Parents don’t teach kids about money... apps do!

study showed that financial education for kids can boost their earning prospects as young adults by 28 per cent.

available, based on the user’s age group and parents’ choice.

As a child, money had no real tangible meaning for me. This consequently meant I had a bit of a tumultuous relationship with finance as a young adult.

The aggressive children’s advertising of the 1990s drew me into ads for toys like Stretch Armstrong, Mr Frosty or ProYo Yo-Yo’s, and, as if by magic, my parents would eventually acquire one for me. Which is all well and good, but I didn’t have any concept of how or where these came.

It would be unfair to pin the entirety of this lack of financial preparation on parents; our education system seems largely to abscond from preparing children for ‘real life’. I spent my school years learning about Pythagoras theorem, photosynthesis and the Russian Revolution of 1917.

Instead, I wish I’d learned financial management, how to submit a tax return and save to buy a house, because funnily enough, my extensive knowledge about the Russian revolutionary Vladimir Ilyich Ulyanov, has been little used since I left high school in 2005.

According to Santander, I’m not alone. Still today, only 38 per cent of children and young people in the UK say they’ve had some financial education at school, although it’s been a compulsory part of their secondary curriculum since 2014 – although life-long solid financial habits start to be formed much earlier than that.

As a young adult, I often lived to the bottom of my bank account, emptying it before the end of the month. I can’t help but feel that had I had the correct teaching and tools available as a child, then it might have provided a stepping stone to earlier financial successes in life. Indeed, one

During the time that I was becoming more financially independent, there was a rapid change in financial technology. In the space of around five years, people went from managing their entire accounts on a little book of transactions that the teller would stamp every time you visited the building society, to logging onto a website to manage your fortune (or lack of) from the palm of your hand.

Kids’ savings accounts have been around for years, but there’s been an explosion in financial education apps linked to saving, investing and transacting, with varying degrees of parental control, depending on the age range. And that’s been driven, in the UK at least, by the fact that nearly two-thirds of children own their own smartphone by the age of 10.

At its core is a fully functioning prepaid debit card that can be personalised with the user’s name and design. Money is deposited into GoHenry by the parents and then released through weekly or monthly allowances, which teaches children about budgeting.

Parents have the ability to set limits on how much can be spent per week or per transaction and monitor their child's spending. Like many neobanks for grown-ups, it provides instant payment notifications, which pop up on the child’s phone as well as a parent’s.

My favourite GoHenry feature is the task and reward system. Parents can create lists of available chores and a monetary value attached, and when these tasks are completed, GoHenry automatically transfers that amount directly into the account – great for teaching children the connection between work and earning money, and something I didn’t have until my first paper round at 15 years old.

Unfortunately, from my investigation, many of these apps and services are of a questionable quality, with missing features or outdated interfaces, although there was one that by general consensus was better than all the rest – a UK app called GoHenry, now available in the US, which was founded by parents.

In 2012, GoHenry set out to empower children, from the age of six right the way up to 18, to master money management. It provides them with a tonne of features and benefits that I just didn’t have growing up, and it tailors which features are

Indications are, though, that kids today are much more savvy than I was. The 2023 annual Pocket Money Index report from NatWest’s Rooster Money showed that their income has kept pace with inflation over the past year, partly boosted by more side hustles, such as babysitting and selling used stuff, while income from tutoring their peers rose an incredible 102 per cent in 12 months to £16.95 per job!

GoHenry doesn’t have all of the features I would want. One obvious omission is the ability to create a secondary reward system that isn’t based on money to help teach the youngest users, in particular, the importance of accruing and saving. It’s unreasonable to expect a child to save up the £3k for flights and entry to Disney World, but if there was the option of earning something like ‘family tokens’ they could contribute towards these bigger goals.

As young adults, my generation transitioned from using a red building society bank book to full digital management in less than five years. Our kids are likely to be the first to transition from a hybrid to a fully cashless society –and if that’s the case, they need to be prepared now.

In this category, NatWest’s Rooster Money account stands out. The app, which is aimed at children aged three and upwards, and its prepaid debit card for those aged six to 17, help to teach youngsters the fundamentals of spending, saving and earning.

Key features include budgeting tools, a virtual Star Chart to reward younger children for good behaviour, the ability to set rewards for scheduled chores, a virtual money tracker and specific pots – Spend, Save and Give – to help kids put money aside for designated goals.

Meanwhile, Santander has been taking a lead on financial literacy for kids with a high-profile campaign and its 123 Mini Current Account can be opened before they can crawl, let alone walk. The contactless debit card is restricted to 13-year-olds and older, but the account comes with no monthly fees and can be managed online and via an app. It also includes an interactive online calculator that can be used by youngsters, and by their guardians, to learn about managing money.

