PNC Financial Services Group Inc. is betting that its new Virtual Wallet Student account will help parents of college-age students get more involved with their children's spending and that it will turn the parents into PNC customers as well.
The Pittsburgh banking company introduced the original Virtual Wallet account in 2008 and in June it rolled out the student version, whose features include a way for customers to ask parents to reimburse them for purchases.
Mike Ley, a vice president in PNC's payments and e-business group, said that while the new account is aimed at students, it could encourage parents to open other types of accounts.
Virtual Wallet Student is "a very useful tool in the parent-student relationship," Ley said. "We of course hope the parents and students both have PNC accounts."
The original Virtual Wallet product, actually a combination of three accounts managed through a common interface, was created for young adults but does not have features explicitly designed to enhance a student's lifestyle.
Virtual Wallet Student is meant to fill that void, Ley said, and to get parents to sign up for PNC's grown-up accounts.
With the reimbursement feature, for example, parents that also have PNC accounts can use the banking company's online "send money" feature to fund their children's accounts electronically; parents with accounts at other financial companies might have to mail a check.
With the student account, every item in the online transaction history is a clickable link that can generate a digital receipt that students can e-mail to their parents to request a reimbursement.
Students can also add comments to explain the transaction, such as noting the purchase was for textbooks, sweatshirts, groceries or dorm furniture.
The feature has "helped that conversation between the student and parents," Ley said. Parents can also receive e-mail alerts to track deposits and spending in the student accounts.
The original Virtual Wallet was launched in July of last year. The online interface combines three PNC accounts, for checking and short- and long-term savings. There are some restrictions; customers do not receive paper statements, for example.
The accounts are managed through an online tool that Ley said is better at tracking spending than the check-register-style format commonly used with online banking.
One of Virtual Wallet's main features is a calendar that can help users track past activity and set future activity. The Virtual Wallet Student version also incorporates events from the academic calendars of many schools in PNC's region, Ley said. This allows students to know when their tuition is due and budget expenses for school breaks or the start of a new semester.
PNC's product is competing against other longtime providers of financial tools for young people, including Visa Inc.'s prepaid Buxx card, and newer entrants like SocialWise Inc.'s BillMyParents, which offers a way for parents to pay for online transactions initiated by teens if the parents approve.
Ley said the student version is also meant to help people graduate to the standard version of Virtual Wallet when they leave school; all they need to do is click a link.
"You don't have to change the account structure, anything like that. You just kind of graduate, if you will, from Virtual Wallet Student to Virtual Wallet," Ley said.
Bruce Cundiff, a director of payments research and consulting for Javelin Strategy and Research in Pleasanton, Calif., said PNC's approach to student spending is novel because it incorporates a long-term plan to mature along with the bank's customers.
"This is very much focused on the greater financial institution relationship, and I think it's fantastic for capturing that deposit growth from the college-age student," he said.
The primary drawback of PNC's product is that students can spend more money than their parents are willing to reimburse, Cundiff said. This is not a problem with some of the competing, prepaid products that allow parents to enforce a budget or intervene before certain transactions are finalized.
"Certainly a dollar in the hand is worth more than a dollar promised by mom and dad tomorrow," he said.
However, that is a more of a personal issue than a technological one, Cundiff said. Whether a student is concerned about this setup "totally depends on the relationship that a given student has with his or her parents," he said.
Moreover, PNC's strategy of making Virtual Wallet Student a financial destination means that no student will be evaluating it on the finer points of the reimbursement mechanism alone, Cundiff said. "This is aimed more at the holistic financial relationship."
The banking company's strategy of facilitating an easy transition from the undergraduate version of Virtual Wallet to the young-adult version is one of the account's most powerful features, Cundiff said.
"Right now maybe you're tethered to your parents' banking account virtually or realistically but that's going to change and they're going to graduate and get a job and" PNC can say, " 'We're here for you then, too.' "
