Future money spinners

Previously, teenagers and young adults were sidelined when banks marketed their consumer products such as credit cards or home loans. This is because they don’t have a regular stream of income or their monthly pay does not make them eligible to apply for the products.

Most banks only had basic savings accounts for youngsters such as junior savings accounts. This could be due to high per transaction operating costs to serve the youth market.

However, lately, this group of consumers are no longer in the periphery. They are in fact being courted by banks, offering specialised products or even a dedicated branch just for them!

While their purchasing power is still weak, youths in Malaysia are beginning to earn income earlier than their previous generations. This is made possible with greater access to the Internet, accompanied by increasing entrepreneurial spirit and higher creativity among youths.

More college students and young adults have taken to the online business as a way to earn side income.

While the government may be losing tax revenue due to undeclared income from the Internet businesses, the banking sector may be benefiting from young, small-time online entrepreneurs when they deposit monies in the banks.

That is why local banking groups are rolling out products specifically for teenagers and young adults.

Last year, CIMB launched YOUth Savers Account and YOUth Savers Account-i, targeted at those aged between 12 and 23. With a minimum of RM100 monthly deposit, YOUth Savers offers higher interest rates than regular savings accounts and up to 100 per cent bonus interest for account holders who save regularly.

It is believed that YOUth Savers has over RM150 million deposits. YOUth Savers is the extension of CIMB Junior Savers Account, which is targeted at children up to 12-years-old.

Malayan Banking Bhd (Maybank), meanwhile, is offering Yippie and Yippe-i Savings Accounts for children aged below 18 as well as imteen Account for teens aged between 12 and 18.

Yippie is a conventional savings account with effective interest rates between 1.45 and 3.01 per cent per annum, while Yippie-1 is syariah-compliant savings account based on Mudharabah (profit-sharing) principle and offers high dividend as account balance grows.

Leveraging on the growing Internet-savvy teens, Maybank has introduced an online savings account for teenagers, called imteen and imteen-i account. Imteen accounts offers interest rates up to three per cent per annum, while the syariah-complaint imteen-i account is based on mudharabah principle with multi-tiered dividend rate. No passbooks are issued for both imteen and imteen-i accounts as transactions are done online.

Moving slightly up in the age bracket, the country’s fourth largest lender Hong Leong Bank Bhd is launching a new branch, dedicated for the Gen-Y customers. This innovative concept aims at building relationships with customers who are born after 1980, with specialised and interactive services.

Not much is known about this branch as its official launch, which was supposed to be last Thursday, was postponed.

It is yet to be seen whether smaller banks will hop on this bandwagon and launch specific products for the youths. However, the banks’ intentions are similar – trying to build their market share in the highly competitive retail banking sector by capturing customers from a younger age.

Business Times : ourpick

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