Revolut <18 is the challenger’s lightweight banking service for six to 17-year-olds. Like GoHenry, it gives them a free-to-open account, which in this case is linked to their parent’s/co-parents’ Revolut account, with a customisable prepaid debit card that sends spending notices to their phones. <18 users can pay in any currency, just like the grown-ups, as well as withdraw cash at ATMs. They can also use the ‘Revolut Me!’ messaging feature, an easy and secure way to receive payments.

Starling won Best Children’s Financial Provider at the British Banking Awards last year for Kite, its account for six to 16-year-olds. Its Kite cards (made from recycled plastic) are free, but the basic account does come with a fee (£2 per month). Otherwise, it shares many of the same features as Revolut <18, such as a secure link so friends and family can send money to a child and parental controls on spending.

And, of course, neobanks such as Monzo and Starling have extended lightweight versions of their adult accounts to 16 and 17-year-olds. Monzo even bills its offering for older teens as ‘a Monzo account with (almost) everything you get as an adult’.

Gimi is one of the first open banking solutions aimed at this market, which is also positioned as a white-label solution for banks. Children are empowered via the app to actively engage with money in their account, either derived by payments for chores, pocket money or ad hoc deposits, and also review purchases and learn from any mistakes.

Developed in the Nordics and rolling out in Europe, it aims to educate 10 million children in personal finance by 2025. It boasts an in-app financial advisor called Piggy and The Superskills Adventure – a teaching tool that allows children to travel between planets in space and discover a different financial topic at each destination.

Savings Spree is a fun app for children aged seven and above that takes kids through several rounds of money games to teach them smart financial habits. Created by Money Savvy Generation, and free to download, there are six rounds of activities in total, which are presented in a game show format and hosted by the Money Savvy Pig. The ultimate goal, via progress through these games, is to show children the different ways they can use their money, namely: saving, spending, donating, or investing.

Open banking hasn’t disintermediated legacy providers to the extent they feared –not yet. As more players build layers of services on top of the data banks hold, Brian Hanrahan, CEO of Nuapay, shares how they can they ensure their slice of the action

Payments made on open banking rails in the UK hit 68.2 million transactions in 2022, according to the Open Banking Implementation Entity (OBIE).

Was that a lot, or a little? Well, it was an increase of 167.5 per cent on the year before when 25.2 million transactions were recorded. But it was a drop in the ocean when compared to the two billion debit card transactions made in Britain during January 2023.

The slow uptake of open banking payments predicated on the revised Payment Services Directive (PSD2), which came into effect across Europe in 2018, has been much commented on. But they are clearly building momentum in the UK and (albeit even more slowly) in Europe.

Elsewhere in the world, similar digital account-to-account (A2A) payments enabled by fast and frictionless systems are also gaining traction. The Worldpay Global Payments Report 2023 reveals the value of worldwide A2A transactions topped $525billion last year and is projected to grow by 13 per cent on a compound annual growth rate basis until 2026, demonstrating the potential size of the market.

In Europe, banks were at first mistrustful of a system that threatened to relegate their role to being that of a mere utility payment provider. But Brian Hanrahan, chief executive of Nuapay, is convinced that open banking can instead ensure banks remain relevant amid competition from a far bigger threat posed by the world’s technology giants. Nuapay, which along with its parent company Sentenial was bought by Australian payments firm EML Payments in 2021, already offered solutions for Direct Debit – an early, non-spontaneous form of A2A transaction for regular payments – long before PSD2. Nuapay has even used open banking now to update that old stalwart. Called e-Mandates, customers signing up for a recurring payment are authenticated by their online banking website or banking app. Unlike the traditional Direct Debit onboarding process, there is no manual inputting from the customer – thereby reducing the risk of errors. Added to that, there is better fraud protection, the process is streamlined, and the first payment is received in real time via bank transfer. The product won the Best Use of Open Banking for Payments award at the Merchant Payment Ecosystem Awards in Berlin in April.

Nuapay’s key focus going forward is its infrastructure for open banking payments, which enable clients to move money not just inside, but between 30 European countries.

Hanrahan says: “A big part of what we do is provide technology for banks, payment service providers and fintechs who white-label that technology and distribute it to their business clients.

“A number of the major UK high street banks are white-labelling our platform, so while you think you’re logged on to the bank, you are actually, behind the scenes, connecting to us. Or a major card acquirer, or payment services provider can take our solutions for Direct Debits and open banking and provide them to their suite of merchants across Europe.

