Dollarmites Luring Kids To Bank 'For Wrong Reasons'
Australia’s finance regulator says school banking programs do nothing to teach kids about the value of saving money, but they’re great at luring long-term customers through cute rewards.
The Australian Securities and Investments Commission (ASIC) has been consulting with students, parents and teachers since it launched a review into how banking programs are run in primary schools.
The largest Australian program of this kind is the Dollarmites rewards scheme, which Commonwealth Bank been running for more than 85 years.
Under the program, a child at a participating school is eligible to open a 'Youthsaver' bank account. The student then receives a 'Dollarmites' token every time they make a deposit into the account, with 10 tokens resulting in a 'reward'.
According to the bank, the program aims to teach children effective saving habits and develop their financial literacy.
But ASIC has revealed this might not be the case, and that kids are being too driven by the promise of rewards.
A report released on Monday found 'limited evidence' that school banking programs have a lasting impact on a child's saving behaviours when they grow up.
The research suggests interest in the program peaks in a student's early schooling years and this is driven by the rewards. Their interest then reduces in later years as the rewards become less motivating.
CommBank has offered students rewards such as scented highlighter pens, origami sets, fluffy notebooks, bouncy balls and slap band rulers.
University of Western Sydney mathematics educator Professor Catherine Attard felt students were being signed up to banking programs such as Dollarmites "for the wrong reasons".
"The issue is they give children extrinsic reward for depositing money, but that's not actually teaching them about saving," Attard told 10 daily.
"They don't understand what they're actually doing when they are putting money into the bank -- especially these days when money is virtually invisible."
ASIC found that school banking increases the chances of a participating student sticking with the same bank into their adult years.
Consumer group Choice conducted similar research in 2017, finding just under 50 percent of surveyed Aussies opened their first account with the Commonwealth Bank. Thirty-four percent of those people stayed with the same bank into adulthood.
Last year Choice Magazine gave Dollarmites a 'Shonky Award' in its annual name and shame of companies and products that they consider to be taking advantage of consumers.
Choice consumer advocate Jonathon Brown said the Dollarmites program is a "thinly-veiled marketing program" that turns children into "customers for life".
"We've heard from parents across the country who are fed up with their children being targeted as future customers," he said.
Attard agreed that banks are benefiting more from targeting children than the student customers and their schools.
When it comes to developing financial literacy, Attard believes this responsibility sits with parents, not schools nor banks.
"We've got to remember the core business of schools, and that is education and delivering the curriculum," she said.
"Yes, we can weave financial literacy into that curriculum, but there's more to it than just getting into the habit of putting money into the bank."
ASIC is now asking for input from the public as part of the review, which is due to finish early next year.
A Commonwealth Bank spokesperson told 10 daily it welcomes the review and has been working with ASIC "to provide information on [its] financial education programs".