附近上门

Children can learn good money habits at an early age, research says, and now a growing group of fintech startups is developing child-friendly tools and resources toward that goal, and attracting funding from venture investors who agree.

Subscribe to the 附近上门 Daily

鈥淚t bugs us that many schools don鈥檛 teach kids about money, even families don鈥檛,鈥� , co-founder and CEO of teen mobile banking app , told 附近上门 News. 鈥淵ou hear stories about people hiding what they buy and asking their kids why the kids bought what they did.鈥�

The data varies somewhat as to the optimal age for children to start understanding financial concepts, but many researchers agree that . And research shows that, mainly influenced by their parents.

Spending and saving

While researching the fintech space, felt many of the popular savings apps enabled children to spend money too easily. Leveraging her background working at , which involved digital strategy of its preschool and parenting websites, and , where she launched digital textbooks to schools, Van Court saw a need to engage and excite children in learning about money.

In 2016, she founded to provide an education-first banking experience aimed at young children that could grow with them. The startup raised funding in January led by .

鈥淲e surveyed parents on what kind of platform they wanted, and they told us that they didn鈥檛 want children to just spend, but to learn how to save money and learn about financial literacy,鈥� Van Court, founder and CEO, said in an interview.

She sees one of the challenges in learning about money is that while much of the world is going cashless, most parents are not.

鈥淜ids ask for $10 or money to go and buy school supplies, and unless the parent has that cash on them, there are few ways of transacting,鈥� she added. 鈥淎pps with peer-to-peer transactions have become an easy way for grandparents, aunts and uncles to send money to kids. It takes the entire family cashless.鈥�

, co-founder and president of , launched the company in 2012. His startup offers a debit card and smart money app for children and teens and has raised $66.2 million in known venture funding, according to 附近上门 data. That includes a round in December led by .

With only , Brauer said, there is an opportunity for companies to not only collaborate with schools, but also to drive education by forming relationships with users and potential users.

鈥淲e are giving a tool to parents who might not feel confident, and worry about how to teach their kids about money,鈥� Brauer said in an interview. 鈥淲e guide them to the right behaviors that empower their children. It鈥檚 not just around a card and spending, it is mindful nudges and notifications across earning, saving and spending.鈥�

Investment

As these apps and platforms attract new customers, investors are taking notice, too.

附近上门 data shows that in the past five years, investors infused at least $535 million into 89 known deals with fintech startups that described themselves as offering savings platforms for children, young people and parents.

Of that, $344 million was raised just in 2020. Leading the pack was , founded in 2014, which guides parents to teach children how to save with its app and debit card products. The fintech company secured a $1.2 billion valuation after closing on $215 million in Series C funding last September, led by and.

raised funding last August in a round led by , and founder said there was 鈥渁 tremendous amount of inbound interest.鈥�

鈥淲hat is different today is how quickly fintechs are growing in the consumer banking space,鈥� Behringer said in an interview. 鈥淭here are 85 million parents and teens in the U.S., and the perception is that this demographic is one of the last unbanked segments that exist.鈥�

Likewise, , managing partner at gohenry investor , said with today鈥檚 environment, particularly with many people losing their jobs due to the global pandemic, now is the optimal time for adults to speak with children about money. The pandemic also highlights how valuable startup banks, or , are in focusing on underserved populations.

鈥淜ids are not worth much upfront to banks, so the incumbents aren鈥檛 paying attention,鈥� Sugden said. 鈥淭he challenge is for startups to raise the brand. We love the fact that gohenry is a market leader in the U.K. and love the opportunity for them to be a market leader in the U.S.鈥�

Teen beat

Teens can learn about money, too, according to MacDonald and Behringer.

MacDonald believes financial literacy starts with a bank account, and Step鈥檚 sweet spot is children ages 13 to 18. The fintech startup was formed in 2018, but launched its free FDIC-insured bank account and Step Card in October 2020, MacDonald said.

Step has raised in venture backing so far, most recently, a round led by in December 2020 that attracted some high-profile investors including and .

MacDonald scouted out movie theaters to observe and interview teens about their relationship with money.

鈥淲hat became clear is a gap in the marketplace with banks,鈥� he said. 鈥淪ome fintechs are catering to the 18-and-over demographic. We said, 鈥楬ey, let鈥檚 start where the financial journey starts, build a relationship and offer products for each step of their life.鈥� Our mission is to educate the next generation how to be smarter about money.鈥�

Behringer鈥檚 Copper Banking, founded in 2019, also targets teens, and the app鈥檚 median age is 14. The company focuses on distribution through schools and is working with schools in Texas, California and Florida to educate students about bank accounts, debit and credit cards and saving, Behringer said.

One of the app鈥檚 signature features enables users to automatically save a portion, from 5 percent to 20 percent, of the money coming in.

鈥淧arents feel overwhelmed and when they use apps like Copper Banking, feel like a massive weight is lifted,鈥� Behringer said. 鈥淭eens often learn by doing, and you can teach teens early. The basics are not complicated, but you have to have someone start that conversation.鈥�

What鈥檚 next

In an increasingly digitized world, many children may never set foot inside a bank branch. That means there is an opportunity for fintech startups to help parents teach their children about money, MacDonald said.

Van Court agrees. The sector targeting financial technology for kids and young adults 鈥渋s the most important fintech out there,鈥� she said.

鈥淭he earlier you can acquire a customer, the more control you have over that customer鈥檚 eventual financial path,鈥� she said. 鈥淚f we acquire a customer at 5 years old, we have an opportunity to keep them and be there for every one of their milestone moments.鈥�

Meanwhile, , senior director of communications and marketing at the , finds fintech startups to be helpful partners in financial education as long as they have qualified professionals and collect personal data in a way that follows privacy laws that protect minors.

Many of the apps have processes in place to address security, such as not keeping a Social Security number after a bank account is set up, notifying both parent and child when money is spent, the ability to lock an account from the app if a credit card is lost, and partnering with banks to offer FDIC-insured accounts.

鈥淔inancial literacy is an essential life skill,鈥� Bock said in an interview. 鈥淵outh need to build sound habits so that it doesn鈥檛 lead to higher debt. They are also very impressionable and think that what they see on their phones and social media is the truth, so it is often hard to talk to them about tomorrow because they are only thinking about today.鈥�

Illustration: