With the advent of digitization in India, the financial services industry finds itself amid profound transformation and is seeing an emergence of new-age banking. The rise of digital banking and contactless payments in India has resulted in a subsequent shift towards wallets, contactless cards, digital payment apps and other financial products. While we consistently explore the need for digital literacy amongst adults, it is duly imperative for children to have an understanding of finances and banking as well. India itself has more than 200 million teenagers and young adults, making it one of the youngest markets in the world. Bloomberg News analysis discovered, India will have the world’s largest workforce by 2027, with a billion people aged between 15 and 64. Driven by the massive demand for teenagers and parents, the neo banking industry is growing exponentially.
Cash still dominates
India’s Gen Z, despite being the most tech-savvy & a digital-first generation, conduct well over 80 percent of their transactions in cash. They are underserved from a banking perspective who exclusively target the salaried class and deprioritize the young Indian population as “unprofitable”. It’s of no surprise that this segment ends up entering adulthood with little or no knowledge of personal finance. On the other hand, today’s youth are becoming financially independent a lot earlier than a few decades ago and just like other categories, they want financial products as well to be customized and personalized to their needs - and marketed to them in a simplified manner.
Neobanks are serving this segment and the year 2022 will see this space expanding exponentially with youth centric innovative offerings.
Apart from select innovations like ATM withdrawals, netbanking and mobile applications, the traditional banking in India hasn’t drastically changed in the last two decades. Traditional banks rarely allow minors to have a standalone bank accounts sans a parent or guardian - a sweet spot being filled in by youth-focused neobanks. With an attention span of less than 8 seconds, India’s youth seek convenience in all aspects of their lives even when they are simultaneously consuming digital content at an unprecedented pace. Youth banking needs to be easy, quick & most importantly, smart.
With an aim to enable teenagers and young adults to gain financial literacy and independence, neobanks in India are seeking to provide a smooth, hassle-free, youth focused neo-banking experience. This smart generation can now experience all the features of a normal bank account from the comforts of their very own phone; all this while getting more financially literate through byte-sized and gamified content.
The onboarding process is literally child’s play (pun intended) with youth neobank’s mobile apps allowing parents to set up an easy-access digital account within minutes post submission of standard identification details.
Focused on catering to the young
These youth-focused neobanks offer teens their own contactless prepaid cards that lets them get the best of online and offline payments by providing the convenience of virtual card online payments and the power of contactless cards while making payments offline.
Category-based spending limits with enhanced security features is an innovative way of building the essence of financial independence and literacy apart from encouraging this user segment to save money through pre-defined savings goals effectively and smartly.
Youth centric neobanks are bringing the change that traditional banks aren’t addressing and their partnership with the parent community is an integral part of their business strategy. They are not only empowering parents (along with their children) to categorize the spending but are also allowing parents to analyze the transactions so that they understand where the money is being spent. Parents get transaction alerts in real-time whilst setting transaction limits to manage the spending and develop responsible financial habits in their children.
In 2022, youth centric neobanks will continue to offer innovative features and launch incentivized engagement to strengthen their brand connect with the youth.
Players in this category are expected to offer a wider array of financial products through an easy-to-understand and use, intuitive, friction-free, gamified, and education-powered experience. Young consumers will be targeted with curated and friendly content on personal finance; especially created by industry experts - a major gap area that continues to exist in the traditional banking arena. Such curated content will take financial literacy to the next level by breaking down complex financial concepts into simpler, byte-sized topics in an engaging and visual manner. Spending will be even more incentivized to drive higher usage. The year will certainly witness the introduction of vernacular content to expand the reach of youth centric neobanks with users across regions in India.
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