Youth market Archives - Page 2 of 3

Mobile Youth Banking: Union Bank’s Yuby is a Good Start for the Grade-School Set

By Jim Bruene Posted on May 19, 2015
Categories: DoughMain, FamZoo, PlayMoolah, Youth market

Even if you don’t have young children, I’m sure you’ve noticed how even pre-teens these days are hunched over their smartphones. So, if you want to get your core customers’ kids engaged with the bank, your strategy pretty much must begin with, and can probably end with, mobile.

Banks haven’t really been able to devote resources to mobile youth banking as yet. The financial crisis hit at the same time the iPhone came out (unrelated, I believe), so it wasn’t really until the dust settled a few years later that v1.0 (adult) mobile banking was introduced. Now, most banks have a solid v2.0 in place and can start developing niche services for certain segments of their customer base.

Union Bank is one of the early entrants in mobile youth banking. It launched a dedicated app a year ago (press release) called Yuby (see landing page below). It was built for them by Mutual Mobile, an app developer which has also worked for Finovate alum Clover.

How it works
The app is very basic (see inset) and includes no ties to actual account data at Union Bank or anywhere else. Basically, it does just three things:

Money tracking: Kids can add or subtract money from their virtual account, but only if a parent authorizes the transaction with a parental PIN—to be typed into the app on the child’s phone; there is no dedicated “parent app.” A simple transaction feed (below) shows the flow of funds in and out of the account.
Basic chore list: It’s easy to add a chore, but there is no tracking or integration with the child’s allowance.
Wish list: The app includes an area to establish multiple savings goals. And it automatically explains how long it will take to save for the goal if the child’s entire allowance is devoted to it.

Thoughts:
This is a great way to start. It’s a simple app, which means no integrations, no security audits, or compliance issues. No personal info is saved (other than a photo), so privacy is not an issue. Basically, it’s a mobile version of a sheet of paper and a pencil. But it’s much more engaging to port those simple functions to a mobile app, where a child/parent can always find it.

This is a good app for the grade-school set. However, it needs a functionality upgrade for the teen crowd. While older kids can still use it, once they are old enough for a debit or prepaid card, the app needs integration to actual bank accounts, both the child’s and parents’.

Resources:
At our Finovate events, we’ve seen a number of youth-banking use-cases presented, usually around debit and/or prepaid. The most recent from CBW Bank, who just last week showed us a glimpse of the future with an iOT integration that would allow parents to control fuel purchases for a specific vehicle (video coming later this week here).

There have been a number of memorable youth banking demos over the years, though none were specifically mobile-optimized. Of the six listed below, only FamZoo and PlayMoolah are known to be active at this time. The other four, in our view, were simply too early, or too complex, to make a business out of youth-banking services. Here are links to the demo videos:

FamZoo demo’d its card-and-allowance system in spring 2013 and fall 2011
Singapore-based PlayMoolah in fall 2012, showed a game-based youth-banking system
DoughMain showed a financial education system in Fall 2011
Bobber Interactive, which was perhaps a few years ahead of its time at the third FinovateSpring in 2010
MatchFund, an online spend-and-save platform for youth, demo’d in Fall 2010
Kiboo showed its mobile and online banking package for teens in Spring 2011

Finally, there is Skill-Life’s Money Island, which was Finovate’s first youth-banking demo in fall 2009. The company was snapped up in 2010 and is now the basis of BancVue’s financial education service.

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Union Bank Yuby Landing Page (link)

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Tuesday Tactics: Attracting Young Customers via the Parents

By Jim Bruene Posted on May 5, 2015
Categories: FutureAdvisor, Investing, Youth market

This is a continuation of Friday’s post about using apartment rent-and-chore-tracking app HomeSlice to attract younger customers. The app is a classic Trojan Horse tactic, though not a nefarious one. The thing is, once you get customers digitally locked-in to your platform, they may never leave. And while this works on any age group, the younger set is more attractive in many ways, because they are not already set in their financial ways, and they have massive revenue potential if you are able to hold onto them through the next few decades.

