From Piggy Banks to Digital Wallets: How Family Banking Is Reshaping Financial Habits

Family banking solutions enable banks to engage future generations while enhancing the financial literacy of young customers today.

• Discover why early financial habits are critical to a child’s lifelong money management.
• See how integrated family banking solutions keep parents in control while fostering independence.
• Learn the strategies banks use to secure both current and future generations of loyal customers.
• Explore how our project in the United Arab Emirates engages youth and supports parents with tailored digital solutions. 

Banking needs and habits are changing for families amid ever-increasing digitalization. For decades, piggy banks have been a popular educational tool to teach children about saving money. However, as cashless transactions become more widespread, the educational impact of a physical piggy bank is no longer as strong as it once was.

Nevertheless, the need for instilling healthy financial habits in early childhood remains just as pressing. A study by Cambridge University shows that most individuals establish their financial habits by the age of seven (1). During this critical period, children develop fundamental behaviors that will significantly shape their financial decision-making throughout their lives.

Goodbye, Piggy Banks: Hello to a Seamless Digital Future

What has changed is the way these habits are formed. The rise of mobile banking apps has enabled young people to manage their finances in a digital environment, gaining critical insights into money management from an early age. A growing percentage of children aged 8 to 12 already use mobile devices daily, making the shift from coins in a jar to digital wallets more relevant than ever. Instead of dropping spare change into a piggy bank, many parents are now transferring funds from their bank accounts —introducing their kids to the basics of digital money management at an earlier age.

Why Early Financial Habits Matter

In this age of technology, financial literacy has become an even more important topic for parents worldwide—yet it remains low in many regions. According to a Eurobarometer survey, nearly half of EU citizens do not fully understand basic financial concepts such as inflation, and only 18% demonstrate a high level of financial literacy (2). Only 47% of college students in the US feel financially prepared for the “real world,” while 90% of parents consider it primarily their responsibility to teach children about money (3). A study by the London Institute of Banking and Finance found that 82% of young people want to learn more about financial products—credit cards, loans, pensions, mortgages—as well as budgeting and debt management.(4)

Introducing Family Banking

In response, the banking sector has introduced a tailored approach: Family Banking. More than just a custodial account, this holistic approach unifies the needs of parents and children through shared dashboards, age-appropriate tools, and gamified learning experiences, all under one digital ecosystem. In doing so, it fosters continuous engagement rather than one-off transactions.

Integrating family banking into the broader business strategy enables banks to position themselves as trusted partners in their customers’ financial journeys. By shifting from traditional product-focused approaches to an ongoing “engagement banking” model, banks can deliver win-win value to families—empowering children to learn and transact responsibly while strengthening the bank’s digital relationship with parents. This next evolution of shared or role-based digital banking experiences places the entire family at the center, rather than focusing solely on individual customers.

Understanding Families’ Needs and Expectations

To become the preferred family bank for customers, financial institutions need to carefully analyze the needs of parents and children, market demographics, and the competitive landscape. A key strategy is to build an application with features specifically tailored to children and families—improving financial literacy and enhancing overall user experience. Family banking offers financial institutions a chance to deepen their engagement by creating tailored solutions that meet both parental oversight needs and youth financial empowerment.

Children under 18 make up one of the largest unbanked populations worldwide, presenting immense growth potential for banks. Institutions looking to serve this segment often focus on:

• User Experience by Age Group: Kids and teenagers require different solutions than adults, often emphasizing engagement, gamification, and hands-on learning.
• Parental Oversight: Parents value the ability to guide and monitor their children’s spending and saving habits.
• Long-Term Relationship Building: Capturing new customers early can lead to lasting loyalty, spanning multiple life stages.

Reflecting on the “engagement banking” approach, many banks now see family banking as a shared experience. Instead of designing a single-user app, they develop role-based capabilities for both children (e.g., their own secure login and debit card) and parents (who control settings, monitor spending, and guide financial learning).

