Making financial decisions is part of everyday life, and that means being financially literate is not just a nice to have, but a core life skill for any individual.
And it needs to start right from childhood, Will Carmichael, CEO at U.K.-based FinTech firm NatWest Rooster Money, told PYMNTS, giving kids and young people a good head start on their journey to financial independence.
“Research shows that we form a lot of money habits by the age of 7, and actually as adults, around 40% of what we do day to day is put down to habit,” Carmichael said in an interview.
Tackling that financial advice gap for young people is the premise behind NatWest Rooster Money, he explained, an app that captures the opportunity to start kids early, as young as 3, with strong money management skills that they can then “carry through life.”
Moreover, as societies become more cashless, he said it’s more challenging to make money tangible for young kids who are mainly spending their allowance and pocket money on online video games like Fortnite or app downloads, making it even more critical to empower and educate kids financially.
As a result, the pocket money app, launched in 2016, offers kid-friendly financial tools that include parental controls, education and security for children up to 17 years, as part of coaching and supporting parents and families to learn about money together.
“You need to make it fun for the kids [and] you need to make it easy for parents. You can teach your kids to cross the road by [doing the same], and I see the same with money. You can learn things from a blackboard, but it’s by doing that that comes around,” Carmichael noted.
For younger kids ages 3 to 4, the firm provides an in-app star chart and a virtual pocket money tracker tied to a rewards system, where chores can be set up for them to earn money. Then at 6 years, they can get their own Visa prepaid debit card, which Carmichael said allows them to make responsible spending choices while reassuring parents with family-friendly parental-control tools.
Graduating from that stage, the kids banking firm offers a range of products, from independent accounts for young people and student accounts, to junior accounts and a range of savings products with up to 6% interest rate. “Ultimately you’re entering an ecosystem of different products for your family,” he said.
In October 2021, NatWest, one of the U.K.’s biggest lenders, acquired the youth-focused FinTech startup — hence the rebrand to NatWest Rooster Money — as part of a broader strategy to strengthen its position in the family finance space.
That move, according to Carmichael, has given the mobile pocket money app a competitive edge in the sector as well as “an open access” to different products within the group for existing NatWest families and families who are new to the Edinburgh-based financial institution.
In fact, the firm recently announced this month that NatWest Group customers now have free access to its prepaid kids’ debit cards subscription beyond the previous 12-month free subscription offer, in addition to free access to Rooster Card subscriptions for up to three children age 6 to 17.
“[As part of NatWest], we’re able to offer this not just as an isolated product, and [customers have] the opportunity to then go on and take out other products as well,” he explained.
And as digital fraud soars, Carmichael said youth initiatives such as NatWest’s free financial education program, MoneySense, are helping not only to empower young people with the knowledge and awareness of fraud but also boost their overall financial confidence.
Apart from raising kids’ awareness, NatWest Rooster Money offers prepaid cards with a dynamic CVV, enabling cardholders to enter a different CVV code at checkout, which Carmichael said reduces fraudulent activities.
Additionally, parents receive a push notification when a merchant transaction is initiated, an additional guardrail that he said has created an opportunity for parents and their children to have important conversations about overspends and unwanted app store charges.
This is particularly helpful to create conversations around the ongoing cost-of-living crisis in the U.K., he added, helping to give children a better understanding of the impact overspending can have on household budgets.
Moving forward, Carmichael said the goal is to ensure that they are supporting the different methods and channels that kids are using, whether it’s around gaming or social media, while creating a safe and secure online environment for them to transact.
Moreover, the aim is to constantly push the opportunity to “make money tangible” in a cashless, multicurrency world that is continuously evolving with multiple different non-fiat currencies. “We’ve seen the opportunities and are making sure that they’re considered in our roadmap,” Carmichael said.
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