The New Requirements for Financial Literacy

April is financial literacy month, which is a good time to reflect on how much the knowledge needed to be financially literate has grown over the past few years.

The growth of new financial products means that learning money management requires training in money-related topics, technical skills, and even self-defense.

 At its core, being smart about money always will require understanding core concepts like budgeting, credit, and saving. But with the arrival of products like small dollar investing, cryptocurrencies, and gambling apps, individuals are presented with the promise of rewards and need to understand the risks that go along with the opportunities.

Additionally, smartphones mean that now everyone is carrying their financial lives in their pockets. They need to understand safe and efficient ways to manage their technology along with their money. People now need to understand whether the products they want to use are compatible with the technology that they have.

The need for technical education will increase as artificial intelligence tools, including agents that can make decisions on behalf of customers, become widespread. Customers using these tools will lead to learn how to correctly prompt AI to achieve their goals.

Finally, all the new products and new technology have been a bonanza for scammers of all kinds. So, the users of all these tools need to learn cyber self-defense including having anti-malware tools, recognizing the ways scammers approach people, and knowing what to do if they are compromised.

What does all this mean for payments providers?

The best customers are the ones who use products well, are happy with them, and turn into repeat customers. These are the ones who bring their friends.

So, providers need to make sure that they are providing the right education to their customers and prospective customers. Research shows that people respond best to just-in-time financial education that comes when they need to make a decision.
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Regulations require a lot of disclosures to be provided to customers, so it’s tempting to think that those disclosures are the end of the story. But companies should think about when and where they have opportunities to provide financial education that helps their customers be successful.

​​​Ben Jackson is the Chief Operating Officer of the Innovative Payments Association, a leading trade association representing companies in payments. With over two decades of industry experience, Ben is dedicated to providing valuable information, advocacy, and support to help members improve financial outcomes for consumers, businesses, and government agencies.