Today, automated investment management platform, aka a robo-adviser, FutureAdvisor launched its own youth play, but targeted it to the parents of the kids it hopes to serve for the next 70 years. The service, dubbed FutureAdvisor College Savings, aims to get funds earmarked for college into its managed savings plan. The startup is forgoing its usual 0.5% wrap fee and is offering the account at zero cost. An impressive graph (inset) charts the savings growth in its plan (optimistically predicted at a 7.1% annual return) vs. a bank savings account (pessimistically pegged at 0.5%) over 2o years. Even though the spread is likely to be less dramatic than the indicated 6.6%, the benefits are large.

Bottom line: For most financial institutions, the parents are probably the easier path to landing the under-21 crowd. So financial services companies should consider similar offerings whether it be student-loan management, regular savings accounts, starter credit, apartment loans, first-car loans, and so on (for more ideas, see previous posts).

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FinTech at TechCrunch Disrupt

By Jim Bruene Posted on May 4, 2013
Categories: Conferences, Insurance, Youth market

This past week, NYC hosted TechCrunch’s semi-annual tech event. TechCrunch Disrupt covers the entire tech spectrum from software to 3D printers to gaming and ecommerce. Generally, the financial vertical accounts for 2% to 3% of the companies involved. That said, several notable fintech companies have done well there. Notably, Mint won the first event in 2007. And in 2011, both InvoiceASAP (demoing at Finovate next week) and BillGuard (see post) made it to the final round, (with BillGuard finishing second overall).

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Startup Battlefield
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This year, three of the 30 "battlefield" companies that made it one stage were in fintech. One of those, Zenefits, was one of seven finalists called back to demo again to the judging panel. Enigma a public-dataset discovery and analytics startup, was the eventual winner.

1. OK’d by PaidPiper (description | demo)

Kids payment tracking and authorization service
Partnering with Vantiv
Mobile first…team has mobile background
Can also be used by small biz with their employees
Charging parents 5% of value transferred (non-starter…needs to get to monthly subscription)

2. Trustev (description | demo)

"Social fingerprinting" to provide a "Trustev score" pulled from social media and other data sources
$20 billion lost in 2012 by online merchants
27% of all online orders are reviewed by humans for potential fraud
Call themselves "Stripe for fraud"

3. Zenefits — Battlefield Finalist (description | demo)

Free, comprehensive HR-benefits platform, monetized with health insurance commissions only
Displaces client company’s health insurance broker to fund the free HR services
Co-founded by Wikinvest’s Parker Conrad
Y-Combinator alum
Typically, small customers can pay up to $2,000 per year for similar services

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Startup Alley Tradeshow
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The "startup alley" is the tradeshow floor where more than 100+ startups and event sponsors have tables to talk to interested parties. There were eight more fintech companies there:

ePaisa: Mobile POS startup
EXP Commerce: Futures market for consumer products
PayTango: YC company authorizing payments with fingerprint biometrics
Peela: Brazilian gift card provider "gift cards on steroids"
Purchext: Parental spending control system using sale receipt capture/OCR (now) and/or NFC (soon)
Taclaro.com: Brazilian online insurance supermarket
TouchtoPay : Fingerprint-based payment system
YourCapital: Algorithmic financial advice for DIYers

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Panel Discussion
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Financial subjects come up throughout the program, for example three VCs over the three days mentioned that they were putting money into Bitcoin. But there was only one focused financial-services session, a panel entitled, Show Me the Money.

Panel members: PayPal (Hill Ferguson, VP), Stripe (John Collison, Co-founder), Gumroad (Sahil Lavinga, Founder)

PayPal launched "login with PayPal" today
Stripe is powering Walmart’s new Goodies food-subscription service
PayPal used to buy $7 billion annually in digital goods (music, online gaming, etc)

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StreetOwl Gamifies Driving to Improve Safety and Lower Insurance Premiums

By Jim Bruene Posted on April 19, 2013
Categories: Insurance, Mobile Commerce, Youth market

During the past few years, I’ve unleashed two teenagers on the streets of Seattle (sorry). They are careful drivers, but they are very inexperienced. Both would rather hop on the bus, or let me drive, than navigate the congestion, curves, and freeways of Seattle.

