Why Financial Institutions Should Care About Consumers’ Financial Literacy

In a world where banking relationships are becoming increasingly virtual, financial institutions are struggling to find new ways to connect with customers  and prevent the exodus of a new generation of tech-savvy consumers that are growing in economic impact. While digital tools like mobile check deposit offer efficiency and convenience, they’ve also made banking relationships pretty transactional. The result? Customer loyalty is at an all-time low. In fact, more than 70% of millennial consumers say that they would likely bank with a revered tech brand like Apple, Google, or Amazon if they offered financial services.

Amidst rapidly changing consumer preferences, financial institutions are increasingly focused on finding new and better ways to grow customer relationships in the digital age. Forward-thinking institutions are shifting dollars away from traditional advertising toward a more transparent, education-based approach that resonates with today’s consumer. Digital education creates new touch points to strengthen relationships and educates consumers on financial services offerings, while also building credibility, trust, and loyalty.

A recent survey conducted by FICO found a correlation between higher financial literacy and better customer engagement, more use of financial services, and decreased likelihood to switch financial institutions. “Educating consumers, especially Millennials, about their financial rights makes good business sense,” said Anthony Sprauve, senior consumer credit specialist of FICO. “Basic financial literacy equips consumers with the knowledge and confidence they need to make responsible financial decisions at all stages of their lives.”

Leading companies are making financial education a core part of their business  providing prospects and customers with an open, transparent way to build their financial knowledge at every stage of life, whether it’s educating a first-time home buyer, helping customers grow their portfolio, or providing information on retirement resources. Consumers that engage with a company through education are actually 5 times more likely to make a purchase than those reached by direct marketing. Providing dedicated and relevant educational content is a powerful way to secure customer loyalty, sell new products, and meaningfully connect with a new generation of customers.

Learn how EverFi is helping financial institutions build customized consumer education programs