“We’ve built a large part of our business on the back of regulatory change.

“The shifts going on now, such as the roll-out of instant payments in every domestic currency and the introduction of open banking, are huge trends. Our role is to simplify access to that. Our clients and partners connect to Nuapay with one integration, and we then connect to 30 countries with their various standards. We shield our clients from that complexity.”

The new account-based payments’ potential for lowering cost by removing the middlemen is a key reason for interest in the technology, as is greater speed and potentially increased security. Instant A2A payments already work encouraged the adoption of domestic instant payment rails in much the same way.

The committee is seeking to set up open banking payments as an alternative to card payments and it specifically named retail payments as part of that ambition.

In the open banking context, it’s not just about payments, of course. Hanrahan says: “We now have account information available across many jurisdictions and it’s particularly useful for lenders’ credit risk assessments and other affordability assessments. But now we’re moving on to what are called commercial or premium APIs where banks can be more proactive to monetise data and go beyond what the regulations force them to do.

“We have discussions going on with a number of banks around whether they could provide age verification data, or address verification with the consent of the consumer, for instance.”

In his opinion, this is where banks can play a more important role. After all, they invest an awful lot of money in establishing the identity of their customers.

“There’s a precedent in the Nordics and Europe for that federated identity asset to be leveraged,” says Hanrahan. “For the banks, it’s good from a monetisation point of view, but it also keeps them relevant. And it digitises the whole economy. There have been significant estimates of GDP impact from that approach being rolled out.”

“Very few players operate effectively across multiple borders, even ‘global’ banks will have dozens if not hundreds of different payment systems in each region,” says Hanrahan.

“If you think about the ubiquity of a Visa or Mastercard payment card, and how seamlessly they work in every geography, that is quite a thing to replicate in instant payments. An operator that can build consistent technology over lots of underlying variation will have an advantage. And we do that in specific regions.” well for peer-to-peer transactions between family and friends, and have in many cases replaced writing cheques for paying a tradesperson. Beyond that, the OBIE’s Open Banking Impact Report says recent A2A transaction growth has been driven by the government allowing tax bills to be paid via open banking rails, while charity donations, the settlement of credit card bills and loading digital wallets via open banking are also boosting use.

Given open banking’s underlying complexity, Hanrahan says collaboration is an industry trend that will favour businesses such as his own. Because, while global banks and leading fintechs have the financial clout to continually modernise their technology stacks, smaller players struggle and so need to be selective around which services they provide directly, and which they buy in.

For businesses that become Nuapay clients, they can take advantage of the automated integrations the fintech has with billing engines, membership and subscription management systems and accounting packages.

More work is needed to make A2A payments the system of choice for retailers, though. It’s an area currently underpinned by card-based systems, but the Joint Regulatory Oversight Committee set up by UK regulators, including the Financial Conduct Authority, is making progress on formalising functional capabilities, dispute processes to protect customers, and a funding model that can sustain the businesses involved in providing infrastructure. The UK government

Hanrahan argues that since open banking rules forced banks to provide API access to customer data for third parties – which is not mandated the other way –they should embrace it and innovate.

Although he acknowledges that the technology that wraps around a bank account, built by other industry players, needs to be monitored by banks, “I don’t think the idea of being put into a utility role is too much of a threat,” he says. Rather, open banking can only be a positive for them… if they innovate on top of it.

“Payments in many countries were drifting away into wallets, into Alipay and so on. If you don’t innovate around the customer experience on the bank account people will move to more convenient methods, including with the Big Techs.”

A2A payments in a single jurisdiction is one thing, but moving them across borders is often where the concept fails.

Leveraging payment regulation and integrating such systems almost always improves efficiency, says Hanrahan, enabling them to move staff from manual processes to more strategic work, and has a big impact on error and decline rates, ‘which is good for both the consumer and the biller’, he says.

“Take the successful neobanks and challenger banks that we work for, they’re a bit like a swan on a lake. They’re paddling ferociously with a complex underlying infrastructure to give a seamless glide for the customer. We’re very much in the business of helping these players operate and achieve the high standards that people increasingly expect.”

The UK’s NatWest and National Australia Bank recently compared and contrasted the two countries’ approach to open banking and came up with five recommendations for the next stage of their respective journeys. Here, the report’s authors, Clare Melling and Brad Carr, look at what the future could hold

Imagine a world where your savings automatically move to the highest interest rates and your borrowings to the lowest.

Where your energy requirements seamlessly migrate to those providers offering the cheapest or greenest, or a mix of both. And where your consumer purchasing history, be it as individuals or companies, is constantly used to pinpoint the best deals of the day for you. These are but a few examples of how an open banking/open data ecosystem could transform the way we run our lives.

