Financial education - as natural as breakfast

Money is the biggest stress factor worldwide, especially among young people.[1] A lack of education in particular has been identified as a major cause of the difficulties.[2] So it's good that in principle 9 out of 10 parents think it's important for their children to learn how to handle money[2] and explicitly want external support for this.[3] However, existing concepts such as games, (online) learning paths etc. are still relatively ineffective[4] and are hardly interlinked with smart solutions (so far predominantly: pedagogically insufficient, short-lived gadgets).

This is where the digital piggy bank comes in. Given the increasing digitization of almost everything, it is an integral part of financial education. The idea behind it: How can a holistic approach be created that facilitates learning about finance and money management - yes, on the fly, so to speak? This includes topics like budgeting, investing, savings goals, understanding different payment methods, and more.

Finances are a difficult subject

…? – many people experience it as a field of anxiety - many fail very concretely in it. Money is the biggest stressor in the world.[5]

Young people today tend to have to make financial decisions early in their lives. Financial services such as loans are also increasingly consumed by young people. Entry into adulthood is often accompanied by increasingly complex and risky financial decisions. In addition, new social manners are emerging in the context of money & savings due to digitalization, among other things. Unlike in Scandinavia, for example, where the societal shift toward digital money is already well advanced, it can be assumed in the Central European region that we will continue to have a parallel system of cash and digital money (book money and cryptocurrencies) within the next decade. Nevertheless, knowledge in the area of digital currency is becoming increasingly important - e.g., the European Central Bank is pursuing the strategy of developing the digital euro in the next few years.

Also, through the Green Deal[6] and many pending changes related to "Sustainable Finance"[7], new mechanisms - around the sustainable impact of investments - are coming into finance that every individual has to learn to deal with. At the government level, green bonds are an issue[8], and the EU Taxonomy Regulation[9] requires companies to make a significant contribution to at least one of six environmental goals without compromising another. Green loans are becoming an issue for retail investors and private individuals.[10]

These growing demands are matched by a lack of financial education, with corresponding effects: Younger generations have less financial knowledge and engage in riskier and less forward-looking behavior than other age groups.[11] 83% of young adults do not feel they have a firm grasp of major money issues and have only superficial knowledge.[12] One in four people who seek help from debt counseling services is under 30 years old.[13]

Insufficient education is often cited as the main reason for difficulties in dealing with money.[14] Sources of knowledge about finances are: Parents 83%, internet search engines 45%, bank 42%, friends 42%, media 40%, school 22%, comparison portals 20% and social networks 17%[15] - fluctuating sources whose quality is strongly dependent on the personal situation. Ergo: Financial education, especially of younger generations as early as possible, is indispensable.[16]

9 out of 10 parents also think it is important for their children to learn how to handle money.[17] They ask themselves two questions in particular:

1. How can I best teach financial education to my children?
2. How do I make digital money tangible for my children?

Market developments & trends in financial education

The financial education strategy of, for example, the Austrian Ministry of Finance (derived on the basis of a broad initiative at the EU level) aims to strengthen people's financial literacy and create greater awareness of money management, asset accumulation, sustainable or stable financial planning, and entry into the capital market.[18]

International and national studies[19] and initiatives[20] address the importance of financial education for children and young people. At the same time, these studies confirm that sufficient financial education at a young age is by no means standard and that this gap can often only be inadequately closed in adulthood as well.

One-third of parents explicitly want external support to teach children how to handle money. The most popular tools are board games and children's books; less popular are learning materials, courses, learning paths and online advice. Many parents find tutorials and apps interesting, but have hardly used them. Gamification[21] and lifeworld-based skill building in stages[22] have the greatest potential.

Many important elements for financial education exist - but their presence in everyday life is only limited. Here at the example of the current offers in Austria (excerpt):

The answer is that the old piggy bank was attractive and many of us still remember it well. But something new is needed to pick up the children of this time - multifunctional, partially digitally staged and linked to age-appropriate financial education.

Market share for smart piggy banks

Total available market: Based on AUT + GER[23] approx. 6 million children aged 3 to 10 plus potential new target users: in annually 0.9 million[24]. A linear extrapolation to the Eurozone (approx. 342 million[25]) results in approx. 22 million children aged 3 to 10 plus new annually: 3.3 million.

In addition, we estimate that the piggy bank market is divided into four categories:

1. classic - inexpensive
2. classic - high quality
3. smart - inexpensive
4. smart - high quality

The competition in the area of "smart piggy banks" is only just emerging and relies more on the use of cell phone apps, which in our opinion only make sense at the age of 10+, and/or offers partial solutions that are only suitable as short-lived gadgets because they do not pick up children in their living environment or accompany them. We are also critical of the fact that a little electronic integration is immediately considered "smart" and that concepts in bright colors and childlike design are not appealing to all ages, gamification without educational impact, and the fact that use is partly tied to banks.

