Beyond offering colorful lollypops to distract children while their parents were waiting on line at a branch, and some traditional savings accounts, banks have not offered many products designed for children.
But with so many kids using mobile devices at a young age, financial apps geared towards children are helping them learn about money management. The banks, credit unions and fintechs that offer digital “kids accounts” can create sticky customers who may stay with that institution for life.
So far, just a handful of banks offer such apps — including the Chase First account and RBC’s Mydoh app. They range from actual accounts to apps more focused on education and financial literacy. Many fintechs and neobanks also play in this space, including Revolut, Acorns, Greenlight, and GoHenry.
The real advantage of offering kids banking apps, however, may lie more in the appeal to the child’s parents.
“The primary reason for offering kids’ accounts shouldn’t be only to acquire the kids as future customers, rather to create a reason for the family to switch to your bank as their primary bank,” says Alexandros Argyriou, CEO of consulting firm Scientia.
RBC’s Kid Banking Success with Mydoh
But exactly how can banks and credit unions differentiate themselves in this market? Or build current and future business by offering a mobile banking app directed to younger consumers? And what features and functionality should it have?
Broadly speaking, such apps should make complicated financial concepts easy to understand for younger consumers, they should have a level of personalization and customization, and be simple and easy to use, says Jamie Sioui, VP Digital Channel Management, Personal & Commercial Banking, at RBC.
By offering financial apps aimed at younger consumers, banks can potentially create lifelong relationships.
“We want to empower young people to confidently take on the challenges they face,” Sioui tells The Financial Brand, “by supporting them early to set them up for future financial success,”
RBC Ventures (now part of RCBx) — the innovation-focused venture capital arm of the bank — developed Mydoh, a money management app that comes with a prepaid Visa card designed for children and their parents, in 2019. Mydoh is backed by RBC but it is available to customers of other Canadian banks as well.
Features of Mydoh include a “task tracker” where parents can check on the status of household chores, and add money to the child’s account once completed. Parents can also set up a weekly allowance to go into the account regardless of tasks completed.
The app also aims to engage children with fun extras, such as the ability to add emojis to notifications, and educational functions like “Mydoh Play,” which includes financial trivia games and information on financial products, such as loans. The app recently reached 100,000 users, including both children and parents.
“At RBC, we believe that supporting young people is key to Canada’s future,” says Sioui. “We also believe that young people should be better equipped for the challenges they face both now and in the future. That’s why we have created programs, advice, offers and technology specifically designed for their stage of life.”
Banks Should Target the Student Market
In addition to Mydoh, which is primarily aimed at the 6 to 14 age range, RBC has a proprietary “student edition” of its mobile banking app targeted towards older teenagers and college students. Sioui says that RBC’s internal research revealed that only 33% of high-school students and 38% of post-secondary students said they felt they had their finances under control, which was a major impetus for creating the student app.
To Be Prepared or Not Prepared:
Only a third of high-schoolers told RBC they feel confident with money, inspiring its teen banking app.
Sioui adds that collaboration with the target user — RBC worked with a test group of 400 students aged 14-22 — was key to developing features they would find most helpful and engaging.
The student edition offers more features than Mydoh, such as P2P payments, and “contextual definitions for financial terms,” that users can click on for fuller meaning, “coupled with money management insights that will help make banking easy to understand” to help these younger consumers understand finance better, Sioui says.
The student app also offers insight on spending patterns, the ability to choose nicknames and colors for different accounts, and tech to upload photos for contacts. It currently has more than 300,000 users.
Ultimately, the goal of these apps is to move customers from Mydoh to the student edition to an adult customer account — and for the bank to obtain and keep customers into their adulthood.
“As you get older, your finances may become more complex and you need access to different tools,” said Sioui. “That’s when you will ‘graduate’ in the main RBC Mobile App, unlocking more features, capabilities and benefits.”
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GoHenry: Get ‘Em While They’re Young
Financial institutions are much more likely to keep a customer as they get older when they start the financial relationship with a person at a young age, observes Dean Brauer, co-founder and U.S. president for GoHenry.
“These are sticky products and it gives you a chance to build a lifelong relationship with the customer,” he adds.
GoHenry is aimed at children from six years old up to the teen years and has different levels of functionality based on the user’s age. Younger users can see money earned from doing chores and take “money missions,” interactive lessons that teach children about the basics of money management and different financial products.
Teen users can get access to P2P payment functionality and Apple Pay, and get direct wage access from their jobs, Brauer states. All users have access to a prepaid debit card component as well.
Brauer says the app differentiates itself from other apps aimed at children by incorporating gamification, which makes learning engaging and “brings financial education content to life,” he said.
Making it Fun:
Using gamification can make teaching kids financial concepts more interesting.
Right now, GoHenry acts like any other standalone fintech; it partners with an FDIC-licensed bank on the back end (Community Federal Savings Bank). But, similar to Mydoh, it has plans to license the app and partner with other banks so they can offer it as well. GoHenry is planning to begin its partnership strategy in 2023.
Brauer says this service will likely be appealing to banks because obtaining younger customers has become a big focus.
“Banks are realizing the need to reach this next generation of customer, they are spending a lot of money to acquire customers in their college years,” Brauer explains. “Banks are always working on lifecycle marketing and creating products for different life stages, and this is an ideal way to reach younger customers.”
Bank To Not Just Kids, But Parents Too
Perhaps the best reason for banks to offer an app specifically for children is not just to acquire that user as a customer in future years, but to attract parents and the whole family, observes Scientia’s Argyriou. The idea is to get as much data as possible about the family’s financial habits, in order to “increase the engagement be able to sell more — and more targeted — products.”
The consultant adds: “As per keeping the [children] customers as future adults, when you are able to engage them from a very young age, make their life easier, and solve their day-to-day needs, subconsciously your brand is associated with being ‘the bank.’ Kids will associate [this service] that they use, as the equivalent of the definition of a bank.”