As far back as 2020, McKinsey predicted that ‘the boost to the economy from broad adoption of open data ecosystems could range from about one to 1.5 per cent of GDP in 2030 in the European Union, the United Kingdom, and the United States’.

And it continued: “All market participants benefit, be they institutions or consumers – either individuals or micro, small, and medium-sized enterprises (MSMEs) – albeit to varying degrees.“ out, followed by energy in 2022, and telecommunications in 2023.

It’s a path along which the first major steps have already been trodden; where empowering consumers with control of their data has indeed increased competition and innovation.

The UK was a pioneer when it set up an Open Banking mandatory framework in 2017, which enables customers to securely share their banking data with third parties and also enables third parties to make payments on their behalf.

Based on the existing legal frameworks of the EU’s General Data Protection Regulation (GDPR) and the revised Payment Services Directive (PSD2), the UK’s API-based structure was introduced by the Open Banking Implementation Entity (OBIE) – which is financed by the UK’s nine largest banks and overseen by the Competition and Mergers Authority, the Financial Conduct Authority and the UK Treasury – to ensure a degree of consensus and interoperability. The depth and immediate functionality of the framework has so far led to more than seven million consumers or businesses using Open Banking-enabled products to manage their money and make payments, with payments usage now growing at 10 per cent a month.

Although widely lauded as being prescient in the breadth of its overall ambition, the Australian model is based on its own legislative framework, which critics argue is over-complicated and costly for participants as it has created two distinct but sometimes overlapping data protection regimes that are governed by whether data was sourced within CDR regulations or outside of them, which then invokes the Privacy Act 1988.

As a ‘read-only’ function, which only allows for insights rather than action initiation, such as payments, CDR has had a rather slow uptake thus far. And although that is expected to increase with the additional data provided by the energy and telecommunications sectors, the real fuel on the fire will be when the Australian government’s aim of increasing functionality by introducing action initiation comes into being.

Australia, another early mover, founded its Consumer Data Right (CDR) regime in mid-2019, modelled on the UK’s Open Banking framework. But rather than being confined to the sharing of banking information and to payment services, the CDR has adopted a whole-of-economy data portability framework with banking the first sector to be rolled

So, how should the UK’s and Australia’s open banking systems develop? A joint report by major UK bank NatWest and the National Australia Bank (NAB) makes five key recommendations:

■ Ensure global interoperability and look beyond a sectorial approach to open data

■ As Australia extends CDR to action initiation and across sectors, it should learn from the UK’s success in building upon existing legal frameworks and infrastructure, rather than duplicating regimes

■ Australia should look to mirror the UK's collaboration between industry and regulators, including considering a role for a purpose-built implementation authority, like OBIE

■ The UK should aim to follow Australia’s lead in extending open banking to an economy-wide data sharing regime

■ Both countries should embed a role for digital identity, without which the regime will not be able to scale and provide the promised benefits to consumers and the economy

Claire Melling, head of Bank of APIs at NatWest, and Brad Carr, who leads risk and governance for the digital and data businesses of NAB, were co-authors of the banks’ joint report and believe that lessons can be learned from the experiences of both countries.

“The UK has probably done a better job of respecting existing areas of legal framework and avoiding some of the potential areas of duplication,” says Carr.

“But also the UK has been a pioneer in a lot of ways and among those is having a dedicated agency with specialist skills in the form of the Open Banking Implementation Entity.

“In Australia, we’ve been a bit more fragmented, with our National Treasury team doing more of the policy, whereas our Competition Commission does more of the monitoring and enforcement. And I think there are some learnings we can take from the UK model that has probably helped to catalyse [open banking] in a lot of ways.

“If there’s one criticism I sometimes hear in Australia, it’s that we’ve tried to do privacy law, something like GDPR, at the same time as we’ve tried to do the Consumer Data Right and that creates some challenges.

Shared experience: The UK and Australia have both been flag wavers for open banking

“I’m encouraged that we’re sorting through those issues now, and I think we’re going to land in a much better place, but it has been an interesting journey, and the UK has probably approached that in a more methodical fashion.”

For Melling, the major lesson for the UK is that, having had success in creating action initiation ‘depth’, it now needs to embrace the Australian model of ‘breadth.’ She says: “The UK has done a good job with depth, but when we start to be able to build out a more holistic view of customers’ portfolios – not just their finances, but their lifestyles, too – that’s when we can start to get some compelling propositions, that really help customers to make decisions.

“That’s something we should be learning from the Australian model and is a real discussion in UK government at the moment.”

