With the world moving online for all aspects of modern-day life due to the Covid-19 pandemic, there are concerns as to how best to keep children safe online, particularly when it comes to financial services.
David Avis is Squad Lead at AND Digital, a tech company focused on accelerating digital delivery. Here he shares his thoughts on how children can be kept safe in a digital financial world.
We hear and read a lot in current times about wellbeing. This usually means the feeling of safety and mental and physical fitness. One of the cornerstones of that is financial wellbeing – the ability to find your way around financial products, budget effectively, plan for the future, and even for the unexpected. But who teaches us those skills?
According to a study by the Money Advice Service, good financial and monetary habits need to be formed in children by the age of seven. The study also states that a combination of good habits at home combined with relevant teaching resources is required in order for children to develop good money management skills, which are essential in helping them become financially capable adults.
Schools clearly play a role here, usually teaching money in maths lessons alongside calculations involving decimals and recognition of coin and note value. But some question whether this is enough in the digital age.
It is interesting to look at the opportunities available to children to learn about money and its value, how to budget and how to save. Furthermore, it is necessary to consider when and how children will learn how to manage digital money as this is, of course, how most of us control our finances today and how our children will likely use their money in the future. Regrettably, the Money Advice Service has highlighted that 5.3 million children in the UK lack a meaningful financial education – a figure that they hope to reduce by 2 million over the next 10 years.
The Role of Fintech
With financial education a fundamental pillar of our human right to self-determination, innovation in fintech that is digitally inclusive, tech-enabled and data-savvy is essential to teaching our children about their finances.
Over the past 10 years, children’s accounts have moved from being savings oriented to being more holistic and in line with the way that adults work with money, including setting goals and earning money. Pocket money apps such as GoHenry have successfully formed a niche yet growing market. Parents have been able to introduce children as young as four to the concept of cashless spending and saving in a safe and controlled environment. Children can understand more about money management, update chores to show that pocket money has been earned, and receive real-time spend notifications.
Other apps like Nestlums promise to provide money training for young children through a character-driven, gamified-experience that sees them earn virtual currencies through the successful completion of real-life tasks set by their parents. Major banks are also playing their part. Earlier this year, NatWest launched Island Saver, a video game that weaves in important money-saving lessons throughout gameplay.
And, ostensibly, these apps and games work brilliantly, supporting the aspiration to provide digitally inclusive learning about finance to our children. However, the concept of children’s digital finance raises a number of concerns including data capture, consent and sharing, and how use of these products might impact a child’s financial future. These come together under the banner of one key ethical issue: the creation of a child’s indelible digital footprint.
Data Capture, Consent and Sharing
In 2018, the Children’s Commissioner for England said: “More data is collected about children growing up today than ever before…we do not know everything about how children’s data might be used – not just now, but also in the future, as children become adults.”
The Organisation for Economic Cooperation and Development released a report in 2017 exploring financial education and consumer protection issues and identified a key threat to be the risks to confidentiality in respect to data collected.
The Data Protection Act 2018 states that children of 13 years and over can consent to the use of their data with prior parental consent. The Information Commissioner’s Office has published a ‘Children’s Code’, which protects all under 18-year-olds and, while this is not law, courts would give consideration to their 15 published standards when making a ruling in the area. In particular, it is worth noting that Information Service Providers (ISPs) have to work to actively protect children, not just refrain from doing them actual harm in the administration of their services.
It is clear that, when it comes to financial services and data ethics, children are one of the most vulnerable customer types. There is a balancing act to be performed between ensuring children receive the appropriate financial education they need to become competent, financially literate adults, and protecting their privacy and reducing the extent of a digital footprint that might work to their disadvantage in the future.
Children’s money in the digital age is an area that requires stronger data policy than currently exists and careful ethical handling by the service providers involved.
Tips for Protecting a Child’s Digital Footprint:
- Read the terms and conditions of the digital financial products your child is using in order to fully understand what data will be collected and how it will be used and protected.
- Ensure that the digital financial products you and your children choose to use are reputable and committed to protecting the data they collect. Conscientious providers will be more likely to set and uphold strict data protection measures to ensure all personal information is kept private.
- Encourage children to create strong passwords for financial products online and to share these only with parents. Guessing passwords is one of the most common ways that hackers can access accounts and devices, so being vigilant about the password chosen can prevent data and information from falling into the wrong hands. Strong passwords should be 12 characters or more and include numbers, letters and symbols.
- Regularly review and understand privacy settings within any apps to ensure data sharing is limited and remains within what you are comfortable with sharing. This will stop third-party companies from gaining access to personal data, preventing possible data misuse further along the line.
- Children should be advised to reveal as little personal and financial information as possible on the internet, for example, when creating social media profiles. This will minimise possible identity fraud or information misuse, which may hamper creditworthiness when they become an adult.
There is a clear role for schools and parents in both teaching financial literacy and protecting the digital footprints of our young generation. However, technology has a role too in developing safe and secure products that educate and perform, while, at the same time, demonstrate transparency, sensitivity to the concerns of parents and young people, and commitment to protecting children’s data to the highest possible standards achievable.