The younger one is still in the permit stage, so he doesn’t have free rein quite yet. But once he becomes fully licensed, I’d love to get tangible feedback on his driving to make sure he continues to play it safe. And I bet our insurance company would like that info even more.

So, the smartphone-based auto-tracking systems seems like a win-win, at least for the parents and their insurance company. But San Francisco-based StreetOwl (note 2) has figured out a way to make it a win for the kids too. The company uses an age-old tactic: bribery.

Its RefuelMe iPhone app tracks driving behavior, earning points for proper speed, acceleration, braking and cornering (see below left). It’s a lot like the Fitbit exercise tracker, which I’ve become ~~obsessed~~ ~~with~~ quite fond of recently.

Young drivers earn awards established by their parents. In the example below right, you can see that the driver is about 1% of their way to earning a $25 Chevron card. Results are tracked both in app (parent and child versions) and at the RefuelMe desktop dashboard.

The company plans on keeping it free and is looking to partnerships with high schools and others to get it in the hands of more teens (and their parents).

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Analysis

While I think most parents see the value here, it’s also a difficult concept to monetize. There is a real education challenge to get trial, and an even harder problem of getting people to pay for it.

So the company has developed a version that is more tied into insurance savings, which has universal appeal. The idea is that the app can prove to the insurance company how super safe your driving habits are, then you can be rewarded with a lower price. And since Smart Owl is serving as a value-added matchmaker, they can be rewarded handsomely by the carrier (see last screenshot below).

Initially StreetOwl sees this a lead-gen program. But the startup is also in discussions with insurance companies about using the technology in place of dedicated hardware to power usage-based insurance. It could also be bundled with youth banking programs and/or PFMs as a value-add.

You can give RefuelMe a test run now. But the insurance lead-gen product is still in private beta and is expected to be released wider within a few months.

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RefuelMe iPhone app (18 April 2013)
Left: scoring system Right: Dashboard with rewards

StreetOwl website

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Notes:
1. Hat tip to Venture Beat
2. StreetOwl is currently raising $750,000 in seed capital through Angel List. Ofer Raz and Jason Hovey are co-founders.
3. For more on banks offering insurance, see our full report here (Dec 2011, subscription)

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Gothenburg State Bank Promotes Kids’ Savings Accounts

By Jim Bruene Posted on February 18, 2013
Categories: Deposits, Checking, Savings, CDs, Youth market

Through the magic of digital delivery, free ATMs, and mobile check deposit, there is no reason for today’s youth to EVER switch bank accounts. Even through college, grad school, multiple job changes, and marriage, your bank and card accounts can simply follow you around the country.

That means it’s more important than ever to make sure you are banking your customers’ kids. Even so, the big players haven’t wholeheartedly climbed onboard the youth banking movement. While oft-times offering exhaustive college-banking programs, they often seem indifferent to youngsters still at home.

We see most of the innovation in family banking at the community bank and credit union level. Case in point: Nebraska’s Gothenburg State Bank’s ($100 mil deposits) three-pronged effort to safeguard the cash of everyone in the family:

Little Savers Club (age 0-3):
— Savings account paying 3.5% APY on first $2,000 (then 0.10%)
— Physical piggy bank
Crayon Account (age 4-13):
— Savings account paying 3.5% APY on first $2,000 (then 0.10%)
— Dave Ramsey “Teaching Kids About Money” financial education kit
— Box of crayons and coloring book
— Savings deposit book
— Deposit rewards (toys & books)
Super Savers Account (beginning at age 10-13)
— Savings account paying 7% APY for (one year only) on first $2,000 (then 0.1%)
— Requires monthly deposits of $25 or more for the higher rate

Bottom line: I’m impressed that the bank pays a high rate on the first $2,000. It’s very hard to teach your kids the value of compound interest when they receive only a few pennies per month in interest. The bank is paying out a maximum of $70 extra per year ($140 in the Super Saver account for tweens, note 1) to keep mom & dad happy.

