Why Fintechs Need to Focus on Financial Education for Customers
Financial education is vital to the success of many new fintechs. After all, if customers don’t know what they need then how are they going to know if a product is useful for them?
Financial education has many rewards
Teaching customers how to control personal wealth should be an obvious goal for any financial company regardless of size, it would benefit customer, company, and country. All without losing money owed to write-offs or insolvency. Customers don’t necessarily need granular knowledge of financial operations to make healthy choices, they just need to know how it’s going to benefit them. Despite many fintechs using persuasive design to nudge customers into making smart choices, no one has actually created a guide on what smart financial decisions mean for customers or how to make them.
It’s a positive multiplier effect on economics - Ryan WarehamThere’s a definite gap in the market for such a guide, perhaps where a customer could put in their yearly wage and necessary expenditures and have a general blueprint for spending generated from that information. If current technology is capable of using a questionnaire that creates an investment portfolio that performs to customer preferences (high risk, balanced, low risk etc) then it should be possible to use questionnaires, and possibly tap into the potential of Open Banking, to evaluate financial decision-making. There are only benefits for increasing levels of financial education in customers. Financially healthy customers are able to spend more money on more products and boost your bottom line.
Easy brand victory
No-one owns this space at the moment, set aside the idea of corporate-social responsibility for one minute and even that wealthier customers makes for wealthier companies, there’s an opportunity for real brand ownership. Whoever establishes themselves fastest as the provider of solid financial advice for customers has a real opportunity to drive customers in droves to their own brand. Banks have a real incentive to educate customers purely for reinvestment purposes, but so do other major financial institutions like insurance. Educated customers are more likely to take calculated risks rather than grasp at the idea of ‘free money’ when under pressure (of course, it’s never free) and understand the long-term impact of their decisions.
Why has no-one done it?
Following on from the financial crash in 2008, there’s been an overwhelming focus on digital development of financial products so that customers can have an eye on their finances at all times. But now, with the dawn of fintechs to handle the niche tech issues cropping up in finance, financial institutions should now have the capacity to implement meaningful financial education. It’s a small wonder why there are currently no government incentives for companies to do this. But regardless of government intervention, there’s a real opportunity for financial institutions to set high standards for financial education and teach customers how to use their money for maximum personal benefit. So, it should be a simple decision to move into providing a strong financial education platform for customers. The benefits are numerous, there are no obvious downsides and there’s everything to gain. Financial education is currently an empty space ripe for first mover advantage, it’s going to be interesting to see who gets there first. Do you want to know how to get ahead of the market? Contact us at firstname.lastname@example.org to find the right place your business needs to be.