“No one wants a 15-year-old Wolf of Wall Street” is perhaps not a statement you’d expect to hear from a group of growth-hungry financial technology innovators.
But that very much seems to be the mindset of a new generation of businesses whose mission is to teach children and teenagers solid financial literacy skills.
During a fascinating Marqeta API Chronicles livestream on the topic of children’s cards, panellists from Woli, Osper, Gimi and Nicky Card shared their thoughts on how modern tools are helping to drive conversations between parents and their offspring about smarter ways to manage money.
As fintech propositions go, these companies are engaged in important work, particularly in an age where young people are ‘glued to their screens’ and have fewer opportunities to handle real money. The absence of tangibility can make it difficult to grasp or foresee overspending and fraud risks.
Putting both children and parents in control of money management
On that, the group spoke at length about one online challenge many parents face: in-app micro purchases with gaming products, which can lead to children inadvertently racking up bills for mum and dad by adding new features to games.
Tom Bishop, head of product and marketing at Osper, said this was a key area of focus for his developer team and the solution had been to give parents the ability to switch off online spending for (computer) gaming purchases.
Vasilis Zoupas, co-founder and CEO at Woli, added that his business was “forming synergies” with gaming companies to offer rewards to users alongside education.
Old versus new: how new child cards compare to incumbent propositions
The panel also felt incumbent products, such as teen bank cards, lacked crucial educational support tools, believing this was down to institutions focussing on acquisition of future mortgage and loan customers rather than trying to instil a sense of responsibility around money.
In fact, Igor Curic, Nicky Card’s CEO and co-founder, challenged the panel and audience to show him an adult bank that had offered to teach people about mortgages or save more and take out fewer loans. “They do offer teen accounts but in reality it is the adult app that is given to a child. They’re very much there for a financially motivated profit model. ‘Let’s get ‘em young, because we know 90 percent of people will stick with their first bank for life. So by the time they’re 18, or 21 or 25 and want to get their first mortgage they will consider us.’ It’s not a case of ‘let us teach them so they never end up in a debt trap’,” he said.
Expanding on the theme, Osper’s Tom wondered why innovation was being led by startups: “It’s interesting for me that we’re 10 to 15 years into the fintech revolution but innovation is still coming from startups and challengers. Incumbents continue to find it difficult to innovate and adapt and I don’t know why that is – is it legacy technology or is it a culture that doesn’t value reward for innovation?”
That said, he did feel APIs held the key to driving transformation. This is because not only are APIs enabling access to online KYC and chat functionality, they also make it possible to offer Banking as a Service, which incumbents were now using to integrate with Osper’s technology.
Should child cards teach youngsters to invest in crypto?
Renowned as digital natives, it’s understandable that children and teenagers are going to be exposed to cryptocurrency concepts and products. And to this point, Igor warned against “getting teenagers started as day traders on crypto” but suggested blockchain technology potentially offered immense benefits.
You do want them earning money from producing digital art as NFTs or collectibles and participating in the token economy. That way, they’re learning how to be creators. And earned crypto could be anything from cards or movie and concert tickets. Eventually, you do want a little bit of hand holding with investments and when they’re comfortable you can introduce cryptocurrencies,” he said.
Igor also felt it was important to teach youngsters to value traditional savings accounts, even though they might offer a much lower return than cryptocurrency – essentially the difference between investment and speculation.
Maintaining a sustainable business in a market segment continually ageing out
The panel also discussed the issue of ageing out; that is, a market that outgrows products as a result of moving on to a new life stage.
To remain relevant, the livestream outlined a useful set of guiding principles for innovators to bear in mind. Firstly, the audience is digital native, so expects to be served via a screen.
Secondly, young people operate in a trust-based system, relying on recommendations from peers and influencers. Finally, young people want their own dedicated space. They don’t want to share a platform with their parents – engagement is via TikTok rather than Facebook, where grandparents often reside.
From a financial skills perspective, teenagers learn best when they don’t feel they are being taught. And to achieve that, it’s vital to combine a card with an app, which keeps parents and children engaged on the topic while allowing space for mistakes to be made safely.
As David Gonzalez, head of sales with Gimi, said: “In this digitalised world it’s easy to run out of money in minutes… and that’s why education, education, education is super important.”
Want to learn more about API innovation?
The full livestream Primary cardholders: how modern platforms are teaching children lifelong money skills can be viewed here.
We’ve also launched ‘The Archive’ – the essential collection of our popular API Chronicles livestream sessions, where you can tune at your leisure.