Exclusive: ‘The magic formula’ – Tim Sheehan, Greenlight in “The Fintech Magazine”
Teaching kids money management is a challenge for families across the world. US-based Greenlight is using its unicorn status to reach more of them, as CEO and founder Tim Sheehan explains
How many times were you told as a kid that ‘money doesn’t grow on trees’? And how often, as an adult, did you wish it would?
Greenlight, a two-million-customer strong physical and digital prepaid debit card and personal financial management tool for kids of any age, set out in 2017 to gently explain the financial basics while at the same time creating future generations of more financially secure grown-ups.
It’s one of an increasing number of providers in this space, from America to Asia, Europe to Australia. In the UK there’s an excited crèche of them: Starling Bank launched its Kite debit card in September 2020, aimed specifically at six to 16-year-olds; Revolut got in on the act with its Junior prepaid and parentally-controlled account last year; and Gohenry, a comparatively old hand in the youth market, has now added a Teen account (13-18 year olds) to its portfolio.
There are plenty of others, such as Nimbl and RoosterMoney, all experiencing a growth spurt, but each with slightly different demographics and subscription models. With a monthly membership fee of £2.99 per child and 50p per additional load (in any given month) on the child’s card, Gohenry, for example, isn’t the cheapest option out there. But with more than one million members in the US and UK, it has a well-established presence, having originally been rolled out back in 2012.
Climbing strongly up the charts more recently, Atlanta-based Greenlight might disabuse kids of the notion that money grows on trees. But it can honestly encourage them to believe in unicorns – because, as of this year, it is one. Greenlight successfully raised $215million in its latest funding round in September, valuing the company at $1.2billion.
Like ’digital piggy banks’ elsewhere, Greenlight’s prepaid debit card and app for kids is designed to enable parents to manage their children’s spending – the app being able to allocate specific stores or categories where kids can spend their cash. Other features include receipt of real-time notifications for mum and dad when the card is used, the ability for parents to transfer money to their child’s card for allowance or incidental expenses; and being able to manage weekly or one-time rewards, such as for finishing chores.
Greenlight also protects the cardholder with a parent-controlled PIN number, ATM access controls and a feature automatically blocking wire transfers, money orders, lotteries and cashback from purchases.
Later this year, the company intends launching an investment account, aimed at helping little Warren Buffetts build wealth over the longer term. The card is issued by the Community Federal Savings Bank in the US, which also holds funds.
SETTING A NEW GOAL
Tim Sheehan, co-founder and CEO of Greenlight, describes the startup’s mission as ‘helping parents raise financially smart kids’ by shining a light on the world of money. That includes providing a card ‘with parental controls wrapped around it’.
“There’s also a built-in savings account with the ability to create and track savings, so that the kids can visually see the progress being made towards their goal.”
Given that most of the general population hasn’t received any financial management education by point of leaving school, Sheehan argues that, ultimately, it comes down to how much parents themselves know. “And even if they do know, they don’t have a lot of time to teach kids these key concepts,” he says.
They can, however, help set savings goals with Greenlight, and watch their digitally-savvy kids watch their money growing through the use of visual trackers, for example. The tools also give parents a practical means of teaching mathematics in a more entertaining way: adding up deposits and subtracting payments via a savings account ledger while, later on, their offspring can learn about the intricacies of compound interest as they watch their savings accumulate.
Sheehan’s approach is based on sound educational psychology. He acknowledges the work of the late Professor Seymour Papert, the South African-born mathematician, computer scientist and educator, who spent most of his career teaching and researching at the Massachusetts Institute of Technology (MIT) in the US.
Papert was a pioneer of artificial intelligence (AI) and of the constructionist movement in education, which advocates student-centred, discovery learning, where students use information they already know to acquire more knowledge. Lego Mindstorms (an initiative to develop programmable robots based on Lego building blocks) also came out of the MIT Media Lab, Sheehan observes. It’s an important point because: “If you let kids construct, or participate actively in their learning, they tend to learn much better,” he says.
“With Greenlight, we’ve tried to build the product in such a way that it’s integrated into the parents’ and kids’ lives, so that the learning process happens naturally.”
The lessons work – one 13-year-old customer even used it to kickstart his own book publishing business.
Beyond that, a major consideration for Greenlight has been to make the registration and onboarding process simple. “As a parent, you sign up. You’re done. We send you the cards, you have full access to the app, your kids can log in to the app, and they can each see their own stuff,” says Sheehan.
The new funding round will allow Greenlight to flex its digital muscles and educate kids across the full spectrum
of personal finance. That could mean, for example, designing apps for specific age groups, based on knowledge. “That’ll be another area we’ll look at,” he says.
Fundamentally, the question he’s addressing is: “What things should you understand, growing up, so that you learn healthy financial habits? That’s really the key because it’s those habits you’ll take with you (through life),” says Sheehan. “We’ve tried to focus on what’s unique about Greenlight. We want to make sure we own the user experience and, over time, add more and more value to the product.
As with any successful product, you need to consistently add content if you want people to continue buying it and/or subscribing to it. And that’s what you’ll see us doing.”