The Data Protection and Digital Information (No 2) Bill recently tabled in the UK Parliament already proposes to ‘allow for the sharing of customer data, through smart data schemes, to provide services such as personalised market comparisons and account management’.

Meanwhile, a new report by the UK's Joint Regulatory Oversight Committee for Open Banking provides a roadmap for its future development by creating a sustainable, safe and scalable ecosystem; offering more and better services –particularly for payment methods – and adopting a scalable model for future data-sharing requirements.

When it comes to digital identity, both Australia and the UK are getting closer to a national digital identity framework.

While not as ambitious as UK Finance chair Bill Wigley's call for the government to develop a super app to provide an economic digital identity, including credit ratings, know your customer (KYC) information, and anti-money laundering data, the Data Protection and Digital Information (No 2) Bill does seek to ‘establish a framework for the provision of digital verification services to enable digital identities to be used with the same confidence as paper documents’.

The Australian federal government is also expected to lay out new legislation by the end of 2023 to introduce a national digital identity framework.

Melling and Carr agree with the need for digital identities. However, they suggest that banks themselves as ‘trusted institutions’ who already hold most of the data are perfectly placed to provide them.

“Within the Australian market, there were two major cyber breaches last year, one at our number two telco, and one at a private health insurance firm. Lots of customer records, identity data, was leaked,” Carr says.

“So we have consumers, on the one hand, with an increased consciousness of their data security, and the risk of identity forward and provide the service, because we have already KYC’d that individual, we can provide an attestation to the business. We can provide a much greater level of security for both sides of that transaction and help lift the economy. But it’s all driven by that same principle: give the consumer empowerment of what particular data attributes are shared with whom.”

Melling agrees. “Banks have a history of being trusted institutions, and, when you pair that with a willingness to innovate and to partner, that puts us in a strong position to be able to support customers.”

That element of trust is also key to overcoming a resistance from some customers against sharing their data.

“Banking customers have been educated over the years to not share their data, and now, all of a sudden, they’re being told to,” Melling says. “So, as an industry, we need to do a really good job of explaining the benefits to customers of sharing that data, and why it’s safe for them to do that now.

“I think that will start to come, particularly in the UK, as we look to open finance and start to build that really holistic view of customers’ finances, including pensions, savings, investments – all of that great data.”

Carr believes the benefits will become self-evident. “It’ll give consumers the opportunity to bring their datasets from different places together, where new insights can be found, and new products and new opportunities can be offered.” own – is another key outcome of better data sharing.

He points to the climate change agenda as a compelling example of how better data sharing can deliver clear benefits.

“It makes it a far more seamless customer journey when you’re not having to log in somewhere else in order to make a payment but doing that in the journey that you’re already in,” she points out.

So where do they think their respective countries’ policymakers should focus now?

“Australia has been a leader in extending into other sectors, I want that to see that accelerate across the whole economy,” says Carr. “That’s my big ask of them. It’s great that we’re going into energy companies and telcos. I think insurance and pension funds will come, but I want to see the tech firms included, and the social media companies as well.

theft, who probably would prefer to minimise the amount of data they need to transfer and submit, to do a transaction.

“On the other hand, we’ve businesses who need to be better at how they secure and protect that customer data, under our Privacy Act. I’m sure there are a lot of firms that have taken photocopies of passports, and kept them in a filing cabinet, scanned a PDF and put it on an unsecured server. It would be better if they didn’t have to take that identity data in the first place.

“As a bank, with both of those sets of customers, we really feel obligated to step

“How we achieve carbon neutrality is important. We do that through being more efficient with energy, embracing renewables. So, the ability to bring customers’ energy data and financial data together makes us excited as a bank,” says Carr. “We can analyse and understand how many solar panels a customer needs on their house, what size battery they need, and then put together the financing package for them or work out how they incorporate it with their mortgage.

“I see a lot of opportunities that can really only be enabled by bringing different sets of data together.”

For Melling, embedded finance –bringing services to customers through channels that a bank doesn’t necessarily

“I want to see the customer empowered across all of their data, wherever it might sit, at whatever firm, domiciled in whatever sector across the broader economy. .”

Melling sees the prioritising of high-value use cases for the customer as being essential to communicate the advantages of an open data economy and promote wider and faster adoption of open data services. “It’s about how we enable account-to-account payments, how we close the savings gap and how do we start to offer lending to SMEs through APIs.”

They both agree that deepening collaboration with fintechs is needed as open banking expands into open data with security at the core of every new use case.

“There’s a great opportunity there for us all to be working together,” concludes Carr. “These are all shared problems for the economy. So my call to action would be to join us in that mission.”