I was recently interviewd by Ben Leis of Youth Trends Report, and reproduce the discussion here for posterity:
Ben Leis: Growing up,
learning to save money was simple and fun with things like piggy banks
but over time financial education becomes more complicated. How can the
financial education process be improved?
Chris Skinner: Parents
teach their children financial responsibility early on through pocket
money, and the idea that if you want more then you need to work for it by
doing odd jobs around the house. The ideas of saving for something
special is also a parental concern, and these are assisted by children’s
accounts at banks and building societies.
As you say, it then becomes more
complex as you reach adulthood and are offered credit facilities by
banks. This means there needs to be some responsibility for managing
your finances and financial education offered by banks, schools and
Some of this is given, but maybe not enough.
Therefore, to improve educations,
schools and government should take note of best-in-class education being
provided by financial providers worldwide. In fact, I would encourage a
mandatory financial management curricula for all sixteen-year olds, but
that curricula should be fun, engaging and entertaining or it won’t
Leis: What banks have taken the lead in successfully engaging and
educating young people on finance and how have they done it?
Chris Skinner: There are lots of examples of good things banks have provided worldwide.
I particularly like online gaming education, such as Wells Fargo’s Stagecoach Island and Barclays Bank’s 56 Sage Street. In both examples, the idea is to have fun in virtual worlds whilst learning the disciplines of financial management.
I also like the work of TD in Canada, where they have a group of over 20,000 fans on Facebook in their Money Lounge, with a specific area for students.
One of my favourite bank services is Tu Cuentas from
BBVA in Spain, where they offer an iPhone and Android based banking
service that brings in all the best things on the internet, such as
budgeting apps that compare your financial behaviours with all the other
BBVA customers to advise and help you get the best out of the bank.
There are many other examples out
there that are worthwhile and the common element in all of these mobile
and internet services is that they are trying to make banking fun and
interesting, rather than boring and staid.
Ben Leis: What are the challenges that banks face today when marketing to young people?
Chris Skinner: Most
banks just don’t get it. They think it’s all about offering accounts
with a free iTunes voucher for downloading stuff. Sure, some young
people want that gimmick but, particularly after the financial crisis,
they also want to find a bank that meets their attitudes and connects
with them at the right level. The banks that sit well with that view
tend to be mutual – such as Cooperative Bank’s green credentials or Caja
Navarro’s Civic Banking – or commercial but with a 21st century outlook, such as First Direct’s social media savviness.
Unfortunately, for most banks, the
idea of talking to customers through electronic media via a blog or
iPhone app is viewed as about as necessary as having an enema. Result:
you don’t find many mainstream banks that do this.
They instead believe that branches
are critical and so, for banks that want to market to young people, they
need to realise that open and transparent electronic communication is
going to be far more important than offering a branch with some tellers
to cash a cheque.
Ben Leis: With banks offering so many competitive choices in products how can young people decide?
Obviously, rates and ease of access are key factors. If you’re seeking a
bank that can help you manage through college or university, for
example, finding a bank that will offer credit is going to be a key.
However, if you really want to find the right bank for you, think more
about answering these key questions:
- How important is access to a branch?
- Do you want great telephone service?
- Are you seeking to manage your finances online?
- Would you prefer a bank that wants to save the planet or one that just gives good interest rates?
and so on.
Each question will then naturally
lead you to an answer. For example, if you want branch banking, then
you’re more likely to deal with Santander, Lloyds, Barclays or
NatWest/Royal Bank of Scotland. If you want great telephone services,
then First Direct will be more up your street. For online services,
Smile or Cahoot is more likely to appeal, whilst saving the planet has
been the key mantra of Cooperative Bank for many years.
Ben Leis: How has technology influenced the way youth bank today? What are the positives? What are the drawbacks?
Chris Skinner: Technology
enables us to manage money without a bank. You could actually exist
quite happily today using prepaid cards, mobile topups, Facebook credits
and PayPal, although the last example is now a bank – PayPal have a
Eurpoean banking licence from Luxembourg. What this really means is
that technology is changing the whole way young people can think about
banking and my vision is that just like iGoogle, where you design your
own home page, there will soon be iBank, where you design your own bank.
That’s the positives. Using today’s
technologies, you can take apps, widgets, gadgets and other services to
design financial management completely around you and your lifestyle.
The downside is that money then
potentially just becomes virtual credits and debits. It loses its
meaning and humanity. That may sound trivial, but one banker – Jerome
Kerviel from Societie Generale – recently lost €5 billion through
trading virtual debits and credits and not feeling the same
accountability for that money as he would have done if there had been
more humanity in the bank.
There’s the rub: you need to
remember that every transaction on your statement is real money going in
and out of your account, not just virtual credits and debits.