Parents create app that teaches children how to save
A group of parents has developed a pocket money app to teach children how to handle contactless payments and acquire sensible money-management habits. Known as GoHenry, this banking app consists of an online account with parental controls and a pre-paid debit card for the child. Parents can monitor their child's spending patterns, deciding when, where and how the pre-paid card is used. They can also set a weekly spending limit.

According to research by Halifax, 81% of children in the UK receive pocket money. On average, a child gets £6.55 a week, the highest level for nine years, the bank says. But it seems the gender pay gap rears its ugly head at an early age, with boys getting 12% more pocket money than girls.



Although 79% of children save some of their pocket money, there are those who want all children to learn good money-management habits, as well as what to do in an increasingly cashless world. Both objectives led a group of parents in Hampshire to come up with goHenry.



Crowdfunding success

In June the business raised almost £4m on Crowdcube, the platform’s largest crowdfunded deal to date, with money coming from 2,300 investors, 1,300 of whom are goHenry customers. Parents pay £2.49 per month per child to use goHenry, following a free two-month trial.



“It’s the UK’s first digital banking solution for families that aims to make kids smarter at managing money,” CEO Alex Zivoder says. “We offer 8- to 18-year-olds a pre-paid Visa debit card and app with unique parental controls. It’s all designed to help young people learn good money habits, while giving parents peace of mind and an easy way to manage pocket money.”

Parents pay pocket money on to the goHenry card from their bank account. They can set spending limits and decide where and how the card can be used, for example whether it can be used for online purchases. They can also keep an eye on how their child is spending the cash.

Alex Zivoder, CEO of goHenry. Photograph: Andy Tyler Photography

Cashless society

As Zivoder observes, many children can’t buy things in an increasingly cashless society without borrowing a parent’s card. “And often parents have no oversight into this spending, while kids aren’t learning the value of money,” says Zivoder.



Unlike traditional bank accounts, goHenry was founded by parents and built from the ground up, he says. “We didn’t just take something for adults and brand it for kids; goHenry was designed specifically for young people and their parents.”



Children can earn more for completing tasks, while savings goals can be set for things they want to buy. “Money management is a vital life skill, and the more parents support their kids to know how to manage money, the better. Research suggests that children start forming money habits from the age of seven, whereas parents leave discussing saving until their kids are nine.”



Zivoder says the future of pocket money is digital. “In 2015, more than half of UK transactions were cashless.

“Today, one in 10 people use their smartphone to check their spending each day.”



Parental control

Mother-of-four, Angela Davies, lives with husband Neill in the Hampshire village of Sway. “My youngest is 14 and two have left home now, but we’ve used goHenry since 2012. Often I’d forget to get cash out for pocket money,” she admits. “My kids were too young for bank accounts – and the nearest branch is four miles away anyway.”



Davies says goHenry has provided a convenient way to make weekly pocket money payments from her bank account on to a goHenry debit card, while setting individual purchase and weekly spending limits. “My daughter can tag items of clothing – she loves Jack Wills – then she can see her pocket money building up until she can afford to buy them.



“I was also able to list tasks, so they could automatically earn more by doing household chores, such as washing the car. When your kids buy things you get a notification, too. It sounds more Big Brother than I mean it to,” she smiles.

However, while it is useful for parents to know how their child is spending their cash, is this level of parental monitoring and control is really necessary?

After all, children learn by making mistakes. “Our customers see it differently to controlling their kids,” says Zivoder. “The rules enable parents to feel confident handing over freedom and independence to their kids to manage money, allowing them to learn by doing it within a safe environment.”

Growth ambitions

Zivoder, a London-based father of two, has worked in e-commerce since 2006 when he launched Expedia in France. “I joined goHenry from lynda.com, an online learning platform sold to LinkedIn for $1.5bn in May 2015. My specialty is scaling consumer web businesses.”



He says the biggest challenge they have faced is creating the market. Because it’s a new product, parents weren’t necessarily searching for it on Google. However, more than 300,000 people now use goHenry, says Zivoder.



Niche focus



Warren Mead, banking partner at professional services firm KPMG, believes there’s plenty of room for new entrants in niche areas within the UK banking sector. “The strategy of some startups and small firms is to partner with large banks. Others are taking market share by targeting profitable niche areas, such as specialist lending and international payments. Many are growing quickly as a result. We’ve seen a wave of digital-only and mobile-only banking entrants, but they’re at an early stage, so it’s difficult to assess their success.”



Mead says a key challenge that startups and smaller firms face in the banking sector is winning customers, because of high levels of inertia. “Just 2% of banking customers switch current accounts each year, while 30% switch their car insurance,” he explains. “Significant investment is also required, usually, and you must have a genuinely appealing idea, of course. But it can be done, especially if a large organisation backs you.”

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