Report: Wired Teens Are Generation $

Teens are poised to jolt the Web in the coming years as their focus shifts from fulfilling entertainment needs to honing purchasing and investing skills, according to a study released Thursday by Forrester Research.

While peer-to-peer driven technologies such as Napster have energized today's Net savvy 16 to 22 year-olds, they will soon take to finance-oriented sites with equal zeal and, notably, less restraint than older users, the firm forecasts.

"The Net generation is just beginning to show financial potential," said Forrester researcher Ekaterina O. Walsh. "But it will quickly grow into a prime market."

As part of its report, "The Next Financial Consumer," researchers drew on data from three surveys, which yielded a combined total of 117,000 responses from North American households.

Ahead of the Technological Curve

The widespread penetration of the Internet has inculcated young users with behavior that is readily adaptive, the study said.

As a result, wired teens are apt to engage in more sophisticated online activities, such as demand-driven pricing and file swapping. Their ability to stay ahead of the technological curve will make them the ideal consumers of online financial services, the report concluded.

For example, although 16 to 22 year-old users are just beginning to survey the investing landscape, they are four times more likely than adults to trade with a pure-play brokerage. Moreover, they are 23 percent less likely to say that they will not take investment risks.

Fearless on Financials

As young consumers begin to incur a wider breadth of financial responsibilities such as student loans and car payments, the report predicts that the Internet will play a key role in how they conduct their transactions.

They have already displayed a greater propensity to research financial products online than older users. That gap is widest with credit cards, for which young consumers are three times more likely to explore their options on the Web.

Although fears about online security and privacy have caused many adult users to think twice about applying for financial products on the Net, their younger counterparts are four times more likely to do so.

Name Your Banker

Teen users also favor a host other digital transactions, the study found. One third of the survey respondents who currently hold bank accounts transfer money over the Internet, and one quarter pay bills online. Of those with brokerage accounts, 55 percent already trade stocks online.

"Although it's impossible to predict how these kids will revolutionize financial services, it's not too early to examine how their technology attitude shapes the universe of brands they will consider when managing their financial lives," said Walsh.

"These consumers already consider technology and Internet companies as financial providers and trust Yahoo! and Amazon as much as Fidelity and E*Trade to hold their money," she added.

Growing into the Role

Older teens are currently active in the e-commerce arena as well. According to a recent poll by Nickelodeon Online/Harris Interactive, the biggest online spenders in the 8- to 24-year-old age bracket were young adults between 18 and 24.

The poll found that average annual online spending for those 18 to 21 was $900 (US$) and $1,200 for 22 to 24 year-olds.

Kids and early teens, however, have a way to go before flexing their economic muscle on the Web.

In a survey of children aged 12 to 17 released last month, Jupiter Communications said that the group will only spend $4.9 billion online in 2005, although the research they do online will fuel over $21 billion in offline spending.