Three things to know when building a parent-child banking proposition

Teaching children good money habits is an important life skill given how important managing finances are to navigating adult life. Over the past few years, we’ve seen an influx of apps and services that look to create a safe, fun and fulfilling environment for parents to do this. Gohenry, one of the first pocket money apps to launch, reached the incredible milestone of one million users earlier this year and FinTech unicorn, Revolut also launched their eagerly awaited Revolut Junior product in March. Parent-Child banking products are clearly in high demand as new technology offers new ways to improve financial literacy among young people.

In fact, Visa’s Innovation Centre in London is seeing increased demand from clients, partners and industry players to create and launch parent-child banking products. So to better understand what such a product should offer, the team commissioned research amongst 2,000 young people and their parents, examining what users want from products aimed at educating children about managing money.

Through the research, we identified three key critical themes all product developers should consider when developing the next big pocket money or child friendly digital banking app:

1.      Stage not age

Age should not be the main indicator of maturity and financial literacy of a child. Their knowledge and understanding of money are more dependent on, and influenced by, their parents, school and peers. As a result, when creating a new money app for children, it is crucial to understand the various stages any given child could be at in understanding money management. It could be naïve to assume that a child automatically graduates to a full bank account just because they turned 16 when in reality some children can have a very advanced understanding of finance at an early age.

This challenge can be easily solved by focusing on creating behaviour based controls, as opposed to pre-defined age levels. This allows parents or guardians to customise the child experience based on the individual child’s behaviour and habits. The parent therefore has more control at determining the pace of growth and responsibility in terms of managing money. 

2.      Empower don’t replace

Parents and guardians play an essential role in teaching children about money from an early age. Our research showed that parents want to have conversations with their children, particularly in regard to setting limits, requesting money, and discussing access to emergency funds. So, it is fundamental that any technology developed empowers the parent or guardian to do so rather than replacing or emulating them with automated messaging.

Any parent or guardian will know that the amount of “parental ideas” they are bombarded with can often leave them feeling frustrated rather than empowered. When developing a youth banking proposition, it is critical that the product caters for a range of parenting styles. Recommendations concerning the child's financial education must be communicated in a way that validates the parents’ or guardians’ choices, placing the final decision in their hands without judgement.

We recommend incorporating customisable controls and notifications for parents on behaviour milestones. By offering suggestions based on the child’s behaviour rather than automatically communicating to the child, parents are empowered to make decisions that are most appropriate for their situation.

3.      Always evolve

It’s important to understand that in today’s world, no digital product or application is ever fully complete. Technology, consumer behaviour and even regulation are continually changing at a rapid pace so to remain competitive, products will need to constantly adapt to the changing needs of families.  

The best way to do this is to design your app in a way that allows for features to be added or adjusted without changing core functionality. This includes the ability to pass controls between the parent and the child, whilst being able customise certain elements of the application for example, design, animations, and saving ‘pots’.

The bigger picture

Whilst parent-child banking products are gaining increased popularity across Europe, the technology behind them also opens up a plethora of opportunities for new products and services that can have a meaningful impact for consumers. For example, how can the same controls used in a child’s pocket money app be used for small businesses managing employees’ expenses or even between an individual and their primary caregiver. New experiences are being created everyday as a result of new technology. As an Innovation & Design team, our priority is to make sure that products we help develop make it easier for consumers manage their financial lives, whilst giving them a good experience as they do so.

If you are interested in exploring parent-child banking or other innovation priorities, please get in touch with Visa's Innovation team. 

Sources

Research conducted by Ipsos and Jigsaw in the UK, in H2 2018. Quantitative questionnaires were completed by 2,087 young people and parents and 18 focus groups were held.