Update from the Financial Capability Network

Financial Capability Network

 

This July, EVERFI’s Financial Capability Network had another intimate invite-only event that convened a diverse set of industry leaders to discuss strategies and best practices for improving the financial capability of people of all ages. The event took place in San Diego, CA, and featured keynotes by Gov. Frank Keating and the former CEO of the Financial Services Roundtable Steve Bartlett.

The event also had many productive and informative speaking panels featuring industry experts.  There were deep-dives into how banks approach CRA efforts, sharing of advice and best practices, as well as research opportunities around financial education. It’s hard to come up with they key takeaways – since there were so many meaningful discussions – but here is our list of the top insights:
  •  Relationships aren’t just the “biggest thing” that matters, they are the ONLY thing!  We spent time talking about relationships with customers, with community, and even with your CRA regulator.  Furthermore, there was definitely some bonding between attendees.  These industry-peer relationships – most of whom do not often get to share ideas – became immediately valuable.
  • Community = Business Growth.  For some reason, Community Development sometimes lives in its own corner of financial institutions, and is not seen as critical to the growth of the institution.  This does not make sense.  Community Development is part of that growth, and investments in community are investments in a financial institution’s future.
  • The power of the Network.  Many financial institutions are tackling difficult problems all on their own.  If we work together as an industry, it is obvious that we can accomplish so much more.  The whole is so much greater than the sum of the parts.
These events are a critical part of the Financial Capability Network – they really make the network come to life. If you would like to learn more about the Financial Capability Network, you can read more here: https://everfi.com/fcn

The Importance of Financial Digital Marketing

Technology has changed the way financial institutions interact with consumers. Over the years, in-store visits to banks have decreased from more than two dozen to roughly three visits per year.  This trend encourages financial institutions like yours to find innovative ways to stay in touch with the consumers who’ve embraced the digital age. This means it’s more important than ever for your financial institution to implement a digital marketing strategy.

How to Start the Digital Conversation

The digital age allows  your financial institutions to stay in constant communication with consumers. In order to create a strong presence, your financial institutions must use content to establish expertise with your targeted audience. Consumers want to receive insights, increase their knowledge on financial literacy, attend webinars; read blogs and case studies. If you work on getting started with one of these digital marketing techniques you will create trust between your financial institution and the consumer.

Digital marketing would also allow your financial institutions to set measurable goals and find ways to successfully achieve those goals. After getting buy in from executives and setting measurable goals it’s time to build the foundation and start executing your plans by:

  • Reaching Your Audience
    There are plenty of channels that your financial institution can use to reach your targeted audience. Some of those channels include email marketing, website marketing, mobile marketing, social media marketing, paid social media, and blogging. Choosing one or two to get started with will enable you to reach more of your consumers.
  • Driving Engagement with Financial Education
    Engaging with your audience through of financial education has a lot of benefits. Not only can your financial institution show off their expertise, but also your company can learn about their target audience and take them on a new journey with your financial institution. 
  • Tracking & Maintaining Engagement
    Once your financial institution has engaged with your targeted audience, it is important to track and maintain the results. By doing so, this allows your financial institution to pull insights, create data and find new ways how to interact with your new targeted audience.

To learn more about digital marketing  and best practices join us for our upcoming webinar on July 20th 1PM EST on The Ultimate Guide to Digital Marketing. If you can’t join us for the webinar check out the guidebooks that started it all, The Ultimate Guide to Financial Digital Marketing.

Modernizing the CRA Under Trump

CRA

96% of Community Reinvestment Act Officers have financial education as part of their current CRA strategy. Our Community Reinvestment and the Role of Financial Education Survey Results review CRA officers’ strategies for achieving CRA’s compliance and community relations objectives.

The Treasury Department has given financial institutions an indication of what may change for the Community Reinvestment Act (CRA) under the Trump administration. Considering firms have not seen this level of proposed change to the CRA in a while, it suggests the Treasury Department (“Department”) is serious.

In an extensive report, Secretary Mnuchin describes the status quo of banks, their problems, and possible solutions. Updating the CRA is one solution that can be a “response to the real risks that American consumers and the American economy face.” While this report is not official, meaning it doesn’t change any laws or guidance, it provides touch-points that banks should already be on top of: streamlining examinations, leveraging technology and impact, and how banks can prepare.

