Latest challenger bank for kids emphasizes collaborative savings

Till Financial, a challenger bank for families that encourages a wider circle of loved ones to contribute to young users’ goals, launched to the public on Thursday.

The New York-based company joins a growing list of challenger banks, including Greenlight, gohenry, Goalsetter and Step. As with apps from Till's competitors, the checking and savings accounts will be managed jointly by parents and their kids.

Some traditional banks are making their own forays into dedicated accounts for kids and students, including JPMorgan Chase, which created its First Banking account in collaboration with Greenlight in October. This is all part of a growing trend of using technology to reach the next generation of customers. On Tuesday, Apple Card launched Apple Card Family, which lets parents set spending limits for their children and other controls.

Many traditional banks' offerings to children mirror the checking and savings accounts they offer adults. Services such as Till emphasize money management in an app and focus on fostering financial independence among children while still giving parents plenty of oversight.

Till is aimed at children ages 8 to 18. Parents can move money among their dependents as one-time transfers, as recurring “agreements” for weekly expenses such as allowance, or to compensate them for tasks they complete. Parents can also bolster children's savings by matching the child’s contributions by a set percentage or by paying interest on the balance. Either party can set customizable contract-like terms on their transactions, such as a repayment timeline.

Kids can set savings goals, track their progress and choose to get a virtual or physical debit card for spending. In the future, Till plans to offer merchant rewards.

“We are preparing better spenders,” said Taylor Burton, a co-founder of Till Financial and a PayPal veteran. “If every time they have a purchase that is typically made on their behalf coming through their card [instead], that’s where they are learning.”

The app is also meant to be collaborative. Relatives and loved ones — what the founders call “constellation” members — can pitch in to help children achieve savings goals by transferring money, matching contributions or paying interest. Similarly, Goalsetter lets relatives and friends gift money to young customers by way of personalized “GoalCards.”

Burton and Till’s co-founder and CEO, Tom Pincince, were inspired by their own experiences parenting kids in different phases of life. Pincince says he’s in the “regretful stage” where he rues the opportunities he missed to better prepare his adult children to manage their money in the modern world. Burton is in the “aspirational stage,” envisioning future money conversations with his two children younger than 18 months.

Till does not charge any subscription fees, as some other apps for kids do, but will make money in three ways: interchange revenue, merchant affiliate fees for its forthcoming rewards, and origination fees for referring customers to other products. As users age out of the target range, Till may recommend credit cards, college loans and other products for their next phase of life, with preferred interest rates or terms.

“We want to stick to the time when we are needed most, which is at the beginning of a young person’s journey,” Burton said. “So instead of trying to be this young person’s forever bank, we will introduce them to their first college loan or first credit product or an adult debit checking product.”

Petal, a credit card for customers with thin credit histories, is the first of such partners.

Till’s founders declined to say how many users they have, but the beta test numbered in the thousands. The $1.8 billion-asset Coastal Community Bank in Everett, Wash., holds the deposits.