There is a saying, long associated with religious cults, that the way to achieve long term growth is to “Catch them while they’re young”.
There is another cult, a secular one, that is increasingly adopting this practice.
This cult’s god is money. Their name? The Merchants of Debt.
From today’s Sunday Telegraph (p. 18 print edition, no online link):
Banking scheme an earner
STATE schools are pocketing thousands of dollars a year in commissions by signing children up to saving accounts.
Tuggerah Public School, Bonnett Bay, Illawong and Turramurra are some of the 3,416 schools which participate in the Commonwealth Bank School Banking program which earns schools $5 commission for every account opened and 5 per cent of the total weekly deposits.
NSW schools earned $500,000 through the scheme last year.
Now, consider this: why would a bank pay a higher rate (5%) in commissions to attract new domestic savings – which are not really “new” at all, since kids mostly get their money to “save” via their parents’ savings – than they are paying for term deposits, or, what it would cost them to borrow wholesale funds from overseas?
A Commonwealth Bank spokesman said the program gave schools an easy and fun way to help kids gain a basic understanding of money management skills.
So it’s an act of corporate generosity, is it? To “help kids” learn how to manage money?
Does the CBA help kids gain a basic understanding of what money is – that 97% of all “money” is debt? Of course not.
“Commission earned can be used for computers, books, sporting equipment or anything else the school may need,” he said.
If it really is corporate charity, then why not just give schools the money for those things – no strings or “schemes” attached?
Obviously, that would offer no direct benefit to the bank.
No, what this really is, is a long term, “catch ’em while they’re young” acquisition strategy.
A marketing campaign:
“It is completely voluntary and there is no recent external marketing of the program.”
I am sure that I am not the only one who perceives the subtle, defensive smokescreen wafting through the CBA spokesman’s words.
Something to hide, ‘eh?
Like, an ulterior motive?
Imagine how much easier (and cheaper) it would be in future, to
offer sell student loans, credit debt cards, personal loans, car loans, and mortgage loans to Australia’s future young adults, if you can find ways to capture their “customer” details while they are still kiddies. And “help” them establish a habit, a mind-set, a “customer relationship” with your bank, while they’re still young and impressionable.
Before some other Merchant of Debt gets to them first.