"Estimates were too conservative"
At the beginning of September, Credit Suisse launched its new Viva Kids offering with the digital money box Digipigi. Five weeks after the launch, Florence Schnydrig Moser, Head of Products & Investment Services, draws her initial conclusions and talks about exceeded expectations, waiting times, false realities, and letters from clients.
Credit Suisse: Ms. Schnydrig, Credit Suisse began offering the Digipigi at the beginning of September. What are your initial conclusions?
Florence Schnydrig Moser: We're exceptionally pleased with the launch. Right from the start, Switzerland has been talking about the Digipigi and about how children can learn how to handle money. That was one of our main objectives.
Can you expand on that?
Viva Kids is primarily a financial education tool for children. Our pocket money study, which we published together with Pro Juventute in July, showed just how important this subject is for families in Switzerland. For 9 out of 10 Swiss parents, it is a key educational objective for children to learn how to handle money from an early stage. I'm encouraged by the fact that this has now sparked a debate.
But all the hype tends to be about the Digipigi rather than financial education. Don't you think that's a pity?
Obviously the Digipigi is the emotional part of the package – the bit people are talking about. But that's not really surprising, because at the end of the day it's the physical, tangible item that is such a hit. However, the Digipigi is merely the starting point of the package – what matters on a day-to-day basis are the other components, such as the two apps for children and parents, the Maestro card, the high interest rate on savings accounts, and the Viva Kids World knowledge and learning platform. That's where the educational effect comes into its own.
Obviously Credit Suisse isn't just interested in financial education – it's also pursuing clear financial goals. What are your ambitions in market terms?
The trend toward digital payments is changing our relationship with money. For parents, it's a challenge to teach children how to deal with money at a time when money is no longer merely a coin or a banknote. As a tool, the good old money box is no longer enough in today's world. Also, the traditional savings account no longer meets the aspirations and needs of an upcoming generation of digital natives. If we want to continue growing – and we do – this trend makes early, long-term client retention increasingly important.
Was the existing product portfolio not enough for long-term client retention?
In the past we covered a large part of the entire life cycle, from young people earning money for the first time to adults interested in home buying, pension provision, or investment, and seniors looking to carefully plan their retirement. As a universal bank, however, it's essential to provide an offering that starts not with young people but at an even earlier stage. In the past we had no attractive offering in this area. Digipigi is designed to help us catch up quickly and ensure client retention.
How many Digipigis have you sold so far?
As with other products, we don't give out any detailed figures.
Let me put the question a different way: According to a media report, the bank produces around 1,000 Digipigis per week. Is that true?
If you took that as a basis you wouldn't be far off. Five weeks after launch it became clear that production couldn't quite keep up with demand. Consequently, clients began to face a bit of a wait for their deliveries. This shows that our estimates were too conservative.
Did you not believe the Digipigi would be a success?
Of course we did. We spent two years working on developing the Digipigi, investing a great deal of time, money, and heart and soul in the project. We were convinced we were launching an exciting offer.
What do you say to children who now face a bit of a wait for their Digipigi?
So, we don't speak directly with the children but with their parents. We apologize for any inconvenience caused, and try to state as precisely as possible when their Digipigi will arrive. It's essential for us to manage expectations properly.
Is there a risk that the Digipigi will be completely sold out?
No, we don't think so. Stocks of turquoise and pink Digipigis are on the low side, because it is these colors that are in greatest demand. But we still have a plentiful supply of red and black ones. We've also begun the next production run already.
The Digipigi would actually be an ideal gift for godparents. Why do you restrict it to families?
The results of our pocket money study show that financial education occurs within the immediate family, in other words between parents and children. That's why we designed the product in such a way that at least one parent requires a Credit Suisse transaction account as well as active online and mobile banking access. They also need a Viva Kids Banking Package. It means parents and children get involved together, the parents retain control, for example through the balance history – and the children learn how to handle money.
A media report criticized the fact that with an interest rate of 5 percent children would be presented with a false reality. Can you understand this accusation, given the current interest rate environment?
The interest rate on the Viva Kids savings account isn't about showing children the current interest rate reality. Rather, our aim is to have an educational impact: The idea is that children should learn that by saving 100 Swiss francs a year they will receive an additional five francs – without doing anything. That way, they learn that saving is worthwhile. If the interest rate was 0.2 percent it wouldn't have the same impact.
So why do you limit the super interest rate to a balance of up to 1,000 Swiss francs?
For an obvious reason: Our pocket money study shows that children aged 12 in Switzerland have average savings of 844 francs. The limit is therefore based on actual circumstances. But clearly the limit also prevents misuse of the child's savings account.
There's also been criticism of the chores element. For many parents, it's wrong to provide financial rewards for doing everyday tasks.
As a mother myself, I share that view. My children don't receive rewards either – certainly not a financial one – for everyday jobs. But if they do any extra work I give them a bit of money in order to save up for something special. To address both these things, parents can also use the apps to assign chores that do not come with a financial reward. The app then serves as a list of tasks, or a kind of "to-do list" for children.
What happens next with the Digipigi?
Watch this space! I would definitely say we're on the right track; I've worked in banking for over 20 years, and have never received as many letters as I have with Digipigi. The highlight was the letter I received from a child who had drawn the Digipigi and written about how great the digital money box was. When you get feedback like that, it obviously motivates you to develop further ideas.