Commonwealth Bank has announced the demise of Dollarmites, ending the iconic and controversial school outreach program responsible for introducing millions of young Australians to the banking system.
The Dollarmites program has traditionally been the foundation of Commonwealth Bank’s financial education efforts, which have taught school children about banking and saving since 1931.
Under the Dollarmites scheme, primary-aged students and their parents are encouraged to open savings accounts through Commonwealth Bank, where they could deposit any loose change and pocket money not spent on tuckshop snacks.
Commonwealth Bank has long heralded the program as an educational tool, allowing young Australians and their families to learn the benefits of saving first-hand.
Despite this quaint billing, Dollarmites has turned countless young Australians into Commonwealth Bank customers, with many choosing to stick with the bank throughout their lives.
One analysis suggests the program is worth $10 billion to the bank due to the sheer scale of its customer acquisition efforts.
School banking programs like Dollarmites caught the attention of the Australian Securities and Investment Commission (ASIC), which last year found banks offering school outreach schemes were “unable to demonstrate that these programs in and of themselves improve savings behaviour”.
Young children represent “vulnerable consumers”, ASIC wrote, while noting that the banks “fail to effectively disclose that a strategic objective of these programs is customer acquisition”.
Commonwealth Bank defended Dollarmites, claiming the parents of Dollarmites savers valued the program.
The New South Wales government pledged to do the same on Sunday. On Monday, the state outlined its new financial literacy ‘challenge’ — a school outreach program developed in partnership with ASIC itself.
The state’s decision will make Dollarmites untenable past the end of the 2021 school year, Commonwealth Bank said.
“Because of the ASIC review and these government decisions, we are unable to continue providing programs in schools and we have had to make a difficult decision to close our School Banking program nationally,” said Angus Sullivan, Commonwealth Bank’s group executive of retail banking services.
With in-school programs to close, the bank said it will retool its educational material for 2022.
“We continue to believe that financial capability is a critical part of every Australian child’s education and we will continue to work with teachers and parents to support them in this endeavour, now and into the future, both in the home and the classroom, as appropriate,” Sullivan said.
The removal of Dollarmites from classrooms nationwide has been celebrated by consumer advocacy group CHOICE, who in 2018 labelled the scheme a winner of its ‘Shonky’ award.
“One of the most important lessons that children need to learn about banking is to shop around for the best deal,” CHOICE CEO Alan Kirkland said Monday.
“Letting the Commonwealth Bank sign up children as customers at a very young age is the very opposite of that.”
“With the end of Dollarmites, we can feel confident that students will get lessons in financial literacy instead of bank loyalty,” he added.