The Financial Digital Transformation

How is it Affecting Children?

Today, it’s possible (even preferable) to do all of our banking without having to leave the house or even speak to another person. The role of the bank teller has shifted to a largely impersonal online experience, which means how we use physical currency is changing as well. The writing’s on the wall: our relationship within the finance environment is fragmenting exponentially.

With mobile payments at the center, the advent of anonymous payments via cryptocurrencies like Bitcoin, Blockchain, and challenger banks, currency is becoming less and less tangible. New payment methods mean transactions are more frictionless. Money management is becoming more highly personal, with financial education lagging behind the times — the corollary being mismanagement of money can have long-term negative consequences, like the inability to purchase a home, start a business, or transcend the burden of living paycheck to paycheck.

So given the indefinite technological disruptions and a steadily shifting landscape, the question becomes: how do we avoid new type of financial crisis where children don’t understand the value of money?

Teaching “money and sense” to youth will always be inherently challenging as they grapple with abstract currency concepts: income vs. spending, saving and investing, risk vs. reward. But as the financial industry tries to adapt to the new and even more abstract realities of money management, the challenge is becomes more daunting.

We spoke to parents, teachers, and children to understand their concerns, opinions, and hopes around this important but largely ignored topic, ultimately discovering issues for us to experiment and develop future design solutions around. How does this new frontier affect banks, parents, teachers, and most importantly, children?

Research

To get a more in depth understanding of the current financial landscape and the evolving needs of customers, we conducted one-on-one interviews with parents along with a survey for additional parents and teachers. Taking their opinions on the financial education their children receive from home, school, and financial institutions, we asked them about current and emerging tech trends such as contactless payments, micro-savings, and cryptocurrencies.

How do you approach teaching your kids about money?

How often do your kids pay in other means than cash?

Who do you think is responsible for their financial education?

Have you opened a bank account for your kids?

To understand how children approach money we prepared simple activities to gauge, asking them to write or draw about how they get money, what they spend it on, and how they pay for purchases.

“My Money Diary” by Eva, six years old

• “I have money because the tooth fairy gave me a hundred pounds”
• “Money is good to save because you might need it for something else and you might get it if you’re good.”
• “And you put money in a piggy bank and the bank is something you put money in.”

We examined how children learn about and interact with money, and found that with younger children, the physical representation of money is key to them understanding its value. Coins higher in denomination were noticeably heavier, although shiny coins were presumed to be more valuable as well. The exercise gave us a better understanding of how children connect value to objects.

Research Synthesis

After synthesizing the interviews and questionnaires, some key insights and themes emerged.

Practically everyone can relate to the constant churn of technology and its influence in our daily lives. Educators are no different, struggling to keep pace with exponential advancements. For their part, banks have been remiss in informing customers on the impact frictionless technologies have on their spending, whether intentionally or not.

So when it comes to youth, it’s no surprise that parents and educators are skeptical at best about banks’ agenda in relation to children’s financial interests. Due to the skepticism, the prevailing feeling is that the onus is on parents to provide financial education to their children. There’s a clear correlation between how parents were taught about money and their finance philosophy which is then passed down to their own.

But busy parents want support. Their opinions about money are informed by a network of family, friends, colleagues, and other parents trusted for their advice, teaching methods, and personal experiences.

There’s an opportunity for banks to help with children’s financial education, assisting parents and in turn, changing perceptions.