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Bankelele: From piggy banks and passbooks to digital payments for the youth.

 

Before the launch of the Hustler Fund, there was a less-heralded but significant money event.

This was a launch by Safaricom of a junior M-Pesa service that allows people of age 10 to 17 years old to transact under the supervision of their parents or guardians.

Junior bank accounts have been a feature at Kenyan banks for about 30 years. But the products have not seen much innovation since.

The accounts come with piggy banks for coins and notes,
and there are fun days with bouncy castles and an annual birthday card.

As a child, I had an account with the Kenya Post Office Savings Bank. I had a passbook, in which the bank recorded balances, deposits and withdrawals. When the school van went to get letters at the nearby post office, I would ask for permission and take a ride there from where I could withdraw the cash that I needed.

Parents could transfer funds into them using a standing order or mobile money, but there’s not much activity till a child turns 18. Piggy banks can have some appeal to young children.

In the USA, some branches have coin-counting machines, where young children can come and empty their piggy banks and the coins are sorted and counted and a deposit slip is generated, for them to deposit in their accounts.

But what financial services are there for teens such as those in the formative stages of visiting malls for lunch, and taking Ubers to sports events? They have had phones for years with their
email accounts, games, music, and movie selections, so why not payments as well?

Some banks offer prepaid debit cards for kids to travel and shop online, but they are costly and cumbersome to use. Time will tell if this is another case of banks being asleep when Safaricom
taps and grows a financial niche.

Financial literacy is much better if it is taught at a young age and it is good for Safaricom to start here. Hopefully, they can extend more lessons on savings, investment, insurance, and budgeting
to assist parents in the journey of guiding the next generation of money managers.

With the new Safaricom service, a parent can manage up to four junior accounts and set transaction limits for children to send money and buy goods and services like pizza lunches, taxi
rides and cinema tickets. But they cannot withdraw cash, pay for betting sites, or take on digital loans.

A few years ago, I pushed a company to create a financial service product that would empower young people.

The rationale was that there is no difference between sending a child with cash to buy bread or milk at the corner kiosk and them spending money on M-Pesa under the eye of their parents.

The product could also be extended to serve the elderly, illiterate or persons with some disabilities like blindness.

Kenya has the third highest level of financial inclusion in Africa but it can be even higher and financial services can serve many more purposes in more people's lives.    BY DAILY NATION  

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