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Gothenburg State Bank homepage with kids’ savings promo (15 Feb 2013)

Kids’ deposit products page (note 2, link)

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Notes:
1. It’s not entirely clear whether the 7% Super Saver rate is good for a single year, 6 months, 3 years or even longer. But I’m making an educated guess that it’s a one-year bonus program to jump-start tween savings.
2. I’m surprised the bank doesn’t tout the high rates on the webpage (you must follow an obscure link to the rate page). Perhaps they don’t want adults gaming the system to score the extra interest.
3. For more on youth banking, see our July 2011, Online Banking Report.

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Betterment Launches Gift Registry Service to Make it Easier for Friends & Family to Fund Longer-Term Goals

By Jim Bruene Posted on September 20, 2012
Categories: Investment Products, Youth market

Betterment, a simplified investing platform, launched a gift registry last week that is super slick. Betterment customers can set up a custom page where friends and family can pitch in to fund a goal. It takes just two or three minutes to set up a basic page and publish it to the web at <gifts.betterment.com/yourevent>. See sample below.

Visitors can choose which gift/goal to fund, add it to their cart and checkout by paying with MasterCard, Visa, American Express or Discover. The funds are placed into the Betterment investment platform where users can track their progress (see screenshot #3). According to Betterment’s terms, gifts must be held for at least 90 days.

The best-use case is weddings where it is customary to help your guests figure out how to give meaningful gifts. The startup lists other gift-giving events such as birthdays, house-warmings, retirements, and so on. But for most of those, it would be presumptuous to ask your friends to pitch in to buy you a trip to Bermuda.

At first, I was surprised that a gift registry made it into Betterment’s roadmap so soon in the company’s life. It seems a relatively narrow niche. But I can see the appeal to the company’s 20- and 30-something customers as they plan weddings. Or maybe the startup is just showing off its design chops. It’s an elegant template that creates professional-looking results.

Relevance for banks/CUs: This would be a nice little tool for banks to provide for parents. Not just for weddings, but for high-school graduations, bar mitzvahs, major birthdays and other events where family members typically send paper checks. The money is housed in special savings accounts with various parental controls (note 1).

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Wedding registry at Betterment (link; 20 Sep 2012)

Checkout using Visa, MasterCard, AmEx, Discover

Betterment goal tracking UI

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Notes:
1. For more on family/youth banking, see our last summer’s Online Banking Report(subscription).
2. We also looked at Betterment, Simple and Personal Capital, last fall in our True Virtual Banking Has Arrived (subscription).

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Is "Family Security" a Product Opportunity for Online Banks?

By Jim Bruene Posted on December 13, 2011
Categories: Identity Theft, Security & Privacy, Strategies, Student Banking, Youth market

In the digital era where teenagers might keep their bank accounts for the next 80 years, it’s important to offer services that encourage kids to sign up for a bank account. There are some cool ideas around financial education, money management, and gamification which we explored in our Online Banking Report earlier this year (note 3).

But what’s the one issue that really drives parents’ behavior towards their kids? Fear. Fear for their physical safety on the way to school, fear of bad influences at school, and fear of the idiots kids will encounter online. The list goes on and on.

You may not be able to protect kids from Facebook bullies, but you can help on the money side. Financial institutions can offer services that help protect children from online scams, ID thieves, and so on. You can offer prepaid cards with controlled access. You can keep parents apprised of their child’s spending so they can recognize early-warning signs of dangerous behavior.

It’s win-win product development. Parents will pay for it through fees and/or loyalty. You’ll lock in more youth accounts, and everyone will get a bit more peace of mind.