Potential Impact of Family Banking

By aligning family banking strategies with long-term customer retention goals, banks can ensure sustained growth and loyalty across multiple generations. As younger generations grow into adulthood, they become an increasingly important customer base. By offering dedicated family banking solutions, banks can:

• Strengthen Proactive Retention and Loyalty: Research shows that families often make up 20% or more of a bank’s retail customer base (5). By serving them better now, banks strengthen retention and ensure higher lifetime value.
• Differentiate Themselves in a Crowded Market: Providing a holistic family banking experience is still relatively novel, making it an excellent way to stand out among competitors.
• Attract Gen Z Customers Early: The best way to win over future customers is to engage them early. Some financial institutions even fund family banking programs through marketing budgets, viewing it as a strategic pipeline to “graduate” young users into full adult banking relationships.

Moreover, direct product revenue—such as interchange or interest on custodial accounts—is often a secondary consideration; banks instead focus on ongoing customer engagement and building lifelong trust. These benefits align well with a broader shift in the industry, moving away from purely transactional interactions to continuous, personalized digital experiences.

Ongoing Project Spotlight: Family Banking in the United Arab Emirates

We are currently partnering with a leading bank in the UAE to help them become the go-to family bank—an initiative still in progress. The UAE market holds considerable potential for innovation and growth, with approximately 1.5 million people aged 8 to 18 as future customers and most children owning their first mobile device by the age of seven (6).

Differentiation Strategies We Are Implementing

1. Segmenting Young People by Age
   • Tweens (8–12): Typically use tablets, so our design is tablet-friendly and includes stronger parental controls.
   • Pre-teens (13–15): More independent with budgeting, so we provide features that balance guidance with autonomy.
   • Teens (16–18): On the verge of opening their own accounts, so we simulate real-world financial scenarios.
2. Using a Single App with Different UX/UI for Kids and Parents
   We maintain one unified app with separate login credentials and interfaces, creating a seamless, cost-effective experience. This setup simplifies the transition to a full adult account when a user turns 18.
3. Implementing a Smooth Onboarding Process
   The parent sets up the account and generates a QR code; the child scans it to skip most data entry. This process reduces errors and familiarizes children with digital banking.
4. Ensuring an Easy Transition to Personal Banking
   Upon turning 18, users move directly into a full-featured personal account with minimal hassle—no extensive paperwork or branch visits required.
5. Creating a Marketplace for Kids
   A built-in marketplace enables children to make controlled purchases, teaching responsible spending under parental supervision.
6. Offering Customized Cards
   Children can design their debit or prepaid cards—choosing colors and patterns or adding artwork. This fosters ownership and makes banking more engaging.
7. Providing a Savings Account with an Interest Rate
   We encourage saving by offering an interest-bearing account for kids, appealing to parents who want to instill long-term financial habits early on.

Expected Outcomes and Current Progress

• Adoption Rate: Based on our extensive analysis of the bank’s customer base and competitor trends, we estimate that approximately 8 percent of newly acquired customers will adopt family banking features (7).
• Customer Retention: Our holistic approach strengthens loyalty, allowing a smooth migration from child to adult accounts.
• Ongoing Refinements: As the project evolves, we incorporate user feedback, track market trends, and follow local regulations to optimize the solution.

Although still in development, this initiative underscores how a well-designed family banking model can drive significant growth, customer satisfaction, and innovation within the UAE—and serve as a blueprint for other markets.

Conclusion

Family banking is more than just a trend—it reflects an evolving approach to how financial institutions engage with one of the largest unbanked segments: children and teenagers. By leveraging technology, segmenting younger users by age, and providing supportive tools for parents, banks can build strong, long-term customer relationships that extend well beyond a single product or service. As modern families continue to seek convenient, personalized digital solutions, the institutions that invest in family banking today are likely to shape the financial habits and loyalties of tomorrow’s adults.

FOOTNOTES:

1- Habit Formation and Learning in Young Children, Dr. David Whitebread and Dr. Sue Bingham, University of Cambridge, 2013

2- Eurobarometer. Flash Eurobarometer 525 (Monitoring the Level of Financial Literacy in the EU)

3- Bank of America, “BofA Launches New Solution to Help Parents Raise Financially Savvy Kids,” Press Release, 2024.

4- The London Institute of Banking and Finance. Young Persons’ Money Index, 2023.

5- Celent, Family Banking Comes of Age, September 2024

6- Gulf News, UAE, 2018.

7- Internal Estimate, Current Family Banking Project, 2025.