Why the digitisation of pocket money is Fintech at its finest

With several apps teaching children (and parents!) the value of saving their pocket money, what does it mean for the banking industry?

There’s an app for everything, is a colloquialism fast becoming canon which certainly rings true if the tech boom of the last decade has anything to say about it. But can we have too much digitisation? And should some things be left alone?

As sure as rain, everyone received pocket money as a child. Whether it was the accumulated ‘don’t-spend-it-all-at-once’ 50ps from granddad, the fivers thrust in your direction from merry relatives following the third round of sherry, or the highly regulated weekly allowance received on a Saturday morning – pocket money was invaluable.

Of course, its value lay primarily in its purchasing power of 5 Freddos to a £1 (excuse the pre-chocolate inflation nostalgia), but pocket money taught the value of saving for that sparkly new bike. Having said that, and depending on the scatterbrain of the parent, pocket money was never a guaranteed regularity. It meant that on the few occasions it was given, it was quickly spent.

An app for everything

And so, in a surprisingly imaginative digital marketplace where the user can geo-map places they’ve defecated, or spend hours therapeutically engaging with a zipper simulator, Fintech has turned its hand to rejuvenating the piggy bank stuffed with coppers in an increasingly cashless world.

More than a fancy gimmick

From 2014, several pocket money apps have popped up to varying degrees of success, with Osper and GoHenry the more prominent. The two apps essentially set up kiddy bank accounts, along with Visa cards, and allow the parents to pay in (or out) and regulate spending. The apps provide the parents with an easy to use interface to monitor the realtime spending of their offspring, whilst the app can also be used to set saving goals for various toys. Is there a degree of education about these apps? You bet there is. If John Lennon were alive today, he’d slip in an additional line: imagine all the people who are financially literate..

How banks market to children

But it’s nothing new to teach children about savings and spendings and the big, bad world of personal banking. Barclays and Natwest have been running community outreach schemes for years – the former doing lots of painting in schools. Over in Aus, Westpac Bank rolled out their financial literacy programme to teach primary school children the value of budgeting, spending and saving whilst also up-selling their Choice Basic accounts to 167 pupils.

HSBC have gone one step further setting up SchoolBanks which, according to the website, are ‘managed by kids, for kids’. They aim to offer 7-11 year-olds a fun and immersive banking experience, including job interviews for different roles; it makes you wonder how tightly HSBC regulate the playground mortgage market.

Now, the cynics amongst you will read ‘school outreach programme’ as ‘get ‘em while they’re young’, but statistics suggest we are creatures of habit and rarely switch accounts. It’s the exact same reason why banks fork out on free railcards to entice young people to their Student Current accounts; it’s a small price to pay for a lifelong customer.

PSD2 – real room for change

But if the startup scene has taught us anything, it’s that big banks need to get with technological innovation to stay competitive amongst the myriad of banking app startups out there, particularly with the shake up PSD2 will provide this year.

But more importantly, apps like Rooster Money are reimagining the old financial ways of doing things and shaking the yoke of the established status quo. They’re bringing children into the world of banking early on at a personal level where their influence doesn’t stop at 3:30 at the school gates, but goes home with them in their phones and tablets. It offers a more convenient service that allows the parent to make informed and monitored banking decisions, where the educational aspect is very real and not simply a flimsy front in order to sell to do-gooder parents.

It encapsulates the very principle of Fintech – putting technology to innovative uses to engage with new customers and making their finance more convenient whilst also providing fresh innovation for the banking industry. It keeps the big boy banks on their toes in a healthy, competitive market, and keeps the consumer wielding the sceptre of choice.

Related reading