Like it or not, whether it’s abundant or missing, money is an inescapable subject for the times in which we live. Sometimes you get the impression that everything revolves around him; in others, despite the attention and importance given to them, we still don’t know how to deal with it. What if we started talking about money earlier, with human beings fresh out of diapers? A bunch of fintechs believes that’s the right moment for them to get started.
A Serasa/Opinion Box survey carried out with 1,276 respondents in September this year traced an x-ray of children’s finances. The majority of parents/guardians (85%) agree that it is important to teach their children the importance of having a healthy financial life. Almost half, 46%, already make some investment for their children — the majority, 54%, in savings — and 51% think about doing so.
Just over half of the parents (51%) give their children any kind of allowance. The main motivation is to teach children how to handle money and have financial autonomy. The survey found that most children began receiving allowances when they were between 5 and 7 years old (47%) and that the main form of receipt is still cash (59%), which ends up being kept in the infamous piggy bank (49%).
In other words, the market exists. And judging by anecdotal references, there is demand from the little ones for more modern solutions, more compatible with the digitalized world in which we live.
“When he turned seven, he walked into my office (at home) with the bag of coins in his hand and said, ‘Dad, I want to buy your credit card,’” recalls Eduardo Schroeder, founder and CEO of Tindin. His son wanted to “buy the credit card” so he could buy a game online, which did not accept physical coins. “Look at how the need evolves, his consumption profile”, says Eduardo. The episode inspired him to create Tindin, an ed fintech specializing in financial education for children.
Created in 2018, Tindin uses a digital wallet product to teach financial education to children, always with the supervision and monitoring of parents or guardians. The portfolio, or transactional, as Eduardo defines it, is just part of the experience. “The most important part is the educational”.
The focus on education is differential compared to solutions from other fintechs and banks, which in recent years have also paid attention to the entry of Generation Z (born between 1995 and 2010) in the consumer market and started to move to provide solutions to the new public. This focus also frees Tindin from an important conflict of interest: one that constrains the company’s revenue to increased spending by child customers.
“How are you going to make a digital wallet, which gains in the amount and volume of transactions, teach children conscious consumption?”, asks the executive.
Tindin does not gain from transactions. The company works with signatures, on two fronts: in B2C, used by parents interested in instilling concepts and good financial practices in their children, and in B2B, focused on schools, which emerged and took off with the mandatory nature of financial education as a school subject in National Common Curriculum Base (BNCC), in 2020. “In 2020 we launched our second product, Tindin Escola, which today is our flagship”, he says.
Tindin Escola is marketed by annual licenses, based on the number of students. It is a gamified and transversal experience, which dialogues with other school subjects.
Each school class that joins Tindin Escola is transformed into a virtual island within the platform’s virtual learning environment. “All 30, 40 students [in each class] compete for natural resources and contribute to the socio-economic development of the island. The island of each group has GDP, it has a collection”, he explains. The objective is to work on broader concepts of financial education, reaching financial citizenship, “not only looking at my own, at my personal finances but at finance as a whole, the economy as a whole”.
Tindin has a total of 70,000 users, with the largest share (45,000, or 64%) in Tindin Escola, serving classes from the first year of Elementary School to the third year of High School. The ed fintech has just over 20 employees and raised BRL 1 million in a pre-seed round in 2020. As he is working on a new round of investments, Eduardo does not reveal billing data.
Credit cards for kids
Although it does not have an explicit educational focus, it was annoyance with the financial disorganization of parents who planted the idea of a fintech aimed at minors in João Pedro Thompson, one of the four co-founders of Z1.
While working at another education startup, JP (as he is known) noticed that most of the problems they had with defaults were not due to lack of money, but to the financial organization, and this, added to other known indicators, such as the fact that almost half of Brazilians are unbanked, led him to the conception of the Z1.
“It was a huge gap that you don’t learn in school, and that problem started to bother you more and more,” says Sophie Secaf, another co-founder and CMO of Z1, in a conversation with LABS.
For her, the financial market is out of step with the reality and needs of Generation Z. “It doesn’t make sense for this generation not only not to have financial education, but the fact that they are only considered adults and can handle money, enter the banks, with 18 years, and the reality of the country is not that.”
The Z1 is a digital wallet for minors and provides a “credit”, or prepaid card, from the Mastercard brand: it works and is accepted as a credit card, but has the limit of cash in the account as if it were one of debt. “Obviously, we wouldn’t think about making a product like this [like a traditional credit card], for a teenager to get into debt. That would be irresponsible,” explains Sophie.
