As we look at the financial industry landscape, there are two major forces at play. First, today's customers have more choice than ever before in the history of banking and virtually no friction when it comes to changing providers. So the old model for building face-to-face relationships to drive engagement doesn’t work as well when most banking has become a series of transactions at the other end of a smartphone. Second, to a large extent, the world remains financially illiterate. A staggering 67% of adults worldwide are financially illiterate¹, which generates a significant social cost around the world.
So when it comes to solving the financial literacy problem, where do we start? One place to start is by teaching financial literacy to children, so when they become adults they’re better prepared to manage their financial lives. However, in most households, financial literacy is not a common conversation. When children were asked if they talk to their parents about money, only 23% of them said that it’s common, and only 34% of parents have explained to their children what credit card fees are and how they work². Which makes us ask the question, why aren’t we proactively doing more to set our children up for financial success?
Part of the issue is that a lot of adults are not financially literate themselves, so they’re unable to pass on those critical skills to their children. In fact, “84% of U.S. consumers have not attended a financial literacy program.”³ What’s more, according to a study conducted by the University of Illinois around 32% of adults are considered to have low money management skills, and 36% are considered to be financially at risk.⁴
Mobile Can Bridge the Financial Literacy Gap
The truth is that literacy programs and educational material may not be enough. Technology tools are a much better solution when it comes to learning how to interact with finances more effectively and in real-time.
For a lot of us, our smartphone device has become an extension of ourselves. We use smartphones to play music, stream videos, read articles, and much more. And smartphone usage is starting at a younger and younger age. Today, “more than half of American children own a smartphone by the age of 11.”⁵ So it seems like the perfect device to bridge the financial literacy gap.
In fact, there are many fintech providers that are already way ahead of the curve, in comparison to financial institutions, on this one in the financial industry. A myriad of fintech providers have developed mobile app solutions to help both parents and their children manage their money more effectively. And it’s no surprise, because it’s a very lucrative opportunity that they’re ready to seize. According to CBInsights, “ Ninety-two million millennials will soon be in what Goldman Sachs calls their “prime spending years,” commanding $1.3 trillion in annual spending.⁶
What’s more, fintech innovators are not going anywhere any time soon. According to, “Statista [the overall value] in the fintech sector in the US [is expected] to grow at a rate of 20.5% and total US$ 6,962,224 million in 2021.”⁷
So it’s no surprise that as fintech disruptors continue to enter the financial services space, they’ll quickly innovate on technological solutions such as mobile banking apps for parents and children. These innovations will no doubt outpace traditional banking methods, and it’s likely that fintechs will be in a better position to build stronger financial relationships with customers and win their loyalty over financial institutions.
How Financial Institutions Can Help
There are countless of technological advancements and innovations occurring across every industry—and the financial industry is no exception. In the last decade, we’ve seen a surge of fintech providers enter the space in hopes of alleviating some of consumers most pressing needs by offering a technological alternative to traditional banking models. And with mobile banking becoming the new norm—especially for younger generations—reaching people on their most coveted devices is no longer an option.
Luckily, fintech providers are also well aligned when it comes to working with financial institutions to power some of the technological initiatives that are needed to create a truly modern digital banking experience.
How MX Can Help
At MX, we work with financial institutions to create tools and solutions that help them succeed in their digital transformation initiatives. The MX KidsApp, one of our technology tools, is a mobile banking app designed for parents and works with children of all ages—from 3 to 18. The app experience is designed to always be age appropriate and the UI evolves with the user at different stages of their life with gamification features and event-driven prompts that delight kids as they grow.
The KidsApp, gives financial institutions the opportunity to develop a much richer, deeper, and more engaging experience with their customers. Not only does this help promote and encourage better financial habits from a young age, but the underlying data platform enables financial institutions to identify relevant and pertinent product offers for their parents. And because the KidsApp has an adaptive UI, it’s one code base for the financial institution to manage, yet it provides a growing level of sophistication and features as the child grows into adulthood. Once the child reaches full adulthood, the app grows with them, helping them continue to maintain good financial health with proactive and predictive alerts using data-driven AI assisted nudges. This enables people to remain in control of their finances and stay informed at all times.
The app also gives parents convenient tools to teach their children about money. When it comes to learning these skills, parents, guardians, and grandparents are able to pass on their financial values to their children more easily than ever before. And perhaps best of all, it gives kids hands-on experience managing their finances in the digital world. When used alongside education in school, KidsApp offers children a resource for discovering the value of financial wellness. In the end, the better you’re able to know your customers, the better experiences you can create, providing added value and guidance throughout every step of your customers’ financial journey.