Empowering Financial Literacy: The Role Of Technology In The Banking And Financial Landscape In 2024

New OECD report highlights 63% of adults who held any type of financial product do not score the minimum target financial literacy score. Zahra Hassan, co-founder of Eligible, discusses how lenders can embrace technology to reconnect with customers and leave financial illiteracy in 2023.

Empowering Financial Literacy: The Role Of Technology In The Banking And Financial Landscape In 2024

A recent OECD report on global financial literacy levels revealed significant concerns, particularly in the context of the UK. Highlighting the critical role of financial literacy in empowering individuals, the report emphasises the role of making informed decisions and maintaining control over the personal finances of the customers.

Zahra Hassan, the co-founder and banking expert at Eligible, the UK’s first platform used by banks/lenders to provide consumers with bespoke financial expertise, provides his insights on the crucial role of financial literacy policies and programs.

Eligible is the UK’s first AI-driven servicing solution for the mortgage market, integrating award-winning technology with real-time behavioural data to generate tailored financial support for borrowers. The company uses AI data to provide tailored expertise that delivers an unrivalled solution to managing their mortgage.

Unlocking financial literacy: Collaborative Solutions for a personalised approach

Addressing the multidimensional challenge of financial literacy no doubt requires a collaborative effort, with banks playing a central role. The essence of this is reflected in Eligible’s own proprietary research which has uncovered that 3million Brits agree that they disregard bank letters and statements regarding late or missed payments as they do not understand the financial language that banks use.

Further to this, 11.9 million Brits agree that none of the financial advice they receive from their bank is personalised to them and their financial situation, leading them to ignore this. This points to a communication breakdown, where many lenders are failing to offer accessible communication, relying on a one-size-fits-all approach.

Further illustrating the effects that the lack of financial literacy may be having on behaviour, the OECD report also found that only 26% of adults compare financial products across providers and only 24% of adults seek advice from independent sources when purchasing financial products and services. Whilst this signals a clear call to action for financial institutions, policymakers, and the broader community to address and rectify the existing gaps in financial literacy.

According to Hassan, the adoption of technology by banks may be the key to repairing the strained relationship between lenders and customers, leaving financial illiteracy in 2023.

AI-driven personalisation and proactive engagement to ensure financial literacy

The advent of artificial intelligence can allow for vast quantities of customer data to be analysed at an incalculable pace, identifying consumers that are most at-risk – providing tailored support where needed. The incorporation of learning algorithms also enables service providers to demystify concepts, providing a vital lifeline to the 7-in-10 Brits that feel overwhelmed by financial jargon.

Zahra Hassan, co-founder of Eligible, comments:

What AI can do today is interact with customers and measure the level of understanding of their existing product before providing bespoke financial expertise. Based on this, we can start to form views on the likelihood that they could struggle to meet their payments.

AI can be used to detect how well people understand their financial product and use this data to spot vulnerable customers in order to better educate and support them.

AI has the power to transform customer support from a reactive relationship to a proactive one. Instead of banks providing support only when the customer asks for it, AI can detect those who are likely to need assistance and proactively engage with them, fostering education and active dialogue.”