New deposits aim to tap lucky money

As children count the lucky money they have received during the Spring Festival, banks are racing to claim a share of it.

Lenders have rolled out unique products featuring preferential rates, special perks and parent-child co-management accounts to tap family assets and cross-sell wealth management as well as insurance products, as shrinking net interest margins squeeze profits from traditional sources.

Bank of Beijing has launched a special deposit product for children's lucky money, offering interest rates of 1.6 percent and 1.75 percent on two-year and three-year maturities, respectively, both higher than its standard time deposit rates.

Guangxi Beibu Gulf Bank has also launched a savings product for children with a minimum deposit of just 50 yuan ($7.2). The annual interest rates for the one-year, two-year, and three-year terms are 1.4 percent, 1.65 percent, and 1.9 percent, respectively.

The latest push by commercial banks indicates that children's finance is becoming a new opportunity for banks to expand their customer base and optimize their liability structures.

By offering exclusive accounts and preferential rates, banks seek to cultivate customer loyalty from an early age and build financial services that span the entire lifecycle, said Xue Hongyan, a special researcher at Jiangsu Su Merchants Bank.

As demand for children's financial literacy continues to grow, banks are expected to further improve their product systems, transforming seasonal marketing campaigns into regular services and extending offerings to areas such as education fund planning and parent-child wealth management, Xue said.

Banks typically treat lucky money products as tools to attract new customers. By locking in such long-term, low-volatility savings, banks can engage in longer-term asset allocation to offset the slightly higher interest expenses, said Wang Peng, a researcher at the Beijing Academy of Social Sciences.

In addition to offering dedicated savings accounts or bank cards for minors, as well as exclusive time deposits and precious metals services, commercial banks are also providing family asset allocation solutions based on parent-child co-management.

Industrial and Commercial Bank of China has introduced a parent-child exclusive account that allows children to independently plan investments, while enabling parents to monitor account activity in real time and manage funds on their behalf.

China Merchants Bank has launched a one-stop parent-child investment and benefits service. One key feature allows parents to create independent sub-accounts for their children under their own bank cards, specifically for managing assets and products related to their children.

China Guangfa Bank has also introduced family financial services based on parent-child co-management. Parents can manage their children's accounts via their own mobile banking apps and purchase customized deposit products on their children's behalf.

Yuan Shuai, deputy head of the investment department at the China City Development Academy, said parents wish to manage their children's lucky money and other dedicated funds while also improving their children's financial literacy.

Parent-child accounts address both needs: they enable parents to oversee funds in their children's accounts while helping children understand the value of saving and financial management through features like growth plans and savings goals.

Analysts said commercial banks are facing continued pressure from narrowing net interest margins and shrinking profits in traditional corporate and retail businesses. Against this backdrop, retail banking has become an important pillar to stabilize earnings.

Wang Pengbo, an analyst at market consultancy Botong Analysys, said that expanding the retail customer base and strengthening full life-cycle management have become the core directions in the transformation efforts of banks.

Although children's accounts involve relatively small sums, they come with lower funding costs and greater stability. By linking family assets through parent-child accounts, banks can not only absorb lucky money deposits, but also potentially drive related businesses such as wealth management and insurance, thereby enhancing customer loyalty and long-term value, he said.

jiangxueqing@chinadaily.com.cn