Our answer to this: between less didactic money counters, the classic savings account and piggy bank, and short-lived gadgets partly tied to consumption incentives or banks, savee positions itself as an impact-oriented overall financial education offering with age- and purpose-appropriate feature depth and child-oriented, flexible education.

savee - the digital financial buddy for kids

We at savee powered by mosaik Projects manufacture hardware - from electronics and plastic (later also from wood) - and we develop mechatronic elements, link electronic components to a complete system, develop a stable internal construction and realize an outer shell from sustainable material. We develop digital processes, algorithms and software - for an embedded system and for a mobile app. We create an ecosystem of different elements - products, features and narratives. Technical-scientific competencies must also be able to optimally take into account the framework conditions on the part of the central user groups.

The focus is on a child-friendly, multimedia, avatar-supported user experience. Avatar Boxi guides the children through the user journeys using multimedia elements:

• auditory: i.e. via loudspeaker output
• visual: i.e. via image on screen
• haptic: i.e. via touch screen input and analog money insertion (both coins and bills)

Proof of concept done - Alpha prototype series almost ready:

1. Non-functional concept ('20)
2. Alpha prototype money recognition 1[26] ('21)
3. Alpha prototype teaser video ('21)
4. Alpha prototype money recognition 2[26] ('22-Q2/23)

In the future, we will bring the entire system to life as a holistic entity that can be experienced. In a first step, around the use case "physical cash deposit" - the holistic functional Alpha prototype. Later, also via connection to a bank account, greater feature depth and a separate parent app.

About the author

Tobias Schaller is founder and managing director of mosaik Projects and a results-oriented doer.

mosaik Projects is a management consultancy specialized in the financial services industry with a focus on business development, transformation and product development. In addition, we are currently developing savee, the digital financial buddy for kids.

Besides the day-to-day business, Tobias is passionate about supporting initiatives and companies that contribute to a sustainable society through their impact.?

His goal is to use his expertise to help others implement complex projects.

Sources / References:

1. Three Coins, Annual Report 2019, 2020
2. Austrian Bankers Association, survey on business knowledge, 2019
3. Austrian Bankers Association & Boston Consulting Group, Financial education for children more important than before after Corona pandemic, 2021
4. OeNB, National financial education strategy for Austria, 2021
5. Three Coins, 2019 annual report, 2020
6. EU Commission, The European Green Deal, COM(2019) 640 final.
7. EU Commission, Action Plan: Financing Sustainable Growth COM/2018/097 final.
8. OeBFA, Republic of Austria, Investor Information - October 2022, 2022.
9. EU Commission, Establishing a Framework to Facilitate Sustainable Investment, Regulation (EU) 2020/852.
10. EU Commission, Strategy for Financing a Sustainable Economy, SWD(2021) 180 final
11. ?Fessler et al, Financial Literacy in Austria - Focus on Millenials, 2020.
12. Austrian Bankers Association, Economic Literacy Survey, 2019.
13. Three Coins, Annual Report 2019, 2020
14. Austrian Bankers Association, Survey on economic knowledge, 2019
15. SCHUFA Holding AG, The "W2 Youth Financial Monitor," 2021
16. OeNB, National financial education strategy for Austria, 2021
17. Austrian Bankers Association, Parents play the main role in their children's financial education, 2020
18. OeNB, National Financial Education Strategy for Austria, 2021 https://www.oenb.at/Ueber-Uns/finanzbildung.html
19. Literature cited under Problem / GFLEC, S&P Global Financial Literacy Survey, 2014 / OECD, Recommendation on Financial Literacy, 2020 / OECD INFE, International Survey of Adult Financial Literacy
20. www.eurologisch.at (OeNB) / www.financiallifepark.at (ErsteGroup) / MoneyMatters (Bank Ausria) / monkee.rocks / Schotterbande (Three Coins) / etc.
21. Austrian Bankers Association & Boston Consulting Group, Financial education for children more important than before after Corona pandemic, 2021
22. Estl, Maximilian | Wagner, Stefan, Financial education under lifeworld-oriented didactic aspects. The Austrian National Bank as an extracurricular expert institution for financial education, GW-Unterricht 165 (1/2022), 23-29.
23. Eurostat & Statistics Austria, 2018 (DE and Eurozone: extrapolation based on AT statistics).
24. The potential market volume of the market was derived independently under assumptions due to the lack of available market data.
25. Eurostat
26. Patented money recognition system for coins and bills (insertion folded possible)