The digital disruption in banking and other financial services is unstoppable. For banks, it is an opportunity to deliver new customer experiences and innovative financial solutions, particularly for youth.
A report by Mastercard Foundation on youth and access to financial services in sub-Saharan Africa terms digital banking as a “winning strategy for financial inclusion of youth.”
Digital banking, like other fintech innovations, is attractive to youth not only for the convenience it offers, but also the promise of financial empowerment.
Notable shifts in customer preferences and advent of digital platforms has upended traditional banking.
However, innovating fit-for-purpose financial products requires a deeper understanding of the needs and behaviours of younger people. With digital banking, it is possible to create a financially empowered generation for the present and future, by bridging the financial divide that disenfranchises young people from opportunities that would transform their lives.
For young adults, digital banking comes with many benefits. First, it offers a friendly, accessible and convenient channel, while supporting innovative, transparent, secure and simple banking products. Second, digital banking offers youth access to banking services during a critical phase in their lives as they settle down in their career and family life.
For example, soft loans to meet emergency expenses or invest in assets and small businesses.
Third, digital banking is an effective tool for promoting financial literacy, now considered a vital life skill.
With the foregoing, focus ought to be on innovation towards cutting-edge, differentiated financial solutions that meet the needs of an increasingly demanding and inquisitive young consumer.
Research by consulting firm Oliver Wyman reveals that up to 30 percent of young people think they will not need a bank at all in future — a vital insight on attitudes of youth towards traditional banking. The study recommends that banks prioritise digital products, communication and customer service to attract millennials.
Promoting access to digital banking by the youthful consumer segment contributes to achieving financial inclusion.
Youth constitute the majority of the population yet are excluded from financial services. According to the United Nations, such exclusion is tied to legal restrictions, high transaction costs and negative perceptions, for example, that youth are a low-income group therefore not a viable market for lenders.
Digital banking is, however, not an end in itself. It must have a transformational impact on consumers by empowering them to save, borrow, invest and grow financially and achieve social and economic resilience.
This includes helping young people build a financially secure future. Banking the youth is banking the future.
