It’s been running in Australian primary schools for nearly 90 years, but consumer advocates say the Commonwealth Bank’s Dollarmites saving program is marketing masquerading as financial literacy. And they want it gone.
Corporate watchdog ASIC this week announced a review of primary school banking programs, following heavy criticism from consumer advocates of the scandal-plagued bank’s ‘youth saver’ program.
Earlier this month, leading consumer advocate Choice handed the “dodgy” Dollarmites program a ‘Shonky Award‘, an annual award for the “shonkiest products and companies taking advantage of Australian consumers”.
The consumer advocate accused Australia’s largest bank of “employing subversive sales tactics under the guise of education”.
“The Commonwealth Bank’s Dollarmite school marketing program mixes unchecked corporate greed with primary schools,” Choice said.
Other leading consumer rights advocates joined Choice in condemning the program.
“We can no longer trust banks to teach children about the financial system, instead we need to be teaching children to avoid the high costs and bad practices we keep seeing from the big banks,” Consumer Action chief executive Gerard Brody said.
Schools need assistance to deliver independent financial literacy programs, Financial Counselling Australia chief executive Fiona Guthrie said.
“If the Commonwealth Bank wanted to make a positive contribution to financial literacy they could sponsor genuinely brand-free education initiatives,” she said.
First established in 1931, the Dollarmites proved remarkably effective as a tool for attracting customers to the Commonwealth Bank, which boasts 1.6 million existing youth saver accounts with an estimated 120,000 new accounts opened each year.
“The Dollarmites scheme uses slick marketing to get at kids when they’re young and market products to them, turning them into customers for life,” Choice head of campaigns Sarah Agar said.
Research by Choice revealed that 46 per cent of Australians had opened their first account with the Commonwealth Bank, with 35 per cent retaining the account as an adult. The Dollarmites program is estimated to be worth $9.9 billion to the bank.
And this is why Commbank needs to get out of schools. The Dollarmites program is marketing dressed up as financial literacy. Does a very good job of catching and keeping customers for decades https://t.co/BMMGtk4bsk https://t.co/rFSFrBVlrf
— Erin Turner (@ErinLTurner) October 18, 2018
Earlier this year Commonwealth Bank staff were found to be fraudulently activating accounts for school children in order to earn bonuses and meet performance targets.
Swinburne University adjunct professor Steve Worthington, an expert in the marketing of financial services, questioned the ethics of the Dollarmites program.
Dr Worthington questioned whether the bank was offering school children a “service of real value”, or “just trying to capture them as customers”.
“What is the real value to a child in taking out an account? Are they rewarded or is it just habit forming? And what’s the benefit to the bank? I would suggest that the value to the bank far outweighs the benefit of the Dollarmites account to the child,” he said.
University of Wollongong behavioural economist Michal Strahilevitz had a different view, describing the program as “smart marketing” and “a clever way to attain brand loyalty”.
“Obviously signing someone up without their consent is always unethical, but otherwise, it’s not unethical to teach a child to save. To me, if I compare it to advertising selling high sugar breakfast foods and unhealthy foods in general, saving is a positive for the kids rather than a negative,” she said.
“I do think it’s smart marketing, as it means that parents are more likely to stay with the bank, and the kids are more likely to stick to the bank as well, but promoting savings for kids is not unethical. I would prefer they go after those who market unhealthy foods to kids, as those products do harm children.”