7 Reasons Bank Financial Literacy Programs Drives Growth
7 Reasons Bank Financial Literacy Programs Drives Growth
Why are bank financial literacy programs so important? It’s a question that many marketing teams at banks and credit unions are asking more and more these days.
Financial marketing for banks is often about recognizing a need and reaching out to fill it, but for consumers, the need for financial services is increasingly tied to financial literacy. Financial literacy programs are becoming a larger part of financial marketing strategies to help develop deeper relationships and inform clients of all ages.
How Your Bank’s Financial Literacy Program Can Drive Growth
1. Growing Demand for Financial Literacy Programs by Banks
Digital environments have changed how money is used, handled, spent, and saved, and even how loans and mortgages are evaluated and given. Younger people today also face more financial stress than ever, with issues relating to high student debt, a housing market bubble in many areas, and a lack of real financial knowledge relating to how or when to spend or save money. At the same time, many struggle with the range of options and solutions, which are often poorly differentiated for the financially illiterate.
Your financial literacy program allows you to reach out to consumers at the right time with financial education resources that will help you to connect and build trust with consumers. Financial education also helping you to solve problems caused by financial illiteracy so that you benefit both consumers and your bank.
Digital Financial Education During COVID-19
Findings from a 2020 survey of marketing executives at financial institutions.
2. Self-Service Means Consumers Take on More Financial Decisions
Millennials and Generation Z are demanding an increasing level of self-service through apps, self-service kiosks, and online services. Yes, this reduces the burden on customer service and allows many banks to save money on support and sales representatives, but it also puts an increased load on the consumer to make their own financial decisions without custom or personalized advice. The importance of financial literacy and education programs will increase as younger generations grow older and face more complicated financial decisions.
For example, even a decade ago, most retirement would have been handled by professionals through a pension plan funded by the government or a company. Today, consumers are often involved in day-to-day financial decisions contributing to their retirement funds and must plan and strategize their own investment decisions through 401(k) and IRA accounts. This means that consumers must have a significantly stronger financial knowledge base, to begin with in order to make good decisions for their future. This is a perfect opportunity for your bank to offer personalized financial education resources either through digital delivery or well-trained staff. Financial education programs for banks not only improve customer satisfaction with self-service solutions. They also offer amazing opportunities to build client relationships while helping them navigate increasingly complicated choices.
3. Choices and Options Are Increasing in Complexity
Digital availability often means that anyone can create and access personalized savings, retirement, and investment portfolios, but an increase in complexity often results in an increase in wrong choices. With a range of investment and savings products available in an array of sophistication, many consumers simply don’t have the financial literacy education to make the right choices. These decisions will later affect their ability to buy a home, save for retirement, or even finance their education, which can be extremely stressful.
Developing your bank’s financial literacy program can help your clients navigate the increasingly tricky waters of investment and saving programs, which will give them the tools to create a better and more financially sound future.
4. Build Consumer Trust with Financial Literacy Programs for Banks
While not all financial literacy or education programs for banks will pay off in the form of a direct customer, it will help you to build customer trust and loyalty. Even connecting in early K12 education programs can help you to deliver a strong message that your bank is interested in helping consumers in the community, which will help you to build more loyal consumers over time.
Most customers also want to know their bank is actively involved in outreach and community improvement, meaning that a good financial education program can help you to build loyalty even with customers who are already with your bank.
Similarly, providing consistent outreach and on-demand financial education through digital platforms will give customers the security that you care about them and their well-being.
50% of consumers hesitate to approach their financial institution.
Clients worry they won't understand the lingo.
5. Good Spending Habits Contribute to Good Customers
Lower levels of financial literacy contribute to increased rates of bankruptcy, defaults, and foreclosures. Financial literacy and education programs help consumers understand their finances and the choices that contribute to good finances. The results being that more consumers are able to make decisions contributing to paying bills on time, taking out loans and mortgages they can meet, and purchasing or working within their buying power.
More informed consumers, in turn, benefit the bank because customers pay on time, are less likely to default or go into bankruptcy, and are better able to meet their financial commitments for loans, mortgages, and large-scale purchases. This will greatly reduce burdens on customer service while increasing revenue through on-time payouts without decreasing customer satisfaction in the form of late fees and fines.
6. Financial Education Programs Can Help Reduce Credit and Debt Spending
Customers with low financial literacy tend to spend more, buy on credit, and pay unnecessary fees and fines, resulting in lower levels of wealth over time. Those with higher levels of financial education are more able to make good financial decisions, save, pay bills on time, invest, and otherwise increase wealth. While debt often relates to the high cost of housing and higher education, giving consumers the financial education they need to make better choices with money reduces overdrafts, improves consumer’s ability to invest, and creates an overall higher life satisfaction.
7. Financial Literacy Programs for Students
Because even high-school-age students are concerned about their ability to save and invest for the future or even college, providing financial education from a young age will help consumers to build confidence as well as skill.
Younger generations are increasingly struggling with financial literacy but are often very aware of the need to save and plan for the future. As a result, Generation Z is often extremely open to taking financial literacy courses and involving themselves in financial education programs at school and in the real world.
Providing financial literacy for students and young people is one of the easiest ways to connect with future consumers while ensuring they have the tools to make good financial decisions. For many banks, the struggle is in developing and implementing a program at a quality and scale that is valuable to local communities and schools.
A Partner for Your K-12 Financial Education Program
EVERFI offers a solution in the form of a digital learning platform developed around financial education for banks, with K-12 programs designed to empower students while creating branding and building long-term consumer relationships. EVERFI uses cutting-edge instructional designs to deliver curriculum aligned with state and national Jump$tart standards and recognized by the Consumer Financial Protection Bureau (CFPB). The platform also provides comprehensive data and reporting to help you quantify your impact for executive leadership and satisfy your Community Reinvestment Act (CRA) requirements. Request Your Demo Today! See why more than 900 financial institutions trust EVERFI to power and provide interactive, digital financial education to their adult consumers and K-12 students.
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