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Digital Allowance: Could Kids' Phones Replace Piggy Banks?

by Keith Wagstaff /

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Like many kids, Kieran Mann and and Rohan Chopra get money for doing chores. These pint-sized entrepreneurs, however, don't want to get paid in cash — which is why they created their own mobile payment app called Beanstocks.

"Piggy banks are so last century," Mann, 9, told NBC News. He and Rohan, 10, developed the app with the help of Rohan's father, Vivek, who just happens to be a software engineer.

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While adorable, Beanstocks isn't the only money app for kids out there. Recently, Clever Kash made headlines in New Zealand by letting parents swipe money from their phones to an elephant-shaped piggy bank. The app started as a collaboration between ASB Bank and advertising firm Saatchi & Saatchi, although ASB hopes to make it available elsewhere in the world starting this spring.

It will have to compete with ERNIT, which started a Kickstarter campaign several weeks ago to fund an app that lets tech-savvy adults send bitcoins to their kids. This is on top of Venmo, PayPal and other services that aren't explicitly marketing themselves to parents, which are also competing with mobile apps from financial institutions such as Chase and Bank of America.

"Kids don't even know what cash is," James DeBello, CEO of Mitek, a company that makes mobile deposit technology, told NBC News. "It's totally outdated. Digital currency is what's relevant to the next generation."

That's not quite true ... yet. Last year, the Federal Reserve Bank of San Francisco published a study that found that in 2012 (which, granted, was four iPhones ago) cash was used in 40 percent of all transactions, more than credit or debit, which were used 17 percent and 25 percent of the time, respectively.

In fact, cash was used more often among young people (ages 18 to 24) than any other age group, most likely because cash is used for low-value transactions and college kids tend not to have the money to buy expensive things. Overall, cash use is trending down, but it hasn't completely died.

 Beanstocks creators Kieran Mann (left), Rohan Chopra (middle) and Bill Mann (right) at TechCrunch Disrupt’s Hackathon. Vivek Chopra

Child's play

Mann and Chopra aren't typical kids. Last month, they gave a demonstration at TechCrunch Disrupt’s Hackathon for their Beanstocks app.

It lets parents create a list of chores. Once the kids, say, take out the garbage, mom and dad can transfer money to their bank accounts. The children can then look at their account balance and spend the money online at parent-approved outlets like Toys "R" Us, iTunes or Amazon. (The young founders are big fans of LEGO sets and video games.)

For parents, the app eliminates the need to dig around for cash. It also helps kids keep track of how much money they have because, in Mann's words, it "updates, like, every millisecond." Beanstocks also helps kids visualize why they're getting paid in the first place.

"You feel like you're earning money, instead of just being given money," Rohan said.

  Beanstocks

Right now, the app isn't available to the public, but they hope to release it in December after testing it with a very discerning audience —their fifth-grade classmates in the Palo Alto area.

Even if Beanstocks can't raise the funds to become the next big Silicon Valley start-up, the app's creators have tapped into what appears to be a growing trend: young people turning away from cash.

The rise of mobile banking

"In 10 years, banking will look a lot different than it does today," Byl Cameron, digital practice lead at consulting firm Carlisle & Gallagher, told NBC News.

The change is already happening. In 2014, nearly 40 percent of U.S. adults with both a cellphone and banking account had tried mobile banking -- up from 33 percent the year before, according to a report from the Federal Reserve.

It's not clear how many kids under the age of 18 are using mobile banking apps right now. But a 2015 survey from Mitek and Zogby found that 54 percent of millennials had made a bank deposit with their mobile phones.

While baby boomers are "very much grounded in physical currency," Cameron said, their kids find mobile banking a natural fit. And the children of millennials? They might never need to write a check.

Right now, however, there aren't too many kid-friendly apps that give parents the ability to send money to their children.

While ASB customers in New Zealand can put money in their kid's electronic piggy bank — a high-tech version of the elephant given out by the bank since 1964 — without ever touching a coin or bill, options are limited in the United States. Union Bank is one of the few U.S. banks to offer an app specifically built for parents and their children, called Yuby.

  ASB Bank

Other banks might want to follow suit, Mitek's DeBello said. His company creates tech that allows users make deposits and access their bank accounts through their smartphone cameras.

Today's piggy bank owners are tomorrow's bank customers, he pointed out. With Venmo and other companies vying to handle young people's money, big financial institutions would be wise to reach kids early and offer them technology that doesn't seem outdated.

"They know if they don't disrupt themselves and innovate, they will find themselves out of business," DeBello said.

Perhaps one might hire the young Beanstocks founders. Both know the child-friendly programming language Scratch (Rohan also knows "a bit of Python") and are looking to work in the tech sector in the future — although banks might need to include some unconventional perks to lure them. Google, one of the boys pointed out, can offer office slides.

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