Blog By: Tushar Chitra, Senior Director, Product Marketing, Oracle Financial Services
The 'future’, everyone has an opinion on where technology is heading! What will mobility, communication, financial services be like in the future? While every business focuses its energies on being future proof, they need to pay attention to one key demographic who will ultimately consume all of these services in the future. This demographic is very unique, unpredictable and has a strong tendency to demand the unimagined. We are talking about children. Children and teenagers constitute roughly 32% of the total world population1. The future belongs to them and soon they are the ones who will call the shots on which car they want to drive, products and services to use and houses to live in.
It is evident that the next generation has inherited a greater affinity for technology. The the likelihood of children adopting a new device and adapting to it almost instinctively cannot be underestimated. How do you introduce children to the world of banking and finance as cash is taking a digital form at lightning speed and the world is losing its physical connect with money.
How do children spend most of their time these days and how do we gain their attention?
Tiny tots love watching videos. It is safe to say video streaming websites are the new Kids TV channels. Children specific video apps with content specifically for toddlers are on the rise. If you are wondering why are we discussing what videos children watch, I would like to stress the point that this is where it all begins, as toddlers grow and near their teens they have already built an opinion about a certain brand based on what they have been seeing around their ecosystem and this has a huge influence on the kind of buying behavior they develop, believe me, if toddlers make up their mind on what they want to buy they do not stop until they get what they want. Also, not to forget the impact of a peer group – it is rightly said ‘children learn most from peers than parents.’ Hence these channels could have a multiplying effect on strengthening a brand’s identity.
Are banks really building their brand to attract the attention of these tiny tots? There is no money to be made by doing so but it definitely is a long term investment. Banks can start early by partnering with various content developers (videos, games, music and literature). They can also create child friendly play areas in branches. Creating a mascot and displaying mascot derived imagery on ATMs, sponsored playgrounds and merchandise make the bank omnipresent. All of this can go a long way in developing an image of the bank in the eyes of a child.
There is a need which parents often find difficult to fulfill, which is explaining the meaning or value of money to a child. A helping hand from the custodian of all things money will not go unnoticed and will surely be rewarded by grateful parents. By the time children are old enough to attend playschool they begin to develop a vague understanding of the value of money, this is where the piggy bank enters the spectrum. What is the use of piggy banks when the use of physical cash is steadily declining? Banks have a unique opportunity of handing their customers a digital piggy bank. Yes a digital piggy bank, one that is internet enabled, biometrically authenticated, accepts NFC payments, has its own QR code display for people to scan and transfer cash. Now doesn’t that sound like a big win for IoT devices! The digital piggy bank can have multiple themes for deposits like candy money, gaming money, toy money and also a college or school fund letting the adult transferring the money make the right choice for the child. This does not sound like fun for the child. To keep all parties happy the display on the piggy bank can show the child articles that can be bought with the funds collected and allow them to place an order directly. Doing this indirectly teaches the child of how money works. Banks have an opportunity to create a platform by partnering with vendors of products and services, such as educational institutions, amusement parks, toy manufacturers and display several products.
The inclusion of children into the financial ecosystem begins with their parents. Banks are sitting on a treasure trove of data. A simple run through of an account statement will identify customers who have children. Once banks get the parents’ consent to participate in a program that introduces money and finance to young children, a piggy bank in the full livery of the bank’s mascot can be placed in the hands of the child.
Children will outgrow their piggy bank sooner than you realize and will be ready to actively participate in an adult environment. The average age when a child gets its first smartphone is 10.3 years 2; this is also the best time to introduce children to the world of money and finance. Fintech’s have already identified this gap and have introduced solutions like mobile apps linked to children’s debit cards. These apps are tools for parents to transfer pocket money to their children, monitor spend and also set spending limits. Ignoring a 10 year olds need for digital payments is definitely an opportunity lost; their needs range from downloading/ streaming music and video, mobile apps, in- app purchases, gaming console related purchases; the possibilities are limitless. Empowering children to make their own digital payments not only frees parent’s time, it also gives the child a sense of responsibility and self-belief. This also helps parents avoid a situation where their child may buy dinosaur on a Jurassic park game for $59003. Many parents employ a points system to get their children to complete daily chores, homework, being obedient etc. this system has scope to be digitized and presented to kids in a gamified avatar linking tasks completed with rewards as prescribed by the parents.
Around the age of 10 is also when children are mesmerized by the world of gaming. The worldwide gaming industry hit 91 Billion USD in revenues for 20164. Games like the World of Minecraft have young children building worlds of their own, this game is very popular and termed the “Lego” of the digital world and it already has banks where children deposit Minecraft Money. Similarly educational games like TiViTz College Savings Game, which help children earn money for their college education are becoming increasingly popular. These games require setting up of a savings account. Barclays has already built an interactive game that teaches basic money management and financial life skills to young consumers. This is just the tip of the iceberg when it comes to the world of gaming for young children. Given the massive scope of introducing banking to the younger generation through gaming and gamification, banks need to develop a strategy to embrace this channel. Banks maybe funding game developers to build games for the younger generation, but banks also need to help game developers reach their existing bank customer base. Exposing banking APIs to game developers creating a seamless experience for children within the bank’s customer base is a good start. This will also lead to customer stickiness from the network effect the customer gains. Every game has its own form of digital currency which needs to be earned or purchased with real world currency, imagine a scenario where banks offer children a repository for their game money which can be used across different games. A move like this will attract gamers to banks the same way toddlers are drawn to video streaming websites, creating a new revenue stream.
All game and no play makes Jack an ‘unhealthy’ boy. Banks today have begun incentivizing healthy lifestyles by providing customers with better rates, offers and added benefits if they lead a healthy lifestyle. Fitness tracking wearable devices paired with a bank’s app track customer’s footsteps, miles they run, cycle,and swim in addition to monitoring their heart rate, calorie counts and overall stress level. The same offerings can be extended to children who are the bank’s customers and linked to the children’s banking app we spoke of before. The success of Pokeman GO demonstrates how gamification can bring children, and some adults, back out into the open spaces.
Devices are not only used to play and pay, they are at the forefront of education as well, Edtech is seen as the next fintech. Close to 7.3 Billion USD was invested in edtech just in 2016 5 and edtech is still considered to be in its infancy. Edtech startups have popped all across the world to cater to the growing demand of education on a digital platform. On the ground level, there is a growing demand to make financial education mandatory. Banks have the opportunity to play a key role as an enabler given their subject matter expertise, they also need to extend their infrastructure to act as sandboxes to help edtech startups in the financial domain to provide their users a near-real experience. This in turn will introduce banks to this untapped demography of youngsters taking their first steps towards financial literacy. Banks have already started collaborating with fintech’s through their innovation accelerator programs, gamification is one of the larger themes of research in many accelerators. Gamification also happens to be at the forefront of edtech helping children have fun as they learn. A partnership between financial institutions and edtech firms has high potential to blossom into a very fruitful collaboration with dividends to be earned for many years into the future. When banks become part of the digital learning ecosystem, students need not look very far when they require any sort of financial assistance for their studies, travels and entrepreneurial ventures.
In conclusion, what we have been emphasizing is that the entire digital banking ecosystem needs to focus specifically on the younger demographic and provide them a banking experience from a very young age so that they board your platform for banking throughout their lifetime. The current set of banking offerings for youngsters are designed to attract their parents more than the children themselves, it’s time for banks to join children on the play-ground and make them their BFF (Best Friend Forever).
My colleague Roger Lobo and I co-authored this blog. We would love to hear your views. We are reachable at tushar dot chitra at Oracle dot com and roger dot lobo at Oracle dot com.