Expanding Communication Channels to Drive Financial Literacy03.11.2019
Financial literacy is on the decline. In fact, according to a study conducted by the University of Illinois, nearly one-third of emerging adults were found to be "financially precarious" due to poor financial literacy and lack of money management skills.
Unfortunately, many young adults overestimate their financial IQ. In fact, a 2012 study by the National Endowment for Financial Education and George Washington University found that nearly 70 percent of young adults believe they possess high financial literacy. That same study found that only eight percent actually had extensive financial knowledge.
These factors indicate an urgent need for educational programs to help younger members enter adulthood better equipped to manage their financial affairs. Experts know that this lack of knowledge can lead to long-term problems for these individuals.
In response, many financial institutions have created campaigns supporting improved financial literacy and are offering tools to help account holders better manage their finances. Not only is this better for consumers, these financial institutions are effectively creating a competitive advantage for themselves. If an account holder is educated on financial matters, they are more likely to use other financial services and be approved for loans.
Creating a financial literacy campaign to better support members, the communities you serve, and overall economy can be executed in a variety of ways. From webinars to programs designed to provide low-cost financial advising, tackling financial literacy can seem daunting, but it doesn’t have to be difficult. Credit unions can start small by making their digital channels intuitive. A digital banking platform that prioritizes the user experience (UX) is an important tool to leverage for member engagement and education. Too often, credit unions complicate their platforms by cramming new features and functionality without the member in mind. While new technology is critical, members may have difficulty adopting new functionality when the UX is suffering. With a poor UX, there is little benefit to bringing the new feature to market.
Delivering an outstanding UX requires credit unions to consider the user through every step of the process. This can be achieved by working with technology partners to develop and design digital banking products with a deep focus on the member journey. As a result, credit unions offer a stronger tool that supports members’ need for greater financial literacy. By providing an intuitive digital banking platform with a strong focus on UX, members gain a better understanding of their financial future. They are able to use the platform to its fullest potential, empowering them to make better financial decisions.
Chat functionality is a good example of extension of UX that is an interactive way for credit unions to support stronger financial literacy. For members, in-application messaging channels guarantees no hold music, which means quicker answers. When accessibility to financial guidance is not constrained by proximity to a branch, members receive answers to their questions faster and become more confident in their decision making. It also removes any fears of judgment that may prevent a member from looking for solutions at all. Counseling members is possible and can be easily achieved with natural language processing, chat bots, secure in-application email and SMS.
Supporting greater financial literacy and empowering young adults to make better financial decisions is not only good for the consumer, but it supports on overall healthier community. For credit unions, it can also foster stronger member loyalty and greater engagement. Furthermore, if a member is educated on financial matters, they are more likely to use other financial services.
Achieving this can be simple, and it starts with offering a convenient, intuitive digital banking platform that prioritizes a superior user experience across the board.
Abhishek Veeraghanta is vice president of marketing and product management for VSoft, a provider of payment, image, and core processing solutions for financial institutions.