How financial education can improve customer experience

Financial literacy remains a serious problem in the United States.

Consider these findings:

As a result, 37 states have taken steps to address financial literacy legislation in 2022. Traditional financial institutions are also taking on the challenge of providing financial education through traditional classroom lessons, workshops, and coaching. While these programs demonstrate impact, there is also concern that a growing lack of trust in financial institutions and a general wariness of sales pitches make it harder to reach younger generations with traditional education measures.

These realities present an opportunity for fintechs to champion financial education in a way that resonates with a new generation of customers. Fintechs are uniquely qualified to play a role in closing the financial literacy gap due to the range of products they offer and the different channels at their disposal for customer communications.

Without an understanding of basic financial concepts, people are not well equipped to make decisions related to financial management. People who are financially literate have the ability to make informed financial choices regarding saving, investing, borrowing, and more. The Economic Times reports that, for teens, in particular, it’s pivotal to teach the need and importance of money management. (It’s not too early to start considering Generation Alpha as well, as this demographic represents the next big opportunity to create financial literacy at an early age.) Parents can play a large role in ensuring teen financial literacy as well, so it’s important they have the understanding and tools as well.

Fintechs fulfill this role better than more traditional companies in the sector because they tend to serve mostly digital natives and because personalization and AI are baked into their DNA.

Customer loyalty can be boosted through secure and personalized conversational banking by sending financial tips and recommendations to users depending on their demographics, behavior, and lifestage.

The pandemic has fueled increased interest in digital banking, even among those who previously were regular branch customers. As a result, on average, one in three digitally active consumers uses two or more financial technology services.

Banks have traditionally understood the importance of personalization in terms of understanding where consumers are in their life stages, and therefore what products might be appropriate to them. It wouldn’t make much sense to target a person who is near retirement age with offers on how to reduce their student debt burden.

But thanks to technology, it’s never been easier to:

Here are some ways fintechs are helping to promote financial education to their customers.

There’s ample evidence pointing to the popularity of mobile apps, but just in case you like things quantified:

If you have something you want to communicate to your customers you’d better have a way to do it through a mobile app! Most fintechs are mobile-first technologies that were designed around app usage, rather than figuring out how to adapt existing services to a mobile environment. It is for this reason that many traditional financial institutions choose to partner with fintechs to digitize existing products, services, and operations.

There are a host of channels that fintechs are using to transmit financial knowledge to their users in ways that are seamless, secure, and engaging. The key is to make the information relevant to a user’s situation – for example, if the user is traveling, do they need to learn about foreign transaction fees?   

Some of the channels enabled by digitization include:

Fintechs and mobile-first companies understand that financial communications don’t have to be stodgy and rigid. A tone that is friendly, understandable, and light, especially when engaging through mobile channels, is likely to resonate with today’s digital savvy customers.

When communicating financial education to customers, it’s important to speak at the level of sophisticationof your audience regarding the market, your products, etc. Before sending educational messages through any channel, it’s essential to segment your customers so that the messages have context and are morerelevant to their needs.

To properly segment your customers, identify:

Having a unified, omnichannel database allows you to segment users to detect behaviors and patterns that can help you target communications. Understanding a customer in depth and knowing the details of their financial situation will give you insights into what content to share with them. Omnichannel solutions go even further and allow you to create educational chatbots, visualize unified data, understand each customer’s unique journey, predict behaviors, and have all the communication channels you need in one place.