Financial literacy among kids and teens: How mobile wallets can help

Kids and teens under 18 years old are considered part of either Gen Z (born 1997-2012) or Gen Alpha (born 2010-2022) generations - collectively named GenNext. Both generations have grown up in an increasingly digital world, particularly Gen Alpha, who are all younger than both Instagram and the iPad.

Gen Alpha and Gen Z are used to technology. From staying connected on social media to consuming entertainment and shopping online, their lives are inherently digital. But the information they consume is less filtered than that of previous generations, and navigating this diverse digital world requires strong financial literacy to make informed decisions.

Despite being digital natives, financial literacy is a concern for younger generations. A study by the National Financial Educators Council found that just 24% of millennials demonstrate basic financial literacy, highlighting the need for effective financial education solutions for even younger generations.

Having grown up in an era where cash is no longer king, Gen Alpha and Gen Z have been quick to embrace digital banking services such as peer-to-peer (P2P) payments, Buy Now Pay Later (BNPL) and alternative investments. But doing so isn’t risk-free…

• Push payment fraud (the most common type of P2P fraud) accounted for 40% of all fraud losses in the UK in 2022.
• 76% of Gen Z faced at least one issue related to BNPL services (including spending more than they should have, missing payments and regretting a purchase).
• Crypto fraud resulted in $679 million of losses in the US in the first half of 2024 alone.

With 31% of Gen Z in the UK saying they’d rather invest in cryptocurrency than a pension, financial literacy will be particularly important considering the heightened investment risk and the amount of unqualified advice the crypto market attracts.

Teens often struggle with a lack of autonomy, find it challenging to budget their money and prefer not to carry a physical wallet. Meanwhile, parents often grapple with teaching digital literacy and ensuring their kids manage their money safely. Some kids banking and teen banking apps, such as Bling! (Germany) and GoHenry (UK), do offer solutions to these challenges - including prepaid cards with parent-set limits, educational financial content and digital apps. But most traditional banking solutions fail to address these challenges, despite 88% of bank executives believing they understand Gen Z’s needs (only 34% of Gen Z customers agree).

Mobile wallets can help improve the financial literacy of younger generations, without requiring banks to redesign their mobile apps. With features like real-time expense tracking, savings goals and budgeting tools, mobile wallets can provide an intuitive and interactive way for kids and teens to learn valuable money management skills.

Netcetera’s own white-label kids banking solution is a prime example of how mobile wallets can enhance financial literacy. Developed through extensive research, including over 1,800 minutes of interviews, 12 prototypes and 41 qualitative tests, the white-label mobile wallet offers a comprehensive banking solution for both teenagers and parents. The teenager ‘cockpit’ provides a safe space for learning financial skills and making card payments with the privacy of cash. Meanwhile, the parent cockpit includes adjustable supervision levels, spending limits and a shared money pot for expenses, giving parents peace of mind and control.

For banks, white-label solutions like ours offer a cost-effective, simple-to-implement method of catering to the needs of Gen Alpha and Gen Z. Crucially, these solutions enable traditional banks to remain competitive, attractive to customers and improve long-term brand loyalty.

To find out more about Netcetera’s kids banking app and white-label solution, speak with our team.