If you’re anything like me, you had a Dollarmite account growing up. CommBank’s strategy worked – but there’s something seriously wrong with this picture.
Alex McKinnon wrote a great article recently, detailed below, shedding light on the fact many banks are targeting young children with their marketing material – and have been doing this for over 80 years.
Although having a grown-up checkbook sounds like a lot of fun when you’re 8, the underlying strategy here is less innocent. Majority of us who sign up to these initiatives never switch banks when we’re old enough to make well-researched, qualified decisions around who we entrust with our money.
Rather than allowing your children to follow our generation’s footsteps, show them how important it is to do their own research and make their own, educated decisions about their money management.
I’d like to personally give praise to Choice, who recently called for school banking initiatives like the Commonwealth Bank’s Dollarmites program to be banned. Choice CEO Alan Kirkland said bank-run financial literacy programs in schools “give banks unfettered access to market their brand to schoolchildren”.
The controversy has highlighted how increasingly common it is for banks to target kids in their marketing campaigns. The Commonwealth Bank, in particular, has had a real focus on children for decades. Did you know the Dollarmites program has run for 85 years? Being so firmly lodged in Australians’ consciousness, it is now considered a treasured childhood memory.
Generations of school kids were exposed to the concept of banking and saving in the form of the Dollarmites, cuddly cartoon characters that adorn the bouncy balls, pencil cases and earphones the bank gifts kids when they open an account.
In 2015, Mr. Narev of Commonwealth Bank announced a $50 million expansion of StartSmart that has turned it into the largest bank-run schools outreach program in the world, reaching more than 500,000 kids a year.
The old Dollarmite chequebooks have been replaced with the CommBank Youth app, which encourages kids to regularly deposit money into their accounts, as well as a raffle sending loyal Youthsaver account holders to Tokyo Disneyland.
Encouraging to kids to save money sounds innocent enough, but things change when you turn 18. The Commonwealth Bank celebrates the transition of its youngest customers to adulthood by sending letters inviting 18-year-olds to take out “their very first credit card”.
The credit cards often offer poor customer value and rope financially vulnerable people into agreements they shouldn’t be taking. But the Commonwealth Bank is committed enough to its “cradle-to-grave” banking strategy to aggressively offer such deals. They were certainly aggressive enough when they tried to sign me up for a credit card at the age of 19, despite my repeated refusals.
Information extracted from Alex KcKinnon’s recent article here.