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Fintune

Financial education for children: Fluent financial skills are critical to young people becoming independent.

Introduction

Fintune is a Swiss-based company behind ‘FINNY’, a digital money box for children to learn the financial skills they need.

Through open banking, internet-connected money box and education mobile app, our product gamifies learning and helps children from the ages of 3-12 to understand the value of money, the importance of savings and budgeting.

The founding team of Fintune has previously led the development of the first digital money box ‘Digipigi’ for Credit Suisse in Switzerland. We loved the financial literacy purpose and impact of such a solution for the next generation, therefore we decided to establish Fintune and develop the fun learning companion for children with global ambition.

Fintune is raising investment to complete hardware and software development, and launch in Austria and Germany as first markets.

Problem

At Fintune, we believe that financial knowledge has to start early. But in our experience, schools – the primary source of education for most children, do not teach practical money lessons. Nearly ¾ of young people say they get most of their financial understanding from parents and other family members.

Key statistics:

  • Only 33% of adults worldwide are financially literate (World Bank survey).
  • 43% of European citizens are not saving anything privately for their retirement.
  • In the UK, 19.3m (71% of) households have less than £10k in savings.

Given a large proportion of adults fail to save, it is worrisome that their children are not getting the right advice, resulting in a perpetual cycle of bad money habits.

Solution

Fintune provides parents with a toolset to teach financial literacy in a digital world. We focus on education and fun learning experiences from a piggy-bank to a full bank account experience (3 – 12 years).

For children aged 3 – 5, the best lesson, to begin with, is this: you have to save and wait to buy something you want. Using FINNY, our digital piggy-bank, they will learn the concept of ‘saving’ and ‘spending’.

For children age 6-12, they can be given more autonomy in spending and in deciding when/what to spend on.

Our app and digital money box (FINNY) gamify financial education and assist parents in their children’s learning process. Using our app, parents can decide the right moment for their child to get a first bank account and to see the account balance and transactions. They can schedule pocket money and pay in cash or digital money. Parents can also set up the broader family community (e.g. with grandma/godparents), who all can support children’s saving progress towards saving goals.

FINNY money box

This digital money box is a fun companion for children. It has a large LCD screen with >20 facial and sound expressions. When coins are inserted, FINNY will respond and encourage them to save more. Expressions are also related to money events on the bank account or saving goals, combining the digital and physical worlds of money. FINNY also plays bedtime stories, serves as a night light, and alarm clock.

You can check out our customer journey movie from here.

FINNY KIDS app

The application is connected to FINNY money box and the children’s bank account. The app is designed to gamify the financial learning experience for children. Children can set their saving goals and wish list. As they progress with their savings, they’ll unlock games, and upgrades to the appearance of the avatar characters (FINNY). Children can collect badges and invite friends to see their progress on the leaderboard. The app allows full parental control and access sharing with designated individuals in the wider family community.

You can check out our app movie from here.

FINNY FAMILY app

This application gives parents an overview of their children’s financial learning progress. Through open banking, it can be integrated with over 2700 bank accounts in Germany and Austria. The parent can also pay pocket money directly in the app and get notifications on any transactions happening in the children’s bank account.

Market

Business model

We will initially focus on the B2C business, ensure that our model is tried and tested, and scale the user-base to a target of 1k active users. Once we have successfully delivered that side of the business, we believe our B2B proposition will become very attractive to banks.

B2C Model

Our B2C offering operates on a freemium model. The free app provides all the essential features to help children learn the basics of financial literacy. Our paid package at EUR 5 per month offers a more enriched experience to assist with their learning. It has the gamification and connection to their bank account to show the balance and transaction.

Our FINNY device will be priced at EUR 80.

B2B Model

On the B2B model, we will work with banks looking to tap into our user base or looking to offer FINNY to their customers. FINNY the digital money box will be partly subsidised by the bank and sold at a reduced price to customers. Customers will get the Hero app package for free when they open the account with the bank.

On top of a modest fee generated from the initial setup and training, we aim to charge the bank a subscription fee of EUR 10 per connected user.

The B2B model is open for retail banks, insurances and telecommunication companies with an interest in financial literacy and family segment.

We estimate that the market globally is worth EUR 100bn and EUR 3.4bn in the EU.

We plan to first roll out our service in Germany and Austria, and will continue to expand to the rest of the EU. The estimation is calculated based on 69% of the children having pocket money and is worth EUR 86.20 per user to us.