Streamlined Examinations

The Department plans to change how regulators examine banks. The long stretches of time between bank examinations constrains banks’ abilities to grow, i.e., mergers and branch openings. Additionally, the standards and processes used by different regulators are not fully aligned. They are also outdated. Interagency guidance about the CRA, published in 2016, recognizes that technology can be a factor in evaluating retail banking services, and indicates that the agencies will consider “new methods as technology evolves.”

As a result, the Department seeks “improvement in the regulatory review and rating assessment process, which would consider the frequency of examinations, the ability of institutions to remediate ratings, and the transparency of how the overall CRA assessment rating is determined.”

Technology and Impact

Examinations should better consider technology as banks increasingly “use technology, such as automated and online offerings, to extend services outside of physical branches,” according to the Department. Particularly, the Department would like to consider assessment areas in communities based on “the changing nature of technology.”

Measurement of impact will be more of a factor as well. This is a sign that impact should not just be relegated to particular zip codes, counties, or areas. It should cross state and local borders. “While all three prudential regulators are involved in checking CRA compliance, none are responsible for evaluating how well the CRA accomplishes its mission.” This is a problem, as guidance indicates that “assessments will depend on the impact of a particular activity on community needs and the benefits received by a community.” Indeed, firms can get additional CRA credit for showing impact. This is likely why the Treasury Department wants CRA investments to be “measured to improve their benefit to communities.” If firms are not measuring the impact of their community development efforts, they should be.

Next Steps

It is unclear how fast the Department will move, as it may wait for approval by the President. At least, the Department “will include soliciting input from individual consumer advocates and other stakeholders.” So while the CRA will generally stay the same for the time being, EY warns the banking industry that uncertainty is no excuse for inaction. It suggests that banks “harness and embrace technology to meaningfully reduce costs and risks and improve agility.” Better yet, banks that incorporate responsible technology into their CRA programs can also help bring fintech, and their products, to the masses.  

Preventing Elder Financial Abuse: Financial Institutions can help

As the baby boomer population quickly becomes the largest senior demographic in American history, it is increasingly difficult for them to keep keeping their hard-earned investments safe. One study says that over $36 billion – with a “b” – is lost each year by preying on seniors.  And there are certainly plenty of scams out there targeting the elderly: roofing scams, Medicare scams, tech support scams, and scams for reverse mortgages. Shockingly, allegedly half of the financial abuse targeting the elderly comes from within a senior’s own family. This type of preying on the elderly is known as “elder financial abuse,” and financial institutions are on the front lines to help make a dent in this growing problem.

Certainly financial institutions already deal with this problem, especially within the branch.  Sometimes a bank or credit union teller needs to expand their role and act as a social worker, family counselor, and banker all in one.  But this is a lot to ask of a front-line teller.  Furthermore, the regulatory landscape in this space is changing, and as awareness of senior scams increases, so will regulatory pressure on financial institutions.

Employees of financial institutions need help.

Furthermore, boomers and their caregivers also need help.  There are literally call centers out there that systematically target seniors on the phone to scam them.  If one person does not fall for the scam, the call center just hangs up and calls the next victim.  It is disgusting, but unfortunately works. They prey on the uninformed. That’s why education and awareness about common scams, and how to handle them, can help shut these call centers down.

Family members of the elderly also need help. They need to know how to navigate very tricky questions about who manages parents’ finances over time.  They need to know what to watch out for. And again: since half of the abuse happens within the family, families need to know what to do in those extremely embarrassing and difficult situations where the problem is not an external scammer, but inside the family itself.

While not the only strategy to help combat elder financial abuse, education and awareness is a big part of the solution. And financial institutions – as a pillar of the local community they serve – can be a trusted source of this education.  FIs need help in order to help.

As the baby boomers age, the problem of financial elder abuse is not going to go away. For banks and credit unions that want to protect their customers, the time to take active steps is now. For more information on how to create a program to prevent financial elder abuse, please request a demo.

Financial Elder Abuse

Keeping Baby Boomers Financially Secure

How and why financial institutions can help

As the baby boomer population quickly becomes the largest senior demographic in American history, there is a growing concern about keeping their hard-earned investments safe. According to a recent report, the U.S. senior community loses an astonishing $53 billion annually to both fraudulent and deceptive practices.[1] This type of preying on the elderly is known as “elder financial abuse,” and financial institutions are in the perfect position to help. First, let’s look at the three types of financial elder abuse:

  • Financial Exploitation
    This type of exploitation is legal but highly unethical, and consists of deceiving or convincing seniors to make poor financial decisions or give their money away.
  • Criminal Fraud
    This type of activity is clearly illegal, and includes identity theft and mail fraud.
  • Caregiver Abuse
    This refers to financial theft or deception by someone trusted—whether it be a family member, healthcare worker, or even a financial manager.

