Gen Z Gets Lit; Let’s Talk Financial Literacy

Flat World Partners
5 min readDec 23, 2021


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Despite the paramount role financial literacy plays in society, it has been a subject continually overlooked by the U.S. education system. Although teens are overachievers in spending money, many never learn how to save it, manage it, and make it grow. This notion is validated by the US ranking 14th in the world for financial literacy. Additionally, 72% of Americans report struggling with nearly all aspects of their financial lives.

Financial education can come in a variety of forms, including games, stories, lesson content, and real-world experiences. However, in response to the financial literacy gap by the traditional education system, there is an emerging fintech category, Youth Banking, that is taking matters into its own hands through real life examples. Companies in the space provide parent-monitored digital banking services to the Gen Z category, whilst integrating features that drive financial literacy. This financial education gap is a global opportunity and one private Fintechs are solving a lot faster than schools and governments.

The youth have historically remained a relatively unappealing and non-lucrative market segment due to their limited income. As such, kids and teens have generally been underserved by the traditional financial system. Large incumbent financial institutions could afford to wait and target customers at points in their life when they started generating income, like just out of college. However, now this is changing, and digital banks, or neo-banks, saw an opportunity to step in and provide banking solutions that meet the needs of younger consumers. This sector has experienced rapid growth over the past 18 months and there are numerous secular tailwinds that are driving adoption.

A third of American teenagers have no bank account of their own and often rely on borrowing their parents’ cards or receiving cash for purchases — which often proves an annoyance, as parents themselves have largely gone cashless. The average age of cell phone adoption in the US is 10 years old and 95% percent of teens have access to a smartphone. The GenZ customer, now aged 9 to 24, are mobile-first, gamers, and digital/social natives and there is a desperate need for a digitized financial product. As such, these younger generations expect digital banking experiences to be just as entertaining as their most beloved consumer apps.

It has been abundantly clear that COVID-19 has accelerated the digitization of finance. Although the ‘Youth Banking’ sector is emerging it is starting to see many new entrants, with the category leader, Greenlight Financial recently being valued at $2.36b after a new funding round led by Andreessen Horowitz. The pandemic gave parents the opportunity to look over their kid’s shoulders to see what and how they were learning and many families are now focused on increasing financial literacy.

The success of GenZ-focused gaming platforms like Roblox — whose user base is an average age of 16 years old — demonstrates the spending power of this market segment. In the current system, where financial education is not a priority, expect to see many Youth Banking applications to fill the void, who have financial literacy at the center of their value proposition.

Hamish Baillieu, Associate, Directs

An independent study estimated that GenZ’s direct and indirect spending power reached up to $143 billion.

Are you a Gen Z and want to invest in your own financial literacy? Check out Copper Banking, one of the most highly rated teen banking apps on the market.

Want to learn more about the Youth Banking sector? Greenlight’s CEO, Tim Sheehan, joined the Tearsheet podcast to discuss what problem Greenlight solves and how families collaborate around the financial app.

This newsletter is intended solely for informational purposes, and should not be construed as investment/trading advice and are not meant to be a solicitation or recommendation to buy, sell, or hold any securities mentioned. Any reproduction or distribution of this document, in whole or in part, or the disclosure of its contents, without the prior written consent of Flat World Partners is prohibited

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