Need to know
- Sophisticated 'pocket money' apps, Kit and Spriggy, are marketing Commonwealth Bank and NAB to children
- Experts say that the apps raise privacy concerns around children's data
- The apps claim to teach financial capability, but may miss the mark
Should Australia's biggest banks be the ones teaching children how to manage their money? And can you trust them with your children's data?
Despite the demise of Dollarmites, banks are still pursuing impressionable children through sophisticated 'pocket money' apps that they say teach financial capability.
Spriggy and Commonwealth Bank's Kit app market themselves as innovative financial education platforms for children, but experts are concerned that the apps are designed to facilitate loyalty to big banks, and say there are privacy concerns about children's data.
What are pocket money apps?
The Spriggy and Kit apps offer parents and carers a way to send pocket money to children and incentivise chores. The platforms give children a Visa card – trackable by parents – that can be used in stores and online, and restricts retailers like tobacconists and pubs.
Kit uses gamified learning, allowing children to go on "Money Quests" with their "smart money sidekick". Children can also create avatars in the app to "express themselves in the Kit world".
Both Kit and Spriggy charge annual fees, and they don't allow users to earn interest on their accounts
Kit says the app is designed to be an engaging and educating experience for children that promotes real-world behaviours, like talking about money and setting up savings goals. But both Kit and Spriggy charge annual fees, and they don't allow users to earn interest on their accounts.
Kit's plans start at $30 a year and Spriggy's at $60.
Dr Carly Sawatzki, an educational researcher at Deakin University, says that while bank-branded programs are banned in schools in many states and territories, financial providers still try to promote products to children because it's profit generating. She warns there are still "third parties crawling through the window".
Brand loyalty to big banks
Spriggy spruiking NAB
While Spriggy might talk big about building children's financial capability, it has a vested interest in steering children in a certain direction. A lucrative agreement with NAB sees Spriggy get $100 for every customer 18 or over sent the bank's way, and an even more generous $160 for every child referred to the bank.
Spriggy says this commercial partnership helps "make the transition out of Spriggy into adult banking smoother for kids when the time is right". It says referral fees are outlined in its Financial Services Guide, and it will always disclose when "a member is offered a product that may result in a referral fee".
Spriggy gets $160 from NAB for each customer under 18 years of age it refers to the bank
NAB Ventures is an investor in Spriggy, having contributed to a $35 million fundraising round along with Grok Ventures and Perennial Value Management. In a media release, NAB described Spriggy as "shaping the future of money for the next generation of Australian families".
Sawatzki says that, for the bank, this is "a winning strategy in terms of customer acquisition".
She compares it to Commonwealth Bank's Dollarmites program, which she says "was established on this very idea that if you get a customer early in their life span, they're likely to establish loyalty to your brand and may be reluctant to change".
And despite bans on school-banking programs, Spriggy has found a way to access the school market. Its parent company, Rivva Pty Ltd, also owns Spriggy Schools, an online ordering platform for school canteens. Parents may be offered a $20 incentive if they sign their child up to Spriggy via the Spriggy Schools app.
Spriggy has found a way to access the school market
Spriggy says, "Spriggy Pocket Money is not promoted by, or within, schools." However, it confirms that Spriggy Schools users may receive promotions relating to their pocket money app, and parents can "learn more about Spriggy Pocket Money within the Spriggy Schools app".
When CHOICE used Spriggy Schools, we found a prominent ad on the app's landing page that promoted Spriggy Pocket money.
Sawatzki says this is a marketing strategy where "schools, teachers, parents, students, are considered to be… a captive and potentially lucrative audience".
Kit to 'integrate more closely with CommBank App'
Kit did not directly respond to CHOICE's question about whether its platform is a new version of Dollarmites. However, in a 2023 interview with Mediaweek, Kit's chief marketing officer referred to the "generational nudge" Kit would give former Dollarmites customers to think this new platform might be right for their own children.
Kit's website says it's looking to "explore opportunities to integrate more closely with the CommBank App in the future".
Experts say that data on savings goals and spending habits can be used to develop behavioural and personality profiles of users.
Children's data safety and privacy
Katharine Kemp, an associate professor at the University of New South Wales who researches data privacy and consumer protection, says she has concerns about Spriggy's privacy policy.
The app can collect images, phone contacts and address books, which can be shared under the broad purposes of conducting product and market research.