How banks and credit unions can help

As institutions that have built long-term relationships with seniors and their children, banks and credit unions are perfectly positioned to help stem the tide of financial elder abuse. But how to do so? Financial education is a big part of the solution. Both elders and their caregivers feel confident that the information they receive from their bank or credit union is both honest and understandable—but getting the information to them can be a challenge.

In the digital age, where some seniors may be housebound but accustomed to surfing the Web, while others might feel more comfortable visiting their local branch, financial education must be a two-pronged approach. The first prong includes providing digital programming that can be accessed by boomers and their children—anywhere, anytime. The second prong focuses on the branch level, and includes training employees and providing relevant print materials. As the baby boomers age, the problem of financial elder abuse is not going to go away.

[1] Study: The True Link Report on Elder Financial Abuse 2015 Executive Summary. (January, 2015). Retrieved January 20, 2017, from https://www.truelinkfinancial.com/news/true-link-releases-latest-elder-financial-abuse-findings-losses-discovered-to-be-much-worse-than-originally-thought

Financial Education Program Online

4 Elements of an Effective Financial Education Program

Young Adult at Computer

Recent studies have shown that young people are growing up without adequate financial education, and banks, credit unions, and employers have been stepping in to fill this gap. But as a corporation or financial institution, how can you be sure that the financial education program you choose is an effective one? Fortunately, the Consumer Financial Protection Bureau (CFPB) has laid out guidelines for what makes an effective financial education program.[1] Here’s what to look for:

  1. Content
    How strong is the content of the program, and what topics does the program cover? Ideally, a financial education program should cover a wide range of topics, including spending, saving, investing, credit, and money management. Also look for programs that speak to different life stages and employ age-appropriate methods and technologies.
  2. Utility
    Is the program easy to use—for both students and administrators? Is it available in other languages? Look for programs that can be accessed by multiple demographics and age groups, and on a range of devices, including computers, phones, and tablets.
  3. Quality
    Explore the quality of the program. How deep is the subject matter? Where are the facts coming from? And is it based on the most recent research in the field?
  4. Efficacy
    Perhaps most importantly, how do you know that the program is effective? A reputable financial education program should be able to demonstrate that students’ knowledge increases after taking the course. Look for programs that not only measure and document student progress, but also can show success after doing so in the past.

There are many financial education programs available in the marketplace, but not all of them are created equal. When you’re evaluating a new program, these four critical elements will ensure that you’re getting your money’s worth.

[1] Report from the Consumer Financial Protection Bureau: Youth Financial Education Curriculum Review. (October 2015). Retrieved January 27, 2017, from http://files.consumerfinance.gov/f/201509_cfpb_youth-financialeducation-curriculum-review.pdf

Financial Education in Elementary School

Financial Education for Younger Kids

As financial institutions and employers watch the twenty-something generation struggle with money matters, there has been much talk about the importance of financial education for young people. But how young should you start?

A recent report by the Consumer Financial Protection Bureau (CFPB) offers compelling reasons for starting financial literacy education for children as early as elementary school.[1] According to the report, childhood financial attitudes, habits, and norms begin to develop between ages 6-12. Teaching children heathy money habits at this age can have lasting effects, setting them up for a lifetime of financial success. In specific, CFPB recommends focusing on two primary areas in elementary school:

  1. Financial Habits and Norms
    We already know that children learn social and cultural behaviors at a young age, by observing the behaviors and attitudes of the people around them. According to the CFPB, financial behavior is no different. The report argues that “the values, standards, routine practices, and rules of thumb used to routinely navigate our day-to-day financial lives” can—and should—also be taught to young children. In practical terms, this means that children who are exposed to healthy financial habits at a young age tend to grow up to be adults who also have healthy financial habits.
  2. Financial Knowledge and Decision-Making Skills
    Beyond socialization, kids also have the ability to start learning concrete financial skills at a young age. The CFPB notes that “skillful money management, financial planning, goal setting, and financial research” are among the hands-on skills that must be taught in order for children to have a healthy financial foundation. For example, teaching elementary-aged kids about saving money, managing a basic budget, comparison shopping, and setting money goals are skills that will last a lifetime, and will give them the financial confidence and knowledge needed to grasp more complex financial topics at a later age.

