Who was your very first bank account with?
If you answered, ‘the Commonwealth Bank’, you’re as dinky-di as drinking from a bubbler on a hot summer’s day.
The CBA’s School Banking Program, known as Dollarmites, is an institution that has been around for over 80 years, and it’s currently in more than 2,500 primary schools across the country.
Yet what you probably didn’t realise is just how cutthroat it is for the bank to get into your classroom.
Here’s how they do it:
The CBA actually pays cash-strapped schools a $5 kickback for every kid they sign up, plus a 5 per cent commission on whatever the child deposits (up to $10), with ‘a minimum commission payment of $25 per quarter’.
Does that sound familiar?
Replace ‘schools’ with ‘financial advisors’ and you’ve got the exact recipe the CBA has used for years to rip millions of dollars from its customers.
This year a scatching Senate inquiry called for a royal commission into allegations of fraud, forgery and cover-ups in the bank’s financial planning arms. And, after unveiling yet another record $9.1 billion profit this week, the CBA is still refusing to back an industry compensation scheme for victims of dodgy financial planning advice.
Does that sound like the sort of institution that should be teaching kids about money?
Well, along with student bank accounts, the CBA has developed a huge syllabus of branded ‘financial education programs’ which teachers are encouraged to use in their classrooms.
And up until very recently, the only financial education in most schools was provided by the Commonwealth Bank.
Are you smelling bulldust right now?
It’s the financial equivalent of McDonald’s sponsoring home economics, right?
What are the chances that the CBA-prepared financial education program teaches students about the dangers of credit cards? Or that car loans in your 20s will rob you in your 30s and 40s? Or the importance of shopping around to get a better deal?
Cashing in on the Classroom
Yet maybe I’m being too hard on the bank.
Perhaps we should believe their fuzzy feel-good advertisements (featuring celebrities like Kerri-Anne Kennerley reminiscing about her school banking days). Maybe they really are just doing it for the kids.
Well, this week, CBA chief Ian Narev admitted (actually it was more ‘boasted’) to the Australian Financial Review that there’s much more to the Dollarmites program than cute cartoons and plastic pigs:
“We have been wondering how do we crack that opportunity for years” he said.
“We have got this extraordinary footprint at school and then it starts ebbing away historically as people have their first credit experience”.
Buying Your Kids for Five Bucks a Pop
The Dollarmites School Banking Program is the envy of every bank in Australia, which is why the CBA is so aggressive in its payments to schools. It’s rolled marketing gold that’s made billions of dollars in profits: a dirt-cheap way of acquiring millions of new customers at the very start of their lives for as little as five bucks a pop.
Schools greet them with open arms, and freely pass around their edu-marketing material — complete with their corporate-coloured cartoon characters who teach the kids about managing money (well, the bank’s way of managing money).
The CBA boasts that it currently has 273,000 students “enrolled in the program”. However, if you’ve been through the Dollarmites program you’ll know that your real lessons comes when you turn 18 — when the bank’s marketing database spits you out an offer for a credit card.
Learning the Alphabet
Narev went on to explain that the biggest growth opportunity for the bank is in winning over the younger generation of Aussies. Your kids. Specifically, the 53 per cent of customers aged 18 to 24 who somehow managed to escape the Dollarmites marketing machine.
The bank is planning on wooing them back with technology. That’s apparently what the kids want. Screw your pens chained to desks — the kids today want apps (which they’ll use to buy stuff they don’t have the money for).
The truth is that the CBA, along with the rest of the banks, has no choice but to get its tech game on.
Their profits are so impressive that they’ve effectively painted a giant $29-billion-dollar-a-year target on their backs, and Silicon Valley’s best and brightest are now aiming at it. This week we saw Google change its corporate name to Alphabet, in an effort to expand its focus to a range of new ventures, like disrupting the (global) financial services industry.
Apple and Facebook are also both rumoured to be working on taking a swipe at banking (and last week it was revealed that Facebook has a patent that helps identify your creditworthiness, based on your friends and interactions).
Narev has previously admitted that the internet giants are some of banking’s biggest threats, and he’s dead right. They have zero acquisition costs, and massive amounts of (user-generated) data about you — and your kids.
Teaching Our Kids Healthy Skepticism
So with our kids being targeted like never before, how about we teach them the lesson of healthy skepticism? And there’s no better place to be skeptical than when it comes to banking.
In fact, savvy teachers could add a bonus lesson to their Dollarmites education materials — and they don’t even have to drop the CBA branding. All they’d need to do is grab a CBA credit card statement with an average $4,400 balance. They can explain to the kids that if they only make the minimum repayments it will take 31 years to pay off, and cost $14,900 in interest!
Kids aren’t dumb: armed with the example above, they’ll soon see that this is the real reason the bank is spending millions of dollars to weasel into their classrooms.
The CBA clearly sees the potential of young people — it’s about time we did too.
Tread Your Own Path!