Fintech
How FinTech tools can help promote financial literacy among young people
Financial literacy is an indispensable skill for today’s youth, enabling them to make informed and effective decisions about their financial resources.
THE 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 simplify processessupporting the development of a more financially aware and empowered generation.
Generational perspectives
FinTech adoption is extremely skewed towards younger demographics versus older ones.
For example, in the realm of wealth, the most significant global transfer of financial assets in the history of humans will occur over the next two decades as baby boomers transition into Generation Z and millennials.
Therefore, many more young people will have wealth and need advisory services, which is expected to be accompanied by a significant shift from human to digital advisors.
Currently, the most effective model for financial institutions in the wealth sector is the hybrid model, which allows them to target all demographics.
If they want to keep up with the market and demands of young people, they need to focus on providing the benefits of AI-based services rather than just human advice. Otherwise, they are likely to see customers leave.
Financial challenges and solutions often differ significantly between generations. While older generations may appreciate traditional banking and personal advice, younger people lean towards digital, quick access and peer-to-peer advice.
Ensuring that solutions cater to both demographics involves understanding their specific needs and preferences: Younger users may prefer gamified and mobile-first experiences, while older users may prioritize security and simplicity.
Closing this gap requires offering educational tools and resources that respect these differences while promoting essential financial skills across generations.
FinTech companies design various apps and platforms to simulate economic scenarios, making learning interactive and engaging.
For example, virtual stock trading apps allow users to practice investing without risk, while budgeting apps provide real-time information on spending and saving habits.
Other tools focus on demystifying complex financial concepts through intuitive interfaces and simplified language, making it easier for young people to understand and apply these ideas in their financial journey.
While FinTech offers numerous 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 assistance from trusted financial advisors or educational programs can provide a basis for understanding, as well as using FinTech tools for practical applications.
Three steps to promote financial literacy
Interact with interactive learning tools: Use 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 cover 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 limited budget, investing a smaller amount, or tracking your spending using FinTech tools. Real-life application consolidates learning and builds 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 shaping financially savvy future generations capable of navigating the complexities of the digital financial landscape.
Nicholas Wright is head of institutional sales at Saxo Bank
Updated: June 19, 2024, 4:00 am