Bottom line: While family financial security is a promising area, it’s no small project. Most banks will need partners to provide at least some of the services (credit-reporting specialists, account-aggregation providers, data analytics, and so on). But once the data feeds are available, they can be bundled together into different packages for various segments.

And mobile delivery will be crucial. For inspiration, look at Life360, a fast-growing mobile service whose core offering is GPS tracking for family members (see screenshot below, note 2). Life360 is free, but offers an optional identity-theft protection family-plan at $14.95/$19.95 per month. Since going free, the company has mushroomed to 6 million families.

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Life360 is a fast-growing startup offering “mobile family safety” (13 Dec 2011)

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Notes:
1. Graphic: From the FTC-sponsored one-day seminar on childhood identity theft this summer (link).
2. For more info on Life360, read the series of Techcrunch posts on the company.
3. For more on family/youth banking, see our recent Online Banking Report (subscription).

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Launching: ING Direct Unveils $10 Million Campaign for Teen Banking

By Jim Bruene Posted on August 30, 2011
Categories: Advertising & Promotion, Deposits, Checking, Savings, CDs, ING Direct, Youth market

Just last month we published a report (here) about the large, and mostly unmet, opportunity to bank tweens/teens AND their parents.

Evidently ING Direct didn’t need our report. The direct bank, soon to be part of Capital One, is launching an aggressive $10 million advertising campaign for its new MONEY account (note 1). There’s no official mention of the program at ING Direct, except for a wall post on its main Facebook page (see last screenshot).

However, several online elements have been released:

Microsite <ingdirectmoney.com> (see first screenshot below)
Facebook page <facebook.com/ThatsMoney> with 129 likes as of 2:00 PM Pacific, Aug. 29 (see screenshot 2)
Facebook app (screenshot 3-5)

Product: There’s only a few sentences describing the product, but it sounds like a standard checking account with debit card access. It will have no fees and no minimums and can be managed online (duh) and through a smartphone app.

Campaign: The $10 million campaign (note 2) is primarily fulfilled via Facebook (see screenshots below) and includes:

Advertising on Facebook and online
Supporting sweeps has (10) $1,000 prizes, (10) MacBooks, (20) iPod Touches
Those submitting pictures of themselves, may get it projected on a Times Square Jumbotron for 15 seconds (begins Sept. 15)

Our take: With 1% rates killing its traditional value proposition, it makes perfect sense for ING Direct to build for the future by positioning itself as a place that caters to the banking needs of the entire family. Well played.

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1. ING Direct’s teen-banking microsite at ingdirectmoney.com (30 Aug. 2011)
Note: In the lower right is a “pre-registration form” where the bank collects the name and email address of interested parties

2. Parents are encouraged to send a message to their children to let them know about the sweeps
Note: The lower right contains a place for parents to send email messages to their children

3. Facebook page at <facebook.com/ThatsMoney>

3. Facebook page info page (Facebook app)

4. Facebook page sign-up form

5. Thank-you page after pre-registering

6. Wall post this afternoon on main ING Direct Facebook page (link, 30 Aug. 2011)

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Notes:
1. New agency Berlin Cameron is spearheading the effort according to today’s Adweek article.
2. That’s about 40% of ING Direct’s projected $25 million media spend for 2011.
3. Hat tip: MyBankTracker
4. For more on teen banking, see our recent Online Banking Report.

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New Online Banking Report Published on Youth Banking: Attracting Tween, Teens, & Under-25 via Online/Mobile

By Jim Bruene Posted on July 18, 2011
Categories: Online Banking Report, Strategies, Youth market

We were still in the Web 1.0 world when my kids (teenagers now) started their first savings accounts. So there were few youth banking services available to facilitate online savings and spending.

Fast forward 10 years. We have Facebook, we have Twitter, we have mobile weather info. But we still have virtually no youth banking tools at the major U.S. banks (Wells Fargo is furthest along, see screenshot below).

And that makes no sense.

There are 100 million people under age 25 in the U.S., and obviously, 15 to 25 years from now, a good portion of your profits will come from this group. However, in the next five years, this cohort will generate exactly zero percent of profits.

