Ready to Market to an Even Newer Generation "Gen Alpha"?

 75.1% of parents would consider switching to a different financial institution that offers a youth banking solution if theirs does not, spotlighting the direct link between such offerings and customer retention.”

04/11/2024 07:18 pm

BLUE BELL, Penn.–Credit unions still working to respond to the divergent needs and attitudes of Millennials, Gen X and Gen Z now have research around a new generation to adjust to: Gen Alpha.

A new report from Rego Payment Architectures and Q2 Holdings titled “Banking on Tomorrow: How Today’s Youth Will Shape the Future of Banking,” offers what the company said is a comprehensive analysis of the financial habits of Generation Z and Alpha and their parents' preferences for a youth banking solution.

In addition, the report highlights the “transformative impact” youth banking solutions can have on the growth of financial institutions, according to the companies.

How to Hit Objectives

“In recent years, banks and credit unions have faced a multitude of challenges related to digital disruption and new financial technology entrants,” the organizations said in releasing the report. “To combat these challenges, financial institutions have focused on increasing customer loyalty and deposit growth. The report offers insight into how both of those objectives can be achieved by tapping into the population of hands-on, well-educated parents who are hoping to instill healthy financial habits in their children.”

Key Insights

According to the two companies, key insights from the report include:

• Financial institutions have an opportunity to maximize on significant youth spending power. Approximately 80% of children ages 7-17 spend up to $50 a week, and 10% of those children spend $100 or more each week – equating to $5,200 of transactions yearly.
• Financial institutions must pay attention to parents’ wants and needs when considering a solution. “Burdened by student loans, the scarcity of affordable housing, and the stagnation of wages, the majority of parents (56.3%) identified the desire to arm their children with the financial savvy needed for a secure future, highlighting the demand for youth-focused banking solutions,” the companies said.
• Parents seek solutions from their current banking provider – and it “could play a huge role in customer loyalty if financial institutions do not adapt. According to the report, a significant majority of parents (57.2%) express a preference for their existing banking provider when considering a youth banking solution,” the report found. “However, 75.1% of parents would consider switching to a different financial institution that offers a youth banking solution if theirs does not, spotlighting the direct link between such offerings and customer retention.”