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ERNIT makes money tangible for children

by Megan Roelofs
Posted on June 24, 2019

How can a child truly understand the value of money when it is just a digital number in this cashless society? With the increasing disappearance of cash money, piggy banks are no longer as convenient to playfully learn the true value of money. Co-founder Søren Nielsen has taken up the challenge to find a proper, cashless alternative by creating the application ERNIT. ERNIT makes digital money tangible for children. It teaches children to earn, allocate and be in control of their own money. In conversation with Nielsen it quickly surfaces that this focus on children’s education is what makes ERNIT a unique enterprise.

Not only methods of payment are different in a cashless society, it also has direct consequences for children’s understanding of money. When Søren Nielsen took his now 6 year old daughter shopping, she thought of his credit card as the ‘magic card’ that could pay for everything without any effort. Nielsen explains that: “When I heard that, I knew that I had to do something about it. How do I get to understand her that a credit card is not just a magic card? The money on that card actually comes from work, it comes from being patient, it comes from saving.”

Nielsen’s worry resonated with two of his friends when they spent New Year’s Eve together: “We all thought about our kids and their money habits. We all remembered that we had piggy banks when we were kids. Putting money into it, pouring it out and counting it. That was how we learned about money. But as grownups having children, we couldn’t see our own kids having piggy banks anymore. In an increasingly cashless society, we couldn’t see how we would be able to teach our kids about the value of money.” With a new year full of promises on the doorstep, they decided to further research this issue.

“We are really trying to teach children the ability to delay gratification so that they understand that if they buy that Snickers today, they can’t get the football tomorrow.”

Marshmallows and money
Soon, they found out about the Marshmallow Test. In this scientific experiment, a child is offered the choice of eating one marshmallow right away or waiting for 15 minutes and get rewarded with an extra marshmallow. These children are tested on their ability to delay their gratification. If they wait longer, their reward gets doubled. This test proved to be a major source of inspiration as financial decision-making essentially revolves around delayed gratification as well: “Basically, we have created a digital version of the marshmallow test. We are really trying to teach children the ability to delay gratification so that they understand that if they buy that Snickers today, they can’t get the football tomorrow.”

It is this focus on education that is essential to ERNIT: “We make digital money tangible by connecting a gamified app with a real-time bank account. In that app, children can then set goals, like a football or a trip to Disneyland. They can also do different tasks at home like taking out the trash or doing the dishes. In general, it is a way for children to try to understand the concept of money. They can also do different tasks at home like taking out the trash or doing the dishes. In that way, they can earn their money. In general, it is a way for children to try to understand the concept of money.”

Teaching children
Truly teaching children the value of money is what ERNIT sets apart from competitors, according to Nielsen: “The way that competitors are tackling this issue is very much from a convenience perspective. In a cashless society, parents don’t have cash anymore. These services are giving parents the ability to give their children pocket money digitally. They enable children to also spend money with a pre-paid card. What we are doing is that we are not convenience-driven. We are more focusing on the learning aspect. What differentiates us from the others is that we are heavily involved on the gamification side. There’s behavioural science behind what we are doing. We are actually creating friction in the children’s understanding of money. Because if you make everything convenient, there is no learning. That is the philosophy of ERNIT.”

“Both TFI and ERNIT are focused on making people understand the concept of money, it is about getting better financial literacy skills.”

TFI Growth Track
ERNIT’s philosophy aligns with the mission of TFI: “Both TFI and ERNIT are focused on making people understand the concept of money, it is about getting better financial literacy skills. From that point of view it was kind of a no-brainer that this programme is tailor made for a concept as ours.” Another essential element that resonated with ERNIT is the close cooperation between corporates and fintechs: “When you mix those two entities together, magic happens. A smaller company is more agile, it does things quicker, you don’t see all the boundaries. Whereas a larger organization works slower and is more aware of the boundaries. These boundaries are important, especially within the financial sector, because we are working under heavy regulation and we are working with real money. So, from that point of view, I think it is always fantastic when corporates and startups work together in this financial space. To me, that is the essence of it.” This network of startups and corporations also allows for a unique network of introduction with corporate players: “We are looking at doing pilots with a corporate partner we met through this programme.” This new collaboration not only enables growth, it also opens up a huge play field for ERNIT: “When you bring a product to market with a corporation, you do a pilot and you can test this solution with real users.”

Last but not least, participation in the TFI Growth Track also generated science-based practical outcomes to the app itself. In cooperation with behavioural scientists, ERNIT is now creating a measurement tool that will assess to what extent the app makes a difference in children’s learning lives. This initiative links back to the marshmallow test, as they essentially want to measure the extent to which the app teaches children the ability to delay their gratification.

The future
This new measurement feature of the app is not the only ambition for the near future. Nielsen also aims to “be up and running in two more markets than we are today. In Denmark, we have real money in the system. Within a year, we should be active in three markets.” The long-term goal remains close to the focus on education: “I think the main task for us is to make digital money tangible and to reimagine the way that we talk about the value of money. In a year, I truly hope that we have come closer to a solution on how do we teach children the true value of money by making digital money tangible.”

Want to know more about ERNIT? Check our selected start-ups page or their LinkedIn, Facebook or Twitter!