In the branch-based past, it made business sense to wait another five years to start selling to this group. After all, high-school graduates closed their bank accounts when they moved to college. College graduates closed theirs when they moved to their first job. And first-time job holders switched accounts when they landed a better job, and so on.

But that was a different time. In today’s remote-banking world, THERE IS NO REASON TO EVER CLOSE YOUR ACCOUNT. You just send in a change of address and keep logging in to the same place.

A 12 year-old girl today is expected to live another 70 years (boys, only 65 more). So if those kids won’t ever need to close their accounts, it stands to reason that getting them hooked to their parents’ online banking becomes pretty important.

That’s why we are seeing interesting startup activity in this area including (from recent Finovates):

Bobber Interactive
Kiboo
MatchFund
MoneyIsland (from BancVue)
Thwakk
Tile Financial

And there is a rush to social media, such as the brilliant Young & Free campaigns invented by Canada’s Currency Marketing.

Finally, the report includes articles from two industry experts:

Justin Hosie of Chambliss, Bahner, & Stophel PC on the importance of bank compliance with the Children’s Online Privacy Protection Act (COPPA)
Matt Cullina, CEO of Identity Theft 911, writes about the importance of protecting your kids against identity theft

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About the report
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Family Banking: Online/Mobile Services for Tweens, Teens & their Parents (link)
In a remote banking world, your most-promising prospects aren’t even driving yet!

Published: July 15, 2011

Author: Jim Bruene, Editor & Founder, Online Banking Report

Length: 52 pages (10,000 words), 52 Figures, 7 Tables

Cost: No extra charge for OBR subscribers, $495 for everyone else (here)

Abstract here

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Wells Fargo offers up solutions for four age groups (18 July 2011; link)

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BillMyParents.com Traffic Spikes to 600,000 Unique Visitors

By Jim Bruene Posted on June 28, 2011
Categories: Debit Cards, Prepaid/gift cards, Student Banking, Youth market

If you want to attract customers between the ages of 12 to 21+, you could not have a better name than BillMyParents. But living up to that promise, not to mention appealing to parents, is a little trickier.

San Diego-based BillMyParents is a public company (OTCBB: BMPI) currently valued at $40 million. When we first looked at the company (March 2009), it was building an alternative payment mark similar to PayPal or BillMeLater. But the company appears to have pivoted into a more achievable prepaid card product.

Today, its core offering is a $3.95/mo prepaid MasterCard debit card (see full fee schedule below) that offers mobile alerts and basic parental controls (lock, unlock, reload).

Fresh off a $7 million infusion of new funding (Nov. 2010, note 1), the company has ramped up its advertising with its first national TV commercial (on ESPN; link) and a mention in MTV’s Rob Dyrdek’s Fantasy Factory (which apparently has something to do with skateboarding). It is also working with Street League Skateboarding.

Evidently, those efforts are bearing fruit as website traffic is up 20-fold since December, to 600,000 unique visitors in May according to Compete estimates (see below). More importantly, traffic to the secure site (e.g., account holders) is up to 17,000 visitors in May compared to 7,000 in December (note 2).

Relevance for Netbankers: Teens want to spend. Parents want transparency and control. And banks want to attract teens and tweens that could be customers for the next 80 years. And if that’s not enough, in the United States, prepaid looks to be favored in the post-Durbin world (previous post).

So expect prepaid cards to be a hotbed of activity from both banks and non-banks (note 3).

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BillMyParents.com unique monthly visitors

Source: Compete, 28 June 2011

Parent section of BillMyParent’s website (28 June 2011)

Fee schedule

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Notes:
1. Source:http://www.marketwire.com/press-release/socialwise-changes-corporate-name-to-billmyparents-inc-otcqb-sclw-1525359.htm
2. Source: http://siteanalytics.compete.com/account.billmyparents.com/
3. For example, BankSimple http://www.netbanker.com/bank_simple/

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USAA Promotes Teen Checking Accounts

By Jim Bruene Posted on January 11, 2011
Categories: Advertising & Promotion, Deposits, Checking, Savings, CDs, Student Banking, USAA, Youth market

In doing some initial research for a report we are planning for Q1 on “family bank accounts,” I started where I usually do, on Google. The only financial institution advertising specifically on the term “teen banking” was USAA (see note 1).

