Financial literacy has long been a goal of the financial services industry, effectively educating those that need more savings control, need to get out of debt, or need to build a healthy credit score. The problem is that if the measure of effectiveness of financial literacy is engagement with the financial services sector or the use of a bank account, then we’re failing as an industry. Why?
Since 2009 more than 1 million adults living in the US have abandoned their traditional checking account, and 30% of Americans don’t have a savings account today. Another indicator of this shift in behavior is that the fastest growing deposit or banking product today is prepaid debit cards, the most popular being those you can simply get off the shelf at Walmart or a local CVS pharmacy. What are we doing wrong?
The real challenge is that half of the country lives paycheck-to-paycheck and complicated financial products and services like savings bonds, mortgages, or investments are simply out of reach. As a under banked citizen I don’t need to know more about banking or savings, I need help everyday to make ends meet. This is why, I think, that financial literacy will evolve.
Everyday the average Smartphone user is checking their Facebook account 14 times a day and 80% of Smartphone users report using their phone within 15 minutes of waking up. Yet, try and get me to read a brochure on savings, or visit a bank branch and you’re going to be facing an uphill struggle. The way to create financial literacy is to provide everyday feedback via phone on how successfully an individual is managing their money. The obvious way to do this is creating mobile pre-paid bank accounts – replacing prepaid debit cards with a phone that can pay at the point-of-sale and withdraw cash from an ATM machine.
This technology is coming and will change financial literacy forever!
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