海角大神

When John Hibbs鈥� daughter Xanthe received her first bank card in the mail, the 6 year old spent the next week Googling how to buy a horse.

Mr. Hibbs and his wife Kate had got Xanthe a newly launched children鈥檚 debit card from the British digital bank Starling. The card is one of a number of new offerings from fintechs aimed at children and teenagers.

鈥淭he earlier we can start the learning process of using a card, the earlier she can learn that you can鈥檛 just go out and buy a horse,鈥� said Mr. Hibbs, who runs a charity.

While traditional banks have long offered basic savings accounts to children, fintechs say they have spotted an opportunity to offer better, slicker apps to tech-savvy kids and teenagers, who they say have been underserved.

Starling鈥檚 Kite card allows parents to transfer money to their children鈥檚 account, set spending limits, and receive notifications of their purchases. It rivals similar products from gohenry and Monzo in Britain while in the American fintechs Greenlight, Step, and Copper are trying to capture the youth market in the United States.

JPMorgan Chase also recently entered the space, introducing a children鈥檚 account in partnership with Greenlight.

The companies say they aim to give children a taste of financial freedom and education, while letting parents track and block spending. They hope to capitalize on the digital payment and e-commerce boom, and hold on to new customers into adulthood.

鈥淚t鈥檚 a play on profitability to get lifelong customers,鈥� said Kavita Kamdar, who heads JPMorgan鈥檚 children鈥檚 venture, Chase First Banking.

JPMorgan鈥檚 partner Greenlight has grown from 500,000 to 2 million parent and children customers in a year.

鈥淚 think the startups are in a position to take junior accounts away from the high street banks,鈥� said Sarah Kocianski, head of research at fintech consultancy 11:FS. 鈥淏ut they have to strike a balance between being appealing to kids and appealing to parents, and goodness knows how you do that.鈥�

Companies must also be careful in keeping data secure and ensure children and parents understand what they are giving consent to, Mr. Kocianski said.

From popularity to profitability聽

Atlanta-based Greenlight, which costs $4.99 a month, including debit cards for up to five kids, allows parents to create in-app chore lists for children and tie the work to perks. It also lets parents set and pay interest on their children鈥檚 savings.

鈥淎 couple of big macro trends drove the adoption of Greenlight,鈥� Timothy Sheehan, the company鈥檚 chief executive said. 鈥淭he decline in use in cash and the adoption of the smartphone, not only among adults but among children.鈥�

U.S. digital payment apps such as PayPal Holdings Inc.鈥檚 Venmo and Square Inc.鈥檚 Cash App, which have become a common way for consumers to send money to each other, do not allow users under the age of 18. This boosts the appeal of new apps targeted at those too young for popular apps but old enough to spend money.

鈥淭his is a demographic that doesn鈥檛 have a bank account, they still have money underneath their bed 鈥� and we are providing them access to the digital economy,鈥� said Eddie Behringer, chief executive of Seattle-based teen banking app Copper.

Analysts and investors question whether the youth market is getting overcrowded, given that youngsters are not cash-rich.

鈥淎 lot of money is going to these firms, but do they make money?鈥� said Ian Kar, the founder and chief executive of consultancy Fintech Today. 鈥淭een banking is not very profitable yet.鈥�

UK-based gohenry, which was founded 8 years ago, offers accounts for children, charging parents about $4 per month.

Alex Zivoder, gohenry鈥檚 chief executive, said the company is on track to make a profit within a few years, despite its pretax loss jumping by three quarters to $7.7 million last year as it invested in expansion including in the U.S.

Mr. Zivoder said the company made an underlying profit in the second and third quarters of 2020.

Rivals do not worry him. 鈥淭he market is huge,鈥� he said.

鈥淚f you think of how many parents there are in the U.S. and UK, will they be happy with one solution, one product?鈥�

For neobanks like Starling, where children and teen accounts are an added product line, analysts see the service as a way to generate additional revenue. Apps solely focused on the younger demographic may find it tougher.

Starling鈥檚 Kite account, which costs less than $3 a month, has been 鈥渇lying off the shelves,鈥� said Helen Bierton, the startup鈥檚 chief banking officer. She declined to disclose figures, noting products like Kite are part of its strategy to reach profitability by the end of 2020.

Spending

Teenagers and children may not have much disposable income, but startups are banking on their growing spending power. Gen Z, the generation currently between the ages of 8 and 23, represents around $150 billion in spending power in the U.S., according to the consulting firm McKinsey.

San Francisco-based Step, which hopes to build a bank for the next generation, plans to initially make money through card interchange and then offer more financial products as customers grow older.

鈥淓very brand wants to reach this new generation,鈥� said Step founder and chief executive CJ MacDonald. 鈥淭hey are not rich, but they still spend billions of dollars a year.鈥�

Ben Galbraith, a Palo Alto-based father of eight, has used Step with his five older kids for the past 10 months. He used to keep track of allowances, spending, and frequently lost cards with a spreadsheet.

鈥淢oving it into an easy-to-use app gets rid of all that stuff,鈥� Mr. Galbraith said.

His oldest daughter Jackie, an 18-year old New York University student, doesn鈥檛 mind her parents having a real time view of her spending. As an added perk she can use Step to ask her siblings to pay her back any money they owe her. But access to digital banking can鈥檛 solve everything.

鈥淭hey ignore my requests, so I have to badger them,鈥� she said. 鈥淭hree of them have not responded.鈥澛�

This story was reported by Reuters.