A new white paper from European payments solutions leader NETS suggests that family wallets will be pivotal to tomorrow’s financial services landscape.
With recent work from the European Banking Authority (EBA)[1] recommending financial literacy in children as a “cornerstone of economic and societal stability”, plus children and young people overwhelmingly choosing to shop and bank online, family wallets are both socially responsible and help to build loyalty among the customers of today and tomorrow.
Innovative FinTechs and forward-looking banks have begun offering customers family wallets that enable children to spend their money from allowances, cash gifts and other sources online in a safe, secure environment and with the full supervision of their parents.
Our white paper explains that banks should be looking to offer family wallets as young people increasingly seek to use “alternative” payment methods such as account-to-account (A2A) transfers and real-time payments (RTP).
Because family wallets are based online and encourage dialogue through messaging between children and parents, they support discussions about money and foster sound financial management in the young.
Furthermore, as an app-based solution, family wallets will be popular with children and young people, with research showing that they have grown up using “gamified” systems employed by apps.
Why banks should act – and how
As well as providing a rationale for family wallets, the white paper explains how they work in practice, including the parental app that provides an overview of their child’s spending and enables parents to limit the amount a child can spend and/or block spending at specific websites and merchants.
Family wallets also feature a children’s app that featuring three functions – Pay, Earn and Save – designed to build understanding about the relationship between earning and spending money and the importance of saving.
With the financial world moving to a fully online environment in the next five years and cash use continuing to recede, educating children in online financial management has never been as important.
Wallets provide children with a safe, fun environment for them to learn how to manage their money while spending responsibly.
They also offer parents peace of mind, knowing that their children are at lower risk of fraud and scams as they can monitor their spending and set limits.
From a bank’s point of view, family wallets make sense both from the perspective of social responsibility and when it comes to bank profitability, widening the bank’s product portfolio while building brand loyalty and revenues in a rising generation of digital-native young consumers.
To find out more about how and why your bank should be offering a family wallet product, download the new white paper from NETS here.
[1] See the EBA, Financial Education Report, 2019-2020
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