When is the right time to get your kid their first smartphone and, once connected, how do you keep them safe?
It’s the million-dollar question that everyone has an opinion on. Including the Governor of California, who last month signed a bill to restrict student cell phone use in schools.
Meanwhile, parents are caught between a rock and a hard place.
Smartphones have been proven to cause low self-esteem and poor mental health in young people, but they’re also an intrinsic part of modern life and it’s crucial that adolescents learn how to use them safely and responsibly.
Whether at 6 or 16, there ultimately comes a time when almost every parent will take the plunge and give their kid a cell phone.
When that time comes, they’re faced with a dilemma: How do you protect your child from the negative effects of social media and screen addiction while giving them enough freedom to learn and grow?
Fortunately, emerging technology may have the answer.
Building good habits: Lessons from fintech
When it comes to learning life lessons, you can draw a few parallels between money management and smartphones.
Both are everyday essentials that young people need to learn about. Both are important signifiers of maturity and independence. Both have the potential to cause harm but, if handled correctly, can also act as a safety net as kids become more self-sufficient.
Knowing a kid can call home or use a debit card in emergencies can set a parent’s mind at ease and give a kid more confidence as they start to move around the world independently. But it’s also all too easy for young people to trip up and start using their new debit card or smartphone irresponsibly.
To help kids build healthy relationships with money, neobanks like Greenlight, Step and Modak have pioneered under-18’s bank accounts with advanced parental control features. These include spending limits, restrictions on purchases (e.g., alcohol and gambling), saving tools, and payment insights for parents.
These accounts encourage kids to learn money management skills in a safe space under the watchful eye of their parents.
The ideal kids’ phone plan should follow a similar model, with inbuilt features like website and app filtering, screen time limits, location alerts, and screen analytics. These tools can help kids build positive digital habits they can take into adulthood, while shielding them from the more damaging effects of smartphone use.
The question is: which brands are best placed to deliver a phone plan that meets the high expectations of parents, packaged with an easy-to-use app that both parents and kids will love?
The answer is staring us right in the face.
The convergence of two life essentials: Finance and connectivity
From a purely business perspective, there are several reasons for family-oriented neobanks to offer a phone plan along with their teen bank account.
Acquisition: Phone plans increase the value proposition of their offering, meaning they can capture more of the adolescent market.
Retention: The combination of banking and connectivity makes an incredibly sticky product portfolio, meaning fintechs will keep the customers they acquire for longer.
Monetization: By upselling family phone plans to existing customers, fintechs can drive additional revenue at zero acquisition cost and minimal cost to serve.
From a user perspective also, banking and connectivity make the perfect pairing:
Simplicity: Parents start thinking about getting their kids a cell phone and a bank account at around the same time. By bundling the two products, fintechs can streamline the signup process into one easy flow, saving parents a whole lot of hassle. To make life even easier, fintechs can also offer installment plans for kids’ devices.
User experience (UX): Imagine the beauty of a single app where parents can manage their kids’ spending and screen time. Kid off on a school trip? Top up their money and their data with a swipe. Family vacation abroad? Sort out roaming data and fee-free spending in a tap. Kid needs to stay home and study? Freeze their card and their smartphone in an instant.
Trust: The online world is frightening. When a child gets their first phone plan, parents want to know it’s from a company they can trust. Neobanks have earned that trust, as reflected in their high net promoter scores. With their stellar customer ratings and commitment to superior UX, neobanks are well-positioned to offer the kind of reliable, parent-approved service that ensures peace of mind.
Embedded connectivity is the future
The timing for this type of offering couldn’t be better.
In the past, embedding phone plans within an app would be a complex and costly process. But today, things are much simpler. Much as Stripe abstracted the complexity of payments back in the day, end-to-end connectivity platforms, like Gigs, now enable brands to embed phone and data plans natively within their app in just a few weeks.
By embedding connectivity in their products, fintechs can deliver two life essentials in one and turn millions of customers into monthly subscribers, increasing revenue per user and lifetime value.
Tinkoff (now T-Bank) and Toss are examples of pioneers in this space, having launched their own wireless services, while Nubank and Revolut both launched travel eSIM offerings this year. But, so far, the powerful combination of a family bank account and phone plan remains an untapped opportunity for fintechs.
As the banking and telecom industries collide, it’s surely only a matter of time before a leading fintech releases a kid’s phone plan that takes the market by storm. In doing so, they will make both the digital and financial world a safer place for young people, and earn the loyalty of a whole new generation of customers.