Tech-enabled financial literacy has the potential to usher in a new era of prosperity for Americans

According to the Federal Reserve, nearly a quarter of adults in the US went without some kind of medical treatment last year because they couldn’t afford it, while one in six – roughly 20 million – say they’ve fallen behind on paying their energy bills, according to the National Energy Assistance Directors Association.

In the financial arena, knowledge is prosperity

The Federal Reserve adds only 30% of Americans between the age of 18 and 29 believe their retirement savings are on track, while 38% have no retirement savings whatsoever. And a recent survey by Forbes Advisor has revealed that two-thirds of Americans have been breaking into their piggy banks to cope with increases in the prices of goods and services.

In the world’s richest economy, such widespread signs of financial unpreparedness can come as a shock. You might be wondering: how did we get here? And, even more importantly, what can be done about it?

Empowerment through education

The saying goes “knowledge is power,” but in the financial arena, knowledge is prosperity. There is a clear link between financial literacy and financial wellbeing. As an article published by the Social Security Administration explains: “Studies employing differing measures and definitions of financial literacy have found that households or individuals who are less financially literate are also less likely to have a checking account, maintain an emergency fund, have a retirement plan, or hold stocks… Such individuals are more likely to take payday loans, make only the minimum payment on a credit card balance, take on high-cost mortgages, have higher debt levels, and be delinquent on debt…”

Despite the obvious need for it, our country has long faced a serious lack of financial education. The basics of financial literacy often aren’t taught in schools or at college. This is compounded by the fact that the products provided by traditional financial services companies appear opaque and confusing for many consumers. It has also long been difficult for many people to have a comprehensive, holistic understanding of their financial status – in other words, being able to answer questions like, “How much am I borrowing, saving, and spending?” This is especially the case if the products they use are spread across different companies.

So, what can be done for the millions of Americans who have been let down by our education system and financial services sector? How can we empower them with the knowledge and tools they need to become financially independent and confident?

The answer lies in harnessing technology – and bringing together the power of community, data, knowledge, and expertise – to create an inclusive and approachable culture around money. A culture in which conversations about personal finance are accessible, understandable, and engaging instead of bewildering, scary, and intimidating. A culture in which people have confidence, peace of mind, and optimism about their financial future.

Financial freedom at your fingertips

Fintech has a major role to play in disrupting the exclusionary “business as usual” to bring about increased levels of financial education and, in turn, wellbeing. It is now possible to offer consumers a hyper-personalised financial experience unique to each consumer and accessed with minimal expense and effort using a smartphone.

Customers authorise financial technology companies to access and analyse their financial data to provide a personalised view of their financial status, including real-time tracking of spending, saving, and borrowing.  Consumer-permissioned data access allows for innovative product development and design that is responsive to consumers’ needs.  Interfaces can be designed to be simple, easy to use, and intuitive with both high-level “dashboard” summaries and detailed transaction information.

Transparency and clarity represent just the first step, however. Fintechs aren’t just capable of painting a picture of consumers’ overall financial status—they can also act as a financial coach, providing the tools, insights, and encouragement to unlock meaningful improvements.  For example, fintechs are providing content and financial education to customers in ways that traditional financial institutions are not.  They are making money more approachable and helping customers build confidence to meet their financial goals.  And they’re providing content and insights in formats that are easily digestible and understood.

Moreover, by leveraging the latest generation of artificial intelligence (AI) tools, machine learning, and data science, fintechs can now offer personalised financial planning and advice that will help users to define and reach their financial goals—both short-term, such as improving their credit score, paying off debt quicker, and saving for emergencies, and long-term like saving for a house or investing for retirement.

I believe that building an inclusive money culture through the bold and innovative deployment of tech-driven financial education and services at scale won’t just change the lives of individuals and their families. The result will also be an America where there’s less inequality, more prosperity, and greater happiness.