Marcell King, President/COO, Nuuvia (formerly Incent)
This past July, the federal government handed financial institutions a rare opportunity: guaranteed deposits, predictable funding, and a direct path to building primary relationships with the next generation of account holders. Whether we maintain those relationships long-term or hand them over to a fintech in five years depends on how we act now.
Each account receives a $1,000 initial deposit from the government. Families can contribute up to $5,000 annually tax-advantaged, and employers can add $2,500 more. These accounts begin accumulating value at birth, but the real opportunity for community financial institutions (CFIs) begins a few years later, when children are old enough to learn how money works and start directly engaging with it. When these accounts are ready for true activation, institutions need to be ready with tools that turn passive funding into a real financial relationship.
According to projections from the Congressional Budget Office, this legislation will drive an estimated $17.3 billion in investment activity and more than $3 billion in new deposits in the next three years. That’s before accounting for recurring contributions or compound growth.
Here’s the catch: while the funding is automatic, the relationship is not.
Most institutions will default to acting as custodians – processing the deposit, holding the funds, and moving on. Institutions that lead will treat this moment as a relationship acquisition event, not an operational task. Turning a one-time deposit into a multi-generational relationship requires more than account setup; it demands early engagement, embedded digital experiences, and a strategy engineered for long-term retention. The question is how to drive primacy and build lifetime value from day one.
This isn’t an abstract challenge. It is a competitive threat with long-term consequences. Fintechs have already claimed the first financial relationship in millions of households, owning when a child earns their first chore dollar or swipes their first card. They are not just offering sleek interfaces, but instead designing ecosystems that reflect how young users think, behave, and build habits. Every interaction is engineered to bypass the institution and redirect value, deposits, data, and brand affinity outside the traditional banking system.
Meanwhile, most youth accounts offered by CFIs are structurally sound but delivered through a stripped-down version of the adult digital experience. They offer little differentiation and lack the built-in tools families need to create real engagement. There’s no learning scaffold, no goal setting, and no visibility into how kids and teens are using the account – just a balance and a card.
Herein lies the problem.
While Gen Z and Gen Alpha still trust CFIs more than big tech when it comes to data security and fraud protection, they are not waiting for institutions to catch up. Data from The Financial Brand show that younger generations are 30% more likely to open new accounts than older ones, but they’re doing it through fintechs and nonbank apps, often entirely outside the traditional banking ecosystem.
This is why institutions must treat this moment not as a compliance event, but as a competitive strategy. If the government is going to seed the account, CFIs need to own the relationship, and that requires purpose-built infrastructure.
CFIs that implement youth-first digital engagement – structured learning, chore and grade-based earning, smart parental controls, real-time spend alerts, and goal-based saving – have reported up to a 32% increase in youth account openings and deposit growth of over 22% in under six months. More importantly, they are seeing stronger household engagement and a measurable increase in cross-product visibility. These results are the outcome of treating youth banking as a long-term relationship strategy, not a box to check.
Beyond the business case, there’s a broader question of equity.
Critics of the One Big Beautiful Bill Act (OBBBA), including The New Yorker and Kiplinger, have noted that while every child receives the same starting deposit, contribution limits will disproportionately benefit higher-income families. If we’re not careful, we’ll see well-resourced households compound wealth while underserved families are left with a stagnant balance and no clear next step.
CFIs have a critical role to play here. Having products that build in equity through income-based matching, fee waivers, and built-in financial coaching can extend the reach of this policy by making it easier for families to participate, understand, and engage.
Institutions that do this well won’t just capture deposits; they will retain the household and be the provider of choice when that child turns 18 and needs a car loan and goes to college, starts a business, or buys their first home. When you’re there for the first dollar, you have the right to be there for the millionth.
This is a margin opportunity, yes; however, it is also a mission opportunity.
We have a unique alignment of public policy, consumer behavior, and institutional trust but will we rise to meet it? If we wait until accounts are dormant or families disengage, we’ll be spending ten times as much trying to reacquire what we’ve already been given. We can either act now or compete later. As any banker knows, retention always costs less than reacquisition.