The financial world that our children will inherit is an increasingly complex one. In an age of online shopping, digital payments, global trading, and sometimes deceptive lending, we need to set up our children for success—and this means teaching them solid financial habits and skills at a young age. To learn more about family financial capability and examine how it can help inform your consumer financial education solutions download our guide.

 

[1]Study from the Consumer Financial Protection Bureau: Building blocks to help youth achieve financial capability. (September 2016). Retrieved January 27, 2017, from https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/092016_cfpb_BuildingBlocksReport_ModelAndRecommendations_web.pdf

Join our webinar June 7th 1PM

Financial Education as a Digital Marketing Tool

Join our webinar June 7th 1PM

Join our webinar on June 7th 1PM EST to learn about how you can leverage financial education.

Four Reasons Why Financial Institutions Should be Paying Attention to Financial Education

Increasingly, financial institutions are leveraging digital financial education to market products and services to a highly targeted and responsive audience. In fact, a recent EverFi survey found that 89 percent of banks and credit unions are already using financial education as a part of their digital marketing strategy, while 45 percent are planning to increase their budget in this area. If you’re not investing in financial education as a digital marketing tool, here are four reasons why you should be:

  1. Consumers interested in financial education are hot leads
    Consumers who are seeking out financial education are already expressing interest in financial services—meaning they have “self-selected” as hot leads. By offering valuable, reliable information, banks and credit unions are positioning themselves as trusted sources of information, and are perfectly positioned to (very selectively) pitch relevant products and services.
  2. Financial education offers highly segmented audiences
    Offering digital financial education programs tailored to different topics and life stages allows banks and credit unions to segment this audience even further. For instance, a young Millennial learning about student loans might also be interested in an auto loan for their first car, while a mid-career earner researching retirement plans might be interested in learning about other investments.
  3. Going digital means accessing your audience anywhere, anytime
    Providing online financial education programming allows your institution an unprecedented reach—banks and credit unions can access their audience anywhere, anytime—via mobile phones, laptops, tablets, and other devices.
  4. Everyone else is doing it
    We’ve already learned that 89 percent of all financial institutions already provide online financial education. With that in mind, the most compelling argument for investing in this marketing tool might be that if you aren’t offering it, your customers will quickly find someone else who is.

Bottom line? In today’s on-demand digital world, if your marketing plan does not include digital financial education, you’re missing out on the chance to both attract and retain customers. For more information on how to leverage financial education for marketing, join our webinar June 7th at 1PM EST.

Financial Capability

The Evolution of Financial Literacy into Financial Capability

With Financial Literacy Month coming to a close, it’s time to ask an important question: should our industry be striving for more than just “literacy?”

In today’s world, we carry around a wealth of financial knowledge in our pockets. Our smartphones ensure that we’re never more than a few screen taps away from the answers to all of our questions. If you think about, carrying a smartphone is like having a bank or credit union branch in your pocket. Yet we’re still celebrating Financial Literacy Month like nothing has changed—when, in reality, a lot has changed.

Taken at its most basic definition, literacy is the ability to read and write. And while an understanding of financial products and terminology may have been a worthy goal for bank and credit union customers in the past, the bar needs to be raised for a world of technology and complex financial decision-making.

Tune in to our webinar on April 25th, 1-2pm ET to hear more on why your bank or credit union should focus on financial capability this Fin Lit Month.

Tune in to our webinar on April 25th, 1-2pm ET to hear more on why your financial institution should focus on financial capability this Fin Lit Month.

A Brief History of Financial Literacy

The first acknowledgement of a need for financial literacy might be this letter from John Adams to Thomas Jefferson in 1787 (since we at EverFi are in Washington DC, we love this kind of historical reference). However, the term itself wouldn’t start to gain popularity until after the 1914 passage of the Smith-Lever Act, which focused on providing citizens with necessary learning experiences, including financial education.

For the majority of the 20th century, financial literacy continued to be a relevant term. But most financial educational tools were text-based, so absorbing this knowledge involved a lot of reading and writing. As it did for many industries, technology soon changed everything.

Smartphones Change Everything

On January 9, 2007, the very first iPhone was announced, and everything changed. Now, people can get the knowledge they need quickly and easily; anything you want to know can be found in seconds. And with more information available, people are able to do more research before making important decisions.