The current serviceable addressable market is worth EUR 3.4bn based purely on the annual subscription of our FINNY app. Once we can establish a strong community of user base, there can be opportunities for us to introduce our own children’s banking account, or to provide a platform for other educational products/services for children.

Traction

Founded in December 2018, Fintune has developed FINNY beta app, initially tested with 10 families (UX lab) and 30 private beta users. Public beta apps have been live in Germany and Austria since the end of October 2020. Our current user base (as of 26th November 2020) is 411 users.

FINNY money box: Developed and defined the features, industrial design and costing. We have started the hardware engineering process and we are planning to launch this by October 2021.

Partnerships

  • Software with Proxym Group, incl. Strategic investment and sales support agreement.
  • Hardware with FEO Elektronik GmbH (strategic investment partnership in evaluation).
  • Financial education: Threecoins, Mara Harvey and FinanzKidz.
  • Infrastructure: Microsoft Azure, “Microsoft for startups”, USD 25,000 credits.
  • Open Banking partnership: finleap connect, third-party provider (TPP) that establishes connectivity to Austrian and German banks, via PSD2 APIs.

Past performance

The information below has been sourced from the company management. Please note that past performance and future projections are not a guarantee or reliable indicator of future results.

Fintune closed 2019 with a total revenue of approximately EUR 16k and total expenses of approximately EUR 231k. During the first half of 2020, the company did not generate revenue and incurred total expenses of approximately EUR 61k.

The detailed financial projections are available in the documents section of this campaign.

Team

A dedicated, experienced team of 3 made this journey happen until now – time to ramp-up!

The founders met at Credit Suisse, where they initiated and successfully launched the first digital piggy-bank in Switzerland: “Digipigi”. The project was delivered as part of the overall Kids Banking strategy with Maestro card and accounts.

Ruth Mojentale (Co-Founder / CEO)

28 years experience in banking and a strong record in leadership and innovation management. 18 years experience in strategy, product management and pricing for retail banking segment/products. MA Business Economics/Executive Degree in Banking & Finance (HWV Zurich), EMBA (University St. Gallen). Previously: Zürcher Kantonalbank, Credit Suisse.

Andreas Kirchner (Co-Founder / CTO)

8 years of lead-engineering experience for mobile apps, security solutions, IoT solution in the finance industry. Hiring and training experience of engineers and establishing an offshore team in India. Track record of successfully delivering new projects. Specialised in Electrical Engineering (HTL Hollabrunn), M.S.C. in computer science (Vienna University of Technology), and M.A. in philosophy (University Vienna). Previously: Credit Suisse.

Naziya Sayed (Product Owner)

10 years quality assurance, agile delivery management and product owner experience of mobile apps in the finance industry. Specialised in exploring new trends and innovation.
Bachelor of Engineering in Information Technology, Certified Product Owner and Scrum Master. Previously: Cognizant/Credit Suisse, Infosys Pvt Ltd.

Advisory Board

Competition

There is a race for the new client segment of children age 7-12 years. Credit Suisse, GoHenry, Osper, Revolut and many other challenger banks/card providers have entered this market.

Fintune’s focus is on toddler (3-5) and kids (6-12) financial literacy.

Some companies are pure software-based. We believe those solutions are great for teenagers but not adequate for younger children, where they’ll need to be taught the difference between physical and digital money and guided to save and spend wisely.

Amongst the companies that provide a combination of software and hardware, most of them are dependent on the bank/payment scheme. We believe this limits the availability to consumers and is also a harder sell to banks.

Once we have developed a community of users, we intend to make FINNY available as a white-label solution, allowing B2B partners to integrate the application and mascot into their marketing strategy for families to acquire and retain their next generation of clients.

Key differentiator

Fintune differentiates in two areas: (1) Tangible Money Box and (2) Open Banking.

  1. Tangible money box: We enrich the mobile app with a tangible, smart, and fun money box in order to enrich the daily routine of families with fun learning experiences about money. We believe that children build their money habits while interacting in a secure, and encouraging environment. This is why FINNY is real, tangible and gamified beyond financial literacy – designed to support children in their daily life.
  2. Open Banking: Unlike proprietary solutions in the market, our goal is to offer every family the opportunity to link their bank account to FINNY. Currently, FINNY can get connected with 2700 different banks or bank accounts – designed to give parents the freedom of choice. We believe that under this approach, FINNY can be far more accessible and appealing to parents.

