bank customers grew up thinking it was their duty to store their money in a bank account. The future generation is unlikely to feel the same. It is time for banks to protect their future now before it is too late.

Michael Nuciforo is London-based principal at The Bold War and a global mobile banking specialist who most recently was head of mobile banking at Britain’s RBS. Reach him at