The Cure for Millennial’s Financial Illiteracy: Mobile Banking

Using mobile technology and expanding mobile banking capabilities may very well be at the heart of any discussion on how to get millennials and the younger generations focused on saving. Whether it is in using mobile apps to educate young consumers, or in providing more robust mobile banking services, there is no doubt the mobile phone is the key to this generation’s world…and they love their phones! Here are a few highlights from a Huffington Post article that sheds more light on the topic:

The global growth of handheld digital devices among younger people is transforming the way consumers are getting their information in general, and financial information in particular.

The Financial Literacy Summit, co-hosted by Visa Inc. and the Federal Reserve Bank of Chicago, brought together senior international financial literacy experts to discuss how mobile technology can improve financial literacy for today’s young adults.

“Millennials” refers to the demographic born between 1980 and 2000, representing the largest group of individuals using mobile banking applications.  At 18%, millennials are also the biggest cohort partaking in Internet browsing, emailing, searching, social networking and news consumption on a smartphone or tablet. By comparison, only 5% of 35-54 year-olds and 3% of those 55 years and older are using mobile devices exclusively.

Amando M. Tetangco Jr., the governor of Bangko Sentral ng Pilipinas, the central bank of the Philippines, told the audience that young Filipino adults are “struggling more than their older counterpart groups with regard to budgeting” and retirement planning, but he said he is still optimistic: “I believe there are certain characteristics of millennials that provide opportunities to build [their financial capabilities]. They have a desire for change”. 

Tetangco’s thoughts were expanded by co-panelists Steven Ciobo, an Australian MP and Georgette Jean-Louis, the executive board member of Banque de la Republique d’Haiti, who indicated that half of her country’s population is under age 21, facing “revenue inequality” and persistent differences in financial literacy that call for better and earlier financial education.

That’s why handheld technology holds so much promise in the youth struggle for financial literacy, according to technology experts on another panel discussion during the Summit.

“Eighty to 90% of U.S. teens have smart devices. That’s huge, but the important thing to understand is that these aren’t just things they use. They’re a way of life,” said Jason Young, the CEO and co-founder of MindBlown Labs, an Oakland, California-based app development company behind Thrive ‘n’ Shine, a personal finance game aimed at teens and young adults.

Young pointed out that 97% of millennials play online games, “most of them on mobile devices.” He described such games as “a very easy way to communicate a new set of facts” and a way to potentially track and reshape real financial behavior. Young also suggested that financial literacy apps have another important advantage: eliminating the fear that so many feel about discussing financial issues. “There’s a stigma and shame to not knowing things. Games remove that.”

Yet Jake Schwartz, the CEO and co-founder of General Assembly, a New York-based online education community training students in technology, suggested that financial literacy success will need to go beyond technology toward a better understanding of millennials and their unique financial challenges.

“When it comes to [financial literacy], we really need to think about the context of this generation’s financial lives,” said Schwartz, who described millennials as an “entirely disillusioned, cynical, exploited group of people” after the recent recession. Many, he said, face “a massive pile of student debt [and] are struggling to find a way to earn their economic way through the world.”

Schwartz said that meeting the unique money challenges and attitudes of the under-35 demographic represents “a massive opportunity” for technology-savvy financial services providers in the future.

Even though financial literacy instruction may begin in the home or K-12 classrooms, the mobile usage numbers for millennials suggests a demand for cutting-edge apps that can teach, transact and manage all aspects of consumers’ financial lives.

All panelists seemed to agree that the earlier financial literacy education can start, the better. Tetangco said the Philippines was experimenting with a new “kiddie savings program” in elementary school to help build savings and money management skills.

In January, the Organization for Economic Cooperation and Development (OECD) released a first-time global financial literacy study that revealed that U.S. students ranked between eighth and 12th place among all 18 participating countries in overall literacy skills.

Bottom line: Focusing on the way under-35 consumers use smartphones and tablets might provide a way for financial institutions to narrow the financial literacy gap and attract, as well as retain, younger members.

BY PRESTON PACKER

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