Fintune takes the best of traditional money boxes (tangible, playful learning) and enriches it with the promise of financial technology (transparency, inter-connectedness, convenience) to deliver financial literacy to the digitally native Generation Z.

Capital

Fintune has raised a total of EUR 457k (as of November 2020) through a combination of founder’s equity, convertible loans and debt instruments.

Debt Instruments

The company currently has EUR 250k in convertible loans and EUR 68k outstanding debts. The convertible loans, issued between October 2019 through August 2020, bear an interest of 2% per annum and may be converted at the earliest of (a) a maturity date of 30th June 2021, or (b) a qualified financing round of EUR 185k.

The outstanding debts of a total of EUR 68k, issued as unsecured loans between November 2019 and November 2020, bear no interest rate. Maturity events are structured as follows:

  • EUR 30k: after the next equity round.
  • EUR 38k: on 31st October 2021.

Use of funds

To date, the funds have been used to cover expenses related to third party services (~43%), salaries (~8%), rent (~3%), insurance (~4%), legal and technical setup (~22%), marketing (~10%) and depreciation (~8%). Our current cash reserve gives us a runway until December 2020.

The milestones that we are aiming to reach include:

  • Hardware: Develop A-samples of FINNY money box
  • Software: Launch paid subscription model
  • Product / market fit: Gain 1000 users

Depending on the amount that will be raised (between EUR 200k to EUR 500k respectively) from this campaign, we intend to allocated EUR 30k raised from this campaign to repay some of the debt obligations, while the rest of the funds will be allocated into personnel expenses (21.5% – 31.6%), general administration related to legal and technical setup (27% – 11.4%), marketing and sales (13% – 12%), software development (26% – 31%) and hardware development (12.5% – 15%).

Growth plans

  • 2021: Build full app, launch and marketing campaign in Germany & Austria
  • Generate first B2C revenues in 2021
  • Q1-Q2: Launch the Premium features
  • Q3-Q4: Produce the first 1000 Finny devices
  • 2022: Enter France, Belgium & Netherlands
  • 2023: Enter UK & Ireland
  • 2024: International expansion

We operate on both B2B and B2C business models. We expect that successful B2B partnerships would help us generate high awareness and consideration in new markets, which would hopefully cross-pollinate our B2C business. That said, B2B business typically has long decision cycles (12- 18 months). Our intention is to firstly focus on developing our B2C user base (to a target of 1k active users by Q2 2021) and then raise another round (approximately EUR 1m) for our growth phase. We will then aim to develop our B2B channel in parallel.

Exit

We believe the most likely exit will be through trade sales to

  • Financial institution/challenger banks looking to expand their offerings/customers service to include financial education to the future generation of customers; or
  • Toy/gaming companies looking to expand their portfolio of products.

Potential acquirers include:

  • Financial institutions (e.g. traditional banks)
  • Pure digital attacker banks (e.g. N26, Revolut)
  • Diversified media firms, telcos
  • Large Fintech
  • GAFAs (Google, Amazon, Facebook, Apple)
  • Large toy/gaming companies (e.g. Mattel)

Risk

Risk associated with liquidity and need for future financing

Our current cash reserves provide us with a very short runway, which means that there is a risk to our project delivery timeline if we do not have sufficient cash. This current fundraise will give us sufficient runway to develop the hardware A-samples and grow the user-base before we need to raise a larger institutional round. Discussion with investors is already underway, and we have secured lead investors for this round. However, if we are unable to secure additional funding in the future, this may have adverse effects on the growth of the business.

Risk associated with personnel

Our team is currently lacking someone with substantial experience in B2C marketing. Identifying and complementing our team skills with B2C marketing expertise is one of our core focus post-funding round.

Risk associated with time-to-market and competition

We are seeing a lot of pure software-based companies entering this market. Although we are confident that our approach has a competitive advantage, we are mindful of the need to launch sooner to secure the first-mover advantage.

Risk associated with credit

We have a significant amount of debt obligations which may need to be repaid in 2021. Although we plan to allocate some of the funds to repay some of the debts, a failure to resolve all our debt obligations may have an adverse impact on the company.

Technology risks

The business of the Company involves new technology, both hardware and software. The Company may develop new technologies ineffectively or fail to adapt to meet customer requirements. If the Company faces material delays in introducing new products, services or enhancements, it may be at a significant competitive disadvantage. However, our team has hands-on experience in delivering and running new and complex mobile applications that adhere to security and privacy standards of the banking industry.

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