Originally, Z1 charged a monthly fee of BRL 10 from active accounts, that is, if the customer did not move their money in a given month, the monthly fee was exempt. In late November, just before announcing a $10 million (~BRL 55 million) series A round led by the Kaszek fund, Z1 abolished the monthly fee, making the product completely free.
The Z1’s differential, according to Sophie, is its communication. This can be seen on the website, in the app, and on social networks — the dialogue is established with the minor, not with the parents. For the executive, this approach is very different from that of a company that works on other fronts and sees Generation Z as a mere market opportunity.
Z1 does not accept customers over 18 years old, “to focus well on this audience and solve this problem for teenagers who cannot have a traditional bank account”, says Sophie, but to open an account is necessary the participation and monitoring of a legal guardian. As for minimum age, the executive says there is not. “Someone with three years [old] will be more difficult, of course, but we don’t have a minimum age.”
The competition is already big and growing. Traditional banks, such as Banco do Brasil and Bradesco (including its digital arm, Next), already have products aimed at minors. Fintechs and digital banks born in recent years also detected the trend, such as Inter and C6 Bank.
Sophie doesn’t give numbers about the Z1 operation, just saying that the fintech has grown an average of 200% a month since its launch in April 2020 and that it aims to reach 1 million customers by 2022. The focus now, according to her, is to grow the team of employees with full attention to the pillar of diversity. In the press release of the latest contribution, issued after the interview given to LABS, fintech stated that it intends to “increase the reach of the company’s product to millions of Generation Z customers, with plans to multiply its base tenfold in the next year.”
There is no doubt that there is an opportunity to be explored in Generation Z and minors who enter the consumer market at an even earlier age, as the research by Serasa/Opinion Box found. But what about the children, how are they? Is there an ideal age to introduce the subject to little ones?
Financialization of childhood?
Schroeder’s son, from Tindin, started getting “adjusted” when he was just 3 years old. “The fact is that even without knowing numbers, without knowing how to read, he knew very well what it was to buy a toy”, justifies the businessman.
On trips to the mall, the child got used to it: he always got a gift, then when Eduardo refused the treat, he got an “uproar” in exchange. “It was in the meantime that I ended up researching about financial education,” he says, and this led him to the dynamics of a weekly version of the allowance.
Three months later, the child was able to buy a toy with his own money. “What happened that day, and from that day forward, I usually say it was a transformation. He never stopped saving in order to achieve his own material goals,” he says.
For Maria Belintane, professor and Ph.D. in Education at Campinas Estate University (Unicamp), with research focused on the financial education of school-age children, “there is no age” to start talking to them about money.
Regarding the risk of precocity, of anticipating a subject that is often a source of anguish and is certainly complex for children who do not even know the numbers, Maria emphasizes that there must be balance: “We need to be concerned about bringing elements of humanity to the debate. And money also makes this humanization possible, because we observe that many children and teenagers become entrepreneurs, changing a specific reality depending on the way you talk, analyze and she realizes that these people need… That the world needs action.”
When asked about inspiring stories from Z1, Sophie remembers one she “loved”, from a teenager who worked at a gas station. “He said he helped to support the family, in the Northeast, and he said: ‘Man, you have no idea what you made my life easier. Before I had to go by bike, hours to the lottery, and now I’m able to do many hours of work, earn my salary, receive in my name.”
Z1 has around 60 employees, none of whom have training in pedagogy. According to Sophie, “this would be too rigid”. Instead, fintech considers the background of investors and engages with Generation Z influencers to speak to their audiences. “Everything we do is based on studies, empathy, but we don’t go into any subject like that, which is extremely pedagogical. Everything we say is a lot of day-to-day tips, financial education as in life, you know? Kind of using reality, the daily lives of teenagers, nothing extremely theoretical in that sense. It’s a much more behavioral approach on the subject.”
The posture is diametrically opposite to that of Tindin. Asked about the care the company takes when dealing with minors, Eduardo replies that “the first thing we did is to have a pedagogical team. Today, we have a teaching team. Our communication with children and young people doesn’t go out of my developer’s mind, from the ‘bank as a service’ mind, it goes out of the head of a pedagogue”. At the time of the interview, around 1/3 of Tindin employees were part of the teaching team.
The two fintechs find themselves in parental involvement. In both, the presence of the person in charge is mandatory and essential for the service to function.
In her doctoral research, conducted at the end of the 2010s, Maria found that although the values vary, practically all the children analyzed received money from their parents. And that the consumption pattern did not differ much between them, with spending concentrated on games and sweets in the school cafeteria. “Children have money in their hands, parents give them money. Now it’s only increased, and with the advent of electronic games, children have a lot more money,” she says.
(Translated by Tiago Alcantara)