Another clause allows Spriggy to notify users of products that may interest them. Kemp says this gives Spriggy "scope to use this for nebulous analytical purposes and targeting".
Spriggy also uses Stripe for payment analytics. Spriggy says that Stripe may collect transactional data and identifying information. This data can be used to build profiles of consumers.
Kit is admitting to third-party data collection but hiding it in the fine print
Kit's privacy policy includes a clause about using "improvements in technology" to get an "integrated view of users". Kemp says that Kit is admitting to third-party data collection but hiding it in the fine print.
"That goes to just how trustworthy these entities seem based on their privacy policy alone," Kemp says.
Another piece of data collected by Kit is the phone's location information. Location data can be particularly useful for profiling and behavioural targeting. Kit says the location data helps block sign-ups and logins from sanctioned countries.
Kit also collects children's information to create in-app "stickers" using generative artificial intelligence based on prompts from children.
Kemp warns that children might inadvertently share sensitive personal information, unaware that this information is being collected.
Both Kit and Spriggy's privacy policies can be changed at any time, and users have to monitor the policy themselves on their websites or apps. Neither app promises that amendments to their privacy policies won't reduce privacy protections.
The privacy policies aren't sufficient for parents to easily work out the risks of using these apps
"People might be surprised about just what a detailed picture can be formed from the use of an app like this," says Kemp.
Data on savings goals and spending habits can be aggregated to develop behavioural and personality profiles of users, and Kemp says the privacy policies aren't sufficient for parents to easily work out the risks of using these apps.
Last year's federal government review of the Privacy Act recommended the development of a Children's Privacy Code. Kemp says that apps like Kit and Spriggy highlight the need for enhanced privacy protections for children.
Parents' experiences
A happy customer: "It gives [my children] independence"
Sydney mum Caroline Hamilton says she's had a great experience with Kit.
"It gives [my children] independence, and it saves the whole hassle of me giving them cash and them having to bring back coins."
Caroline's son, nine, and two daughters, 13 and 14 earn money that is deposited in their Kit accounts, which they can use to buy food or items from the school shop. The family only uses Kit for transactions, and not for its financial education program.
Caroline likes having oversight over her children's spending
Caroline likes having oversight over her children's spending. When one of her daughters was "spending quite a significant amount" at a cosmetics store, she was able to "call her straight away".
Because her children already have accounts with Commonwealth Bank – including some set up through Dollarmites – she's resigned about her children's data. "CommBank already has their data," says Caroline.
Not impressed: The costs outweigh the benefits
David Stössel, who uses Spriggy with his eight-year-old daughter, says it has not helped with her financial capability and that the costs outweigh the benefits.
"I'll just open a bank account for her and just get a bank card because the fees and charges on that will be significantly cheaper."
He feels "a little bit locked in" because he cannot easily get money out of Spriggy once it has been transferred in.
I'll just open a bank account for her and just get a bank card because the fees and charges on that will be significantly cheaper
David, Spriggy customer
"I can put it into what's called a parent wallet, but it still sits within the Spriggy architecture. You can't actually transfer money out of Spriggy into another adult bank account.
Spriggy says this is because of "an added layer of security and protection for their funds" and they have a support team "to facilitate these transactions seven days a week".
David says that apart from the option to have a superhero print on the card, Spriggy doesn't have much more functionality than a bank account.
Building financial capability?
Spriggy's homepage touts itself as "Australia's #1 Pocket Money app that helps kids learn about money", while Kit bills itself as a "smart money sidekick" that builds children's financial capability.
But one part of financial capability these programs don't teach is how to earn interest. There is no capacity in Kit or Spriggy for account holders to earn interest on their savings.
Though there are claims from both that interest-earning capabilities may be on the way, in the meantime Spriggy acknowledges in its Product Disclosure Statement that it is earning interest on account holders' money.
There is no capacity in Kit or Spriggy for account holders to earn interest on their savings
Sawatzki says financial capability also involves understanding the terms and conditions of financial products, services and technologies, and understanding the security risks associated with sharing your financial data.
Kit says it builds financial capability through educational games that focus on scam awareness and setting saving goals.
Sawatzki counters that while some programs have innovative design features, they should be taken for what they are: "Enterprises dabbling in education, just like the bank programs were before they were banned".
Correction 4 April 2024: An earlier version of this article quoted Kit's chief marketing officer as saying the app "builds on the legacy of Dollarmites". This was mistakenly included as a direct quote.
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