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New-age banking for minors can make them money savvy


Keeping children’s digital savviness in mind, two companies have launched new-age banking services for minors. Fino Payments Bank’s product is called Bhavishya Savings Account. While a neo banking platform FamPay is offering banking services for minors above 10 years in partnership with IDFC First Bank.

New banks are technology companies that usually offer financial services in partnership with banks.

What’s on offer

Both companies are offering digital KYC (know your client) for their products. Parents and children both need to complete the KYC formalities to avail of the services.

Fino Payments Bank’s Bhavishya Savings Account has an annual subscription fee of 350 that covers most account-related costs such as transaction charges and debit card costs, among others.

The account comes with a debit card that a minor can use only for cash withdrawals as of now. The bank allows a total withdrawal of 10,000 in a month, and no single transaction can be of over 3,000. “We are collecting feedback at present. Depending on our interactions with customers, we would allow e-commerce and UPI (Unified Payments Interface) transactions in the next three months,” said Ashish Ahuja, chief operating officer, Fino Payments Bank.

FamPay has started offering a numberless prepaid card, which costs 500. While there is no card number, it has the magnetic stripe and a chip for transactions at ATMs and point of sales terminals. Minors can also use it for online transactions. “Our app has a virtual card, which has all the details, including card number and CVV. We also provide the UPI address for online payments,” said Sambhav Jain, co-founder, FamPay.

For security and contactless payment, the company also offers a dynamic PIN (personal identification number), which is generated on the app and is valid for two minutes. The account holder can safely show the temporary PIN to the shopkeeper to complete the transaction.

According to Jain, in a majority of households, parents ask teenagers to do all the online transactions. “But when they have to buy something for themselves, they need to ask parents for OTP (one-time-password),” he said. Both companies require a mobile number other than the parents’ for their services.

Gamification of money habits

FamPay and Fino Payments Bank both plan to introduce more features in the future. Both want to teach the habit of savings to minors. For this, they plan to gamify the experience.

“Say, a child wants to save for a music system. Every time the balance reaches 1,000, the bank will automatically transfer it to the goal. We will have a product sketch. As the child keeps saving, the photo will slowly start appearing. Once the target amount is reached, the sketch will turn into a complete photo,” said Ahuja.

Fampay, too, has its interface, which looks like a game and encourages account holders to save regularly. It rewards cashback whenever a minor reaches different savings milestones.

Both companies want to keep the offerings digital as they believe that cheques would not be relevant in the future. Once the account holder turns 18, both the companies plan to convert it into a regular savings account. FamPay will offer a bank account from its partner (IDFC First Bank), while Fino Payments Bank will offer their regular savings account.

Developing habits

Both the services go beyond what a bank has been offering traditionally. The attempt is to make minors savvier about money. “Such new-age accounts are a better option than traditional children’s savings account. In most cases, it’s parents who are interested in their kids having a regular children’s savings account. The minor is usually interest only in the transactions,” said Suresh Sadagopan, founder, Ladder7 Financial Advisories, a financial planning firm.

According to Sadagopan, in the future, learning about cheques, demand drafts, depositing money in a branch will not be much relevant to minors. “What is more important is to learn delayed gratification, savings for goals and value of money. Many of those who are entering the workforce are taking loans to buy a bike or car. Such impulsive purchases can be avoided if they are taught a few basic aspects of money,” said Sadagopan.

While you teach children about money, also ensure you educate them about cybercrime so that they don’t fall easy prey to hackers.

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