By Rebecca Crook, Chief Growth Officer, Somo
It’s no secret that as a financial service, if you can entice children into opening a bank account, the chances are you will keep them well into adulthood, developing what could be a long and loyal relationship. There will be many adults today that still house ornate Natwest piggy banks in the attic they received as children, and are likely to still be banking with the brand today.
However, with the speed of behavioural change triggered by the rise of the Big Five tech companies and the growing tech ecosystem, consumers are perceiving brands and services differently. This has been visible across the financial industry, with challenger banks disrupting the very traditional and unchanged landscape, and the likes of Monzo offering digital-first accounts that can be opened in minutes and managed simply with a well-designed app that updates instantly
Launched in 2015, Revolut is one of the largest challenger banks, valued at $5.5bn with over 10m customers downloading the app worldwide, 1.6m of them in the UK. This week it announced it is launching Revolut Junior, an online-only account and ‘money management’ digital product for children of Revolut account holders, which can be monitored by parents via the app. This is available for children aged 7 upwards and offers assurance to parents by giving them an option to receive notifications when the child spends money and controls on how the card is used – e.g. disabling online payments.
Bank accounts for children is by no means a new idea, with all traditional banks offering them, however there’s little by way of this type of digital offer and It’s a clever move by the fintech giant, beating rivals such as Monzo to the punch. It shows an understanding of this generation that is digital-first n behaviour and more entrepreneurial thanks to the opportunities that the online world now offers – in the UK alone those aged between 6 and 18 earned a whopping $4.5bn in 2018 largely because of social media and growing allowances.
It also allows Revolut to extend communications with its adult users, offering additional support with teaching young people how to manage money, whilst building an understanding on how young people interact with digital services across categories. This knowledge can then inform next iterations of the product and further offers. Revolut has the opportunity to build data profiles for customers right at the start of their banking life, which could lead to much more personalisation and a strong relationship where it can be more than simply a management app but a service built and integrated into everyday lives.
We understand from our extensive research at Somo into the future of financial services, that despite the large number of digital-only bank account holders, few still use them as primary accounts. So Revolut will see this as another way to help persuade these parents who hold a secondary account with them to properly move across and bank with them fully – meaning they can be a prominent factor in the lives of the whole family.
With speculation over how long we’ll see the use of bank branches and as we move closer to a cashless society, Revolut is setting the tone for financial online communication and interaction with young customers from the off. These customers are not needing to shift behaviours, they already live their lives via technology across services. They are far less likely to go into bank branches and are more likely to want to interact via a messaging app which makes the process consistent and simplistic. Whilst we know bank branch interactions have decreased due to the rise in digital we do know from our research that consumers for more complex purchases such as mortgages often welcome that face-to-face time so it will be interesting to see how Revolut leverage technology to serve this need when the time comes.
The challenge for Revolut, however, is that young people do not frame loyalty in the way generations before them did. As technology develops, brands are continually changing and evolving with disruption and persuasion to switch – whether banking, food delivery, taxi firms, etc. It won’t be long until Revolut’s competitors are launching a rival product that will take the learnings of Revolut’s offer with further developments. It’s vital that this new product stays intuitive and relevant to young people with shorter attention spans and includes them in product development.
Many may also question if Revolut will still be a major player in this space by the time many of these account holders reach adulthood – we don’t know. But if it continues to think intuitively and recognises habits and behaviours of how young people like to communicate and what is important to them when using platforms, it puts itself in a strong position in a fast-changing market with competitors biting at its ankles.
Global Banking & Finance Review
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