Financial institutions (FIs) that offer financial education to consumers find it helps build confidence, Alexis Castorina, consumer education manager for Early WarningÂ®, said PYMNTS.
âThe more financial institutions can invest in education in general, the more they will build trust and deliver more value to their clients – and keep them as clients,â Castorina said.
Financial literacy has always been important, but during the pandemic it is even more so. Today, the focus is on improving underserved communities, getting people back into the financial system, promoting economic recovery from the pandemic, and creating better protections for consumers against fraud.
âLast year President Biden essentially made a proclamation on national financial capability,â Castorina said. “He called on the public and private sectors to really step up efforts to provide high quality financial education and to do so in a way that better understands and supports the unique needs of different communities.”
Raise awareness and overcome obstacles
Through financial education, consumers can take action to achieve their goals, make better decisions and avoid falling victim to abusive financial practices. An understanding of issues such as basic budgeting and how to build credit sets a good tone for the overall financial life of the consumer.
âAnytime you have that education and understand how the system works and positive behaviors, it can really have a significant effect on your positive results and what that looks like for your financial future,â Castorina said.
While there are benefits to education, there are also challenges to be overcome. On the one hand, while digital is convenient, some people learn best in person. On the other hand, there is no standard program.
Often the first step in overcoming these barriers is to create awareness of the importance of financial education. Many financial institutions partner with influencers to run a financial education campaign and then direct consumers to resources like online learning materials. Ideally, they ask consumers about their goals so that the financial institution can then determine the right place to start.
âIt really depends on where the consumer is in their journey, their level of knowledge of financial capabilities, and then what data the financial institution has in order to essentially set up a learning plan and advise what consumer on what precisely he is looking for, âCastorina said.
Reaffirm the role of consumer information source
FIs can also play a more active role in the education system. For example, ZelleÂ® has partnered with social impact firm EVERFI to create a program that teaches teens how digital banking works and how to protect identities online. Since the last school year, it has reached 66,000 students in schools in 47 states.
“There are things that financial institutions can do like that, which also puts their brand in the foreground to say, ‘Bank X is really serious about it, and here’s how we’re backing it to show that we are committed â” says Castorina.
While the financial institution has traditionally been at the center of a consumer’s financial life, this has changed with the rise of FinTech. Today, a consumer can have an account with a traditional FI, but also have accounts with different third-party applications that cover different segments of his life or the transactions he wants to make.
This proliferation of services and providers has made things even more difficult and confusing for consumers.
âSo what’s really important right now is that the financial institution reaffirm its role as a source for the consumer in a number of different areas of their financial life and really invest in financial education. , so that it can be the source of information a consumer turns to when they have questions about a new moment in their life, such as buying a home, âCastorina said.