In the next in our series on financial inclusion, we look at how financial services for children, young people and families have really taken off, and why.
It’s difficult to shake a digital piggy bank. And that’s the concern for today’s parents in teaching their children about money.
A survey of 6,000 parents conducted by ParentPay showed that in an increasingly cashless society, 7-in-10 agreed their children do not understand the value of money in the way that they did when they were the same age.
However, the upside of digital and fintech is the sheer range of new banking, saving and money management products now available for children and their parents. These are typically card and app combos, namely prepaid cards that can be loaded and monitored via smartphone apps.
Everything under control
These products draw on the in-built control features of prepaid. The cards are pre-funded, so children can’t spend money they don’t have and it’s not possible to go overdrawn. Pocket money cards such as RoosterMoney, Nimbl and Hyperjar – Money Saving Expert’s recent pick for Top Prepaid card for U18s – enable parents to monitor their child’s purchases and restrict spending by amount or merchant type. ATM withdrawals can be enabled or disabled.
This not only helps allay parental concerns that their children are spending money too easily or on the ‘wrong’ things, it also helps families have healthy conversations about money. Further control features typically include alerts when cards are used, and the ability to freeze cards if they are lost, stolen or misplaced.
Spend tracking and budgeting are also key features of Osper, a mobile bank for young people. It allows kids to tag their spending and learn how to improve their budgeting habits. While Pixpay, a French smartphone account for teens, includes geolocation and merchant data for transactions, plus automatic classification, tagging and annotation of purchases, so teens can see where their money goes.
Pocket money goes digital
Earning is as important as learning – particularly for younger users of such products! Pocket money has effectively been digitised as all cards offer transfers or top-ups. GoHenry also enables pay-by-chore, where parents can set tasks for children to complete in exchange for extra pocket money.
Setting savings goals is another key feature of these new products. Most allow children to manage their money between different ‘pots’ via the app, which helps with mental accounting and to learn about the value of money and saving. Digital gifting from friends and family towards savings goals is also possible, either via transfers or gift links.
Fintech improves financial inclusion
Historically, children and young people have been under-served rather than directly financially excluded. This has been due to the mismatch between their needs and the products on offer.
But technology has helped make ID checks easier, lowered the costs-to-serve and enabled new ways to assess credit and affordability. This in turn has helped providers get creative on business models. The fintech mantra of disruption applies to mindsets and processes as much as to technology.
Providers have disrupted themselves and their thinking to explore new and different ways to make money. That may be a monthly subscription fee for an app, interchange revenue on card purchases, fees for limited edition card designs and so on.
How Monavate can help
If you’ve got a great idea – maybe it’s to help families save or teens and young adult bank on a smartphone – then come and talk to us.
We’ve got the licences, experts and tech to turn your ideas into viable payment solutions.
We’re an FCA-authorised e-money institution and principal members of Mastercard and Visa (card schemes) to offer issuing services and BIN sponsorship for debit, credit, prepaid card programmes and more.
Our experts have the experience to help you learn hard lessons the easy way for simpler, happier paths to market. And our tech will have you up and running in no time.
To find out more about BIN sponsorship and the Monavate difference, contact us today.