Beyond access to knowledge, smartphones also give people the ability to take action from the palm of their hand. They can read Amazon reviews to research a product, then purchase it with a single click. They can download their bank’s app and have access to financial education, then put that education to use right away by making changes to their accounts. These interactions go well beyond simply becoming literate; instead, smartphones allow users to achieve proficiency and take immediate action.  

Moving Beyond Financial Literacy to Financial Capability

Consider a customer who is aware of both bank services and check-cashing services—the latter of which can be predatory, tacking on huge service fees. The customer already has the financial literacy to know that each option exists. But to achieve true financial capability, this hypothetical customer needs the confidence and strategic attitude to make the connection that a banking product would be a better choice for their long-term financial health.  

That’s why we think it’s time to replace financial literacy with a more impactful term: financial capability. Financial capability is the set of knowledge, attitudes, habits, and confidence in one’s ability to control one’s finances that a consumer needs to build his or her financial wellbeing. In other words, it’s not just a matter of being literate about your financial options—it’s having the capability to use that literacy to make good decisions.

In order to change the conversation surrounding financial education standards, we need to change the industry expectations. So, in April 2018, let’s not celebrate Financial Literacy Month anymore. Instead, let’s raise the bar.  Let’s plan a big, impactful, and action-oriented month.  Let’s have Financial Capability Month.

P.S. – Download our mini guide, Developing Financial Capability Across Every Stage of Life: Why Financial Education Should Start Early, to learn how your financial institution can improve its financial education initiatives.

Financial Marketing and Millennials: By the Numbers

For financial institutions seeking to attract the millennial demographic, using technology is the key—especially technology that is optimized for mobile devices. Not convinced? Here are some mind-blowing statistics around millennials and mobile that you should know to influence your financial marketing strategy:

Financial marketers looking to engage millennials must leverage mobile technology as part of their financial marketing strategy.

Financial marketers focused on engaging millennials must leverage mobile technology as part of their financial marketing strategy.

  • Millennials (people between the ages of 18 and 34) have the highest rate of mobile usage of any other demographic.
  • A whopping 97% of millennials have used a mobile device to access online content. For 1/5 of millennials, mobile devices are the only way they access the Web.[1]
  • The average adult checks their phone 30 times a day. That sounds like a lot. But the average millennial checks their phone more than 150 times a day![2]
  • Does your website work well on all devices? Because 40% of people will abandon their first choice of a search result if it isn’t mobile friendly.[3]
  • Are your emails optimized for mobile, as well? We hope so, because 91% of people checking email on their phones will ignore marketing emails if they are not optimized or linking to pages that are mobile-friendly.[4]
  • When it comes to financial education, we here at EverFi found that 36% of our adult users used their phones to access our financial education content—in 2017 alone.
  • Does your bank or credit union offer financial education? Because millennials are 24% more likely than Baby Boomers to value financial education from their bank as an important feature.[5]

Taken together, these statistic make it clearer than ever: banks and credit unions that want to attract millennials should be focusing on providing a great mobile experience for this demographic.

For more information on how to connect with this “mobile generation,” download our new white paper, The Financial Marketer’s Guide to Acquiring Millennial Consumers Through Mobile.

 

[1] 2016 U.S. Cross-Platform Future in Focus. (n.d.). Retrieved December 16, 2016, from http://www.comscore.com/ Insights/Presentations-and-Whitepapers/2016/2016-US-Cross-Platform-Future-in-Focus

[2] SMW Staff (2016). Millennials Check Their Phones More Than 157 Times Per Day | Social Media Week. Retrieved February 23, 2017, from https://socialmediaweek.org/newyork/2016/05/31/millennials-check-phones-157-timesper-day

[3] De, D. (n.d.). Financial services in a mobile-fi rst world. Retrieved December 16, 2016, from http://forum2016.com/ wp-content/uploads/presentations/Financial_Services_In_a_Mobile_First_World.pdf

[4] Van Rije, J. (n.d.). The ultimate mobile email statistics overview. Retrieved December 16, 2016, from http://www. emailmonday.com/mobile-email-usage-statistics

[5] Study: Millennials Value Financial Education, Guidance and Mobile Account Access from Their Financial Services Providers. (2016). Retrieved December 16, 2016, from http://www.prnewswire.com/news-releases/study-millennials-value-fi nancial-education-guidance-and-mobile-account-access-from-their-fi nancial-services-providers-300346661.html