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How parents really feel about banking products for their kids 19 April 2022 581

Anna Perera Shaw, Director, Consumer Credit, Deposits and Payments at RFI Global, discusses the illuminating results from their latest global survey on youth banking in Australia. 

Could you tell me more about the survey you did on youth banking?

We polled 1,000 young people aged 16 to 21 and 540 parents with children aged under 18 online in our last edition of the Youth Banking Survey, in March 2021. This is part of our ongoing research to serve financial institutions’ strategic and tactical decision making. Youth banking is a growing focus for them, and hence also for us.

Traditionally, children manage their money in cash. Is there an evolution towards digital? What are the reasons for this?

RFI Global research showed that when parents give pocket money to their children, 2 in 5 (44%) give them cash. 1 in 5 parents (22%) transfer money to their child’s bank account. Cash is still the primary way children receive money regardless of their age. The decision to pay pocket money in cash versus transfer it into a kid’s bank account is likely related to parents’ overall payment preferences as we continue to see a steady decline in cash payments. There may also be other factors, such as how much freedom the child is given in how they manage and spend their money.

At what age do parents consider that their children can have and manage a bank account? 

36% feel the start of primary school is the right time to open a transaction account and 30% feel high school is the appropriate time.

When it comes to having independent access to an account with a linked card, our data has the average ideal age at 15. However, 1 in 5 parents (18%) indicate that 10 to 12 is the right age.

Parents seem to prefer to open an account for their children at their own bank. This is a bit discouraging for banks that offer innovative products for children. How can this be explained? 

While main bank relationships are no longer such strong influencers over banking decisions as they were 5 to 10 years ago, data shows that people still go to their main bank first for new products. However, if given information about other banks’ unique or innovative products for children, many will be tempted. RFI Global research showed that over 1 in 10 (15%) parents would take out a product with a bank they do not currently have a relationship with if the products were better suited than those offered by their main bank.

Giving your child the free use of a bank card appears to be very problematic for parents. What is the problem? What can banks do to change this trend?

Our data shows a wide range of parents’ opinions with regards to the ideal age for a child to own their card. Also, when testing different scenarios, including giving a child restricted versus unrestricted access, it is clear that this depends on the task the child is completing.

2 in 5 parents are comfortable with their child’s unrestricted access to view their account transaction history or their account balances. However, many parents are likely to restrict their child’s ability to withdraw money at an ATM (41% prefer restricted access), transfer money to other accounts (40% prefer restricted access) and make purchases (in store: 39% prefer restricted access and online: 47% prefer restricted access). Banks would do well to ensure parents can pre-set level of access and restrictions on their children’s bank accounts.

The most advanced banks seem to be moving towards building an offer centered around the child or rather families. Do you think that an ecosystem of banking and non-banking services built for families could appeal to parents?

Based on our data, all-inclusive offerings are indeed attractive to consumers since many look to consolidate product relationships with one provider. These offerings would need to be customizable (each family and their needs are unique), transparent, and simple. Indeed, perhaps even more so since the pandemic, consumers look for simple and straightforward products that can be carried forward into the future with transparent fees and charges so there are no unexpected costs down the line.

 

To get more insights from the RFI Global's survey and learn more about financial institutions' offerings for kids, visit our FS Innovation Radar and download the report "Generation next"

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