Web 2.0--Startups Seeking Young Adults

Ed Kountz | May 01, 2008, 07:04 AM

Some of our more popular recent research has centered on the payment habit differences between young adults—whom we define as those online users 18-34—and older online adults, or those who are 35 and older.

Chief among these changes, of course, is higher ownership and online usage rates of debit cards, but other examples (including relatively higher rates of usage of P2P payments services, and higher overall interest in mobile payments) are also evident.

An upcoming JupiterResearch report will consider these changes in the context of online behaviors and financial services needs specifically for 18-24 year olds—the much-vaunted Millennial online user category, for whom habits have not yet been as deeply established and for whom instant communications, digitalization and online and mobile technologies have become a natural extension of daily life.

With that in mind, it's worth noting the firms who are positioning to appeal, within a Web 2.0 environment, to the habits and needs of young adults. Had a recent conversation with UpDown.com, an online investing community/ social networking site aiming (the firm says) at online users 18-34. In sum, the firm seeks to add community to the online investing scene, and will reward within its investing contests financial incentives for those who beat the S&P 500. Still early days…and given the relatively lower level of investible assets among young adults, too early to declare success. Plus, firms like zecco.com and TradeKing are also seeking to a similar goal, but worth watching nonetheless. The average age of an updown.com user is 29, the firm reports, so an interesting positioning in terms of age.

And our numbers repeatedly show the outsized ownership of student loans among young adults. Another startup, Fynanz Inc, is leveraging the credit crunch to bring a P2P lending flavor to student loans. The firm originates student loans, and like other P2P lending sites brings together lenders with borrowees to make a market in student loans, wich Fynanz originates. While a targeted niche in the P2P lending space, worth watching given the slowdown in the broader student loan market (after all, it's not like demand will disappear)…but the firm will need to expand nationwide, and like other emerging two-sided markets create an equitable balance between both sides. Easier said than done, but an interesting concept with a memorable brand.