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How FinTech tools can help promote financial literacy among young people
Financial literacy is an indispensable skill for today’s young people, empowering them to make informed and effective decisions about their financial resources.
O advent of financial technology in particular, it has significantly transformed the financial education landscape, introducing innovative tools for learning and managing finances.
These technological tools streamline processessupporting the development of a more financially aware and empowered generation.
Generational perspectives
There is a hugely skewed adoption of FinTech towards younger demographics versus older ones.
For example, in the wealth space, the most significant global transfer of financial assets in human history will occur over the next two decades, as baby boomers transition to Generation Z and millennials.
Thus, many more young people will have wealth and need advisory services, which is expected to be accompanied by a significant shift from human advisors to digital advisors.
Currently, the most effective model for financial institutions in the wealth space is hybrid, which allows them to reach all demographics.
They must focus on providing the benefits of services powered by artificial intelligence, rather than just human advice, if they want to keep up with the demands of the market and young people. Otherwise, they are likely to see customers leaving.
Financial challenges and solutions often differ significantly between generations. While older generations may value traditional banking and in-person consultations, young people tend toward digital, fast access and peer-to-peer advice.
Ensuring solutions cater to both demographics involves understanding their unique needs and preferences – younger users may prefer mobile-first gamified experiences, while older users may prioritize security and simplicity.
Bridging this gap requires offering educational tools and resources that respect these differences, while promoting essential financial skills across generations.
FinTech companies design various applications and platforms to simulate economic scenarios, making learning interactive and engaging.
For example, virtual stock trading apps allow users to practice risk-free investing, while budgeting apps provide real-time information about spending and saving habits.
Other tools focus on demystifying complex financial concepts through user-friendly interfaces and simplified language, making it easier for young people to understand and apply these ideas to their financial journey.
While FinTech provides countless opportunities to improve financial literacy, challenges such as information overload and source reliability can be overwhelming.
Young people should be encouraged to critically evaluate the information and tools they use. Seeking guidance from trusted financial advisors or educational programs can provide a foundation for understanding, along with using FinTech tools for practical application.
Three steps to increase financial literacy
Engage with interactive learning tools: Utilize FinTech apps that offer gamified learning experiences, such as simulated trading platforms, budgeting apps, or financial planning tools. These interactive elements make learning about finance more engaging and less intimidating.
Consume financial content regularly: Read blogs, watch videos, or listen to podcasts that discuss financial topics. Many FinTech companies and financial advisors produce content tailored to young audiences, breaking down complex issues into digestible chunks.
Practice financial management: Apply the concepts you learn by managing a small budget, investing a smaller amount, or monitoring expenses through FinTech tools. Real-life application consolidates learning and increases confidence in managing finances.
Financial literacy is an essential skill in the modern world.
As FinTech continues to evolve, it will undoubtedly play a crucial role in training financially savvy future generations equipped to navigate the complexities of the digital financial landscape.
Nicholas Wright is head of institutional sales at Saxo Bank
Updated: June 19, 2024, 4am