FINANCIAL INCLUSION FOR YOUTH CYFI International Summit Ana-Maria Pochi, Account Manager Romania MasterCard Europe June 28, 2016
Parents are always concerned about how their children spend money and often look for ways to monitor and control their spending Youth Financial Needs Parents want to instil in their children a sense of responsibility when it comes to financial management. Parents want their children to spend responsibly, and to learn that the bills must be prioritised. They are looking to monitor the spending of their children, whilst some voice concerns about not knowing of any tool to do this, there are some who are making use of prepaid cards to monitor and control their child s spending Youth Financial Solutions The goods and services parents think are likely to be bought by children range from low cost items such as mobile top ups and films/books/entertainment to clothing and restaurants. Therefore they are keen to look for a tool which can cap their children s spending. 2
Youth: Payment methods used by children Payment methods ever used 1 st 2 nd 3 rd 1 st 2 nd 3 rd Cash (53%) Preferred payment methods Debit card (30%) Electronic bank transfer (29%) Cash (32%) Debit card (14%) Electronic bank transfer (12%) How confident are the respondents when their children use debit/credit cards? 78% of children agreed 18+ have parents who are confident in them using a debit/credit card Base: All children aged 13+ (Total n=812) Q34. Payment methods ever used / Q35. Preferred payment method / Q36. Confidence with debit/credit cards 3
Who are the Millennials? Teens 15-19 years old Getting ready for jump to higher education Still financially dependent on parents Many experiencing work for first time and gaining own money Spending own money on recreational purchases and socializing with friends Utilize basic financial products, such as checking accounts and debit cards Students 20-24 years old Currently in school or recent graduates Increased financial independence Moving away from home Greater responsibility through sudden independence Need broader portfolio of financial products YoPros 25-29 years old College graduates Financially independent for the most part Look to broader portfolio of premium and affluent financial products
Why focus on Millennials? Millennials are the largest generation alive today, accounting for ¼ of the global population They will comprise 75% of the workforce by 2025 Their annual spending power exceeds $200 billion and they also influence another $500 billion in purchases Influence! Peer approval matters - 63% of Millennials buying decisions are made with friends Millennial spend will surpass Baby Boomer spend in 2017 74% of Millennials report influencing purchase decisions of peers and other generations They make their opinion heard 7 in 10 Millennials share feedback with companies after an experience Source: Sheridan Orr, retailcustomerexperience.com 2012 Edelman Insights 8095 Refreshed Luxury Society
Card usage behaviour is essential for developing effective approaches for Youth Youth card product customers purchasing patterns and behavior are oriented towards e-commerce They are very price-conscious and strongly driven by merchant discounts and offers discount offers need to be instant and frequent, no 12-24 month redemption cycles Opportunities for issuers are value propositions focused on sensible money management and budgeting Product Personalization is a key product feature and customer need for any type of Millennialoriented consumer product and, thus, should be reflected within any Millennial product offer Millennials tend to use their card products more for lifestyle needs, such as entertainment and eating out Millennials value transparency and simplicity in advertisements and in products marketed to them. They are put off by hidden fees and lengthy setup processes.
Empowering Millennials by understanding emotional, functional and technological needs Behavioral Drivers of Millennials Opportunity to Deliver Unique Proposition Emotional Fulfilment through Passions Exclusive offers, access, and shared Priceless experiences Functional Money Management: Control, Value Superior products, user experience and content Technology Mobile: Connectivity Social: Engagement Innovation, partnerships and marketing
Technology MasterCard is committed on delivering a multi-purpose ID/payment card for students, staff and families Technology MasterCard Processing Solution MasterPass (contactless, online + mobile) EMV chip (secure payment + campus non payment applications) InControl (alerts, messages) Display card (information + authentication) Functionalities Student ID Library borrowing Computer user access Campus Premises access Data storage on EMV chip Transit Payment On-campus Off-campus Cafeteria Vending Retail stores machines Photocopying Contactless terminals Loyalty E-commerce M-commerce ATM cash withdrawals Scholarships Disbursements Health system Parents Control Advanced functionality Insurance Information Remote Authentication Spend Behaviour Multi-currency
Content Best practices June 29, 2016 Page 9
Commonwealth Bank of Australia Commonwealth Bank launched their Debit MasterCard in October 2008 Key Objectives for the program from educational perspective was of raising awareness among Youth in terms of modern financial product and services: Drive new-to-bank deposits Attract new younger customers with high long term revenue potential Generate a positive Halo effect for the bank s brand by introduce an innovative product with a cutting edge acquisition campaign
Commonwealth Bank of Australia The Bank added value proposition through compelling music offer
Commonwealth Bank of Australia Results: 252,617 accounts in 13 week campaign period 24,000 consumers took up the music offer in the 8 week period of the initial campaign, above the 15,000 forecast 79% of new accounts were opened by consumers in the target segment 54% of new accounts were new-to-bank
Commonwealth Bank of Australia Current products offer
Commonwealth Bank of Australia Current products offer kids / teenagers June 29, 2016 Page 14
Youth only branches SuperFlash Banca Intesa (Italy) Concept Layout and Comunicatio n 12 Youth only branches, roll out throughout Italy in youth/student areas with special opening/ closing hrs. Free wifi, entertainment, on going DJ selected SuperFlash music mix. Increased use of mobile phone (eg SMS) and email to encourage contacts Furnishing aligned to the target Tangible products/services to increase the emotional experience Digital posters in youth oriented tone & language to stimulate interest Personal Interaction Offerings ranging from lite current account with prepaid card to student loans, bridging loans, mortgages & savings, Increased use of mobile phone (eg SMS) and email to encourage contacts Move & Pay, NFC pilot with customers using SuperFlash MC PayPass within SIM card for Samsung phones.