The top-of-the-page ad led to a well-designed landing page devoted to Teen Checking (see screenshots below) with a clever call to action:

We won’t take any of your teen’s allowance.
Teen checking without hidden fees.

USAA even has a dedicated site with its own URL to support its youth-banking efforts: https://my.usaa.com

Relevance for NetBankers: Teenagers may be one of the most lucrative segments to attract to your financial institution. They not only spend billions themselves, but also could literally stick with you for a lifetime.

The thinking goes something like this:

Attracting the children of your customers helps you retain the parents
Retaining the parents helps you retain the kids as they become young adults
Young adults become parents
Repeat

This didn’t work so well in the old branch-based world because one of the first things the kids did when they moved away was open a checking account at the closest branch to their new apartment or dorm room. In an online/mobile-centric world, that no longer has to happen.

Google search for “teen banking” (see note 1; search conducted at 5:00 PM on 11 Jan. 2011 from Seattle IP address)

USAA’s “Teen Checking” landing page

Notes:
1. First-page organic results included (note, search was limited to items posted in past month)
— Fremont FCU
— North Shore Bank
— Coast Hills FCU
— U.S. Bank (Visa Buxx)
— S.T.A.R Community Credit Union
— American Riviera Bank (my new favorite bank name)
2. If anyone wants to point out great examples of teen/youth/family banking efforts, please drop me an email jim@netbanker.com or leave it in the comments. Thanks.

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ING Direct Adds Kids Savings Accounts

By Jim Bruene Posted on November 23, 2010
Categories: Deposits, Checking, Savings, CDs, ING Direct, Youth market

We first opened an account at ING Direct back in 2001, not long after it opened for business in the United States. Almost since the beginning, my wife and I used it to store money and handle allowance bookkeeping for our kids. To keep things simple, we created sub-accounts from our main savings account.

That made for a super-easy setup since it takes about 20 seconds (I’ve timed it) at ING Direct to create a new sub-account. The sub-accounts are nicknamed for each child and automatic transfers drop their allowance in so we no longer had to remember that every week. It’s a great system.

However, the above approach doesn’t officially put the money into the child’s name, which could have tax and other advantages. And if you want to provide your kids with online account access, you have to turn over your own username/password. And if you do that, there’s nothing to keep enterprising youngsters from making an extra transfer or two into their own accounts. While I’m sure that wouldn’t happen in our house (right, boys?), it’s not an ideal setup.

ING Direct solved those limitations in October when it launched special kids savings accounts, which are joint accounts with an adult. But the child gets his own login-info separate from the adult. Kids can log in to check their balance, but only the adult can make transfers.

The ING Direct kids account pays the same rate as the adult version, currently 1.1%. And there are no fees, an ING Direct custom. The only downside, you have to complete a small application process, which took 3.5 minutes, not much, but still a bit of a chore compared to the 15-second, sub-account set-up process.

Once established, the new savings account shows up on the adult’s main account menu like any other account.

Bottom line: It’s a nice addition to the ING Direct lineup. While relatively bare bones in terms of features and functions, it will be interesting to see what the bank does with it over time such as integrating with Planet Orange, the bank’s financial education effort (see screenshot below).

Landing page for more info on Kids Savings Accounts ( link, 23 Nov. 2010)

Kids account application, for adding to an existing adult account
Note (not shown): On the second step, you choose a 6-10 digit unique PIN for the child and on the third step, you fund the account with a minimum opening deposit of $1.

Planet Orange is the bank’s financial education resource <orangekids.com> Note: So far, no integration with Kids Savings

Hat tip: DepositAccounts.com

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