Social media fueled misinformation and evolving consumer expectations are driving financial brands to focus on financial literacy of younger consumers.
When financial firms decide to build an impactful financial literacy strategy, its better for everyone involved. But doing this isn’t as easy as it looks. For consumer education to be effective, FIs need to identify how to engage younger audiences and what areas to focus on the most.
So far, many different financial literacy strategies have been employed: podcasts, coloring books, games, college campus-focused campaigns, and social media-based influencer marketing.
Bringing parents into the picture
How to engage: However, one resource that financial brands may need to leverage more are parents. An American parent offers an average of 114 unique pieces of financial advice to their children in a year, according to data.
What needs to be addressed and why: And while parents are fairly confident in guiding their children about matters like budgeting, savings, credit cards, and debt, only 4% of parents feel equipped to guide their children about international finance like moving money across borders, according to the research.
Parents’ lack of confidence in their ability to teach children about international finance may impact how younger consumers access global opportunities in the future and their ease with functioning or operating businesses that surpass geographies. “This disconnect is particularly significant because we see younger generations growing up in an inherently more global world. Whether studying abroad, working remotely for international companies, or maintaining relationships across borders, their financial needs will likely be more globally oriented than their parents,” said Ankita D’Mello, Principal Product Manager (North America), at Wise.
Why international finance is hard to explain
International finance may be tricky for parents to get into because it requires a significant amount of scaffolding in a child’s understanding of the financial world. For example, when explaining an international money transfer between bank accounts, parents have to now explain multiple related concepts, says D’Mello, including:
- Exchange rate margins and why the amount received might differ from what was sent
- Why processing times can vary between countries
- How different countries have different banking systems and requirements
- The role of intermediate banks and why they matter
It’s these concepts that financial brands need to target when thinking of how to empower parents to teach their children about international finance more effectively.
How to empower parents
Financial brands can play two distinct roles here: one as the accessible tool and the other as the facilitator. These are some strategies FIs could adopt to help parents be more confident in their abilities to educate their children about finances:
1. Be a part of the solution: For example, one way Wise makes cross border transactions easier is by describing their fee structure upfront. This helps parents if they choose to demonstrate how a transaction works in practice and also helps alleviate parents’ personal anxieties about the process and any associated confusion.
But the firm is also increasingly focusing on the educational aspect of its tools and digital presence by doubling down on providing related support in its app to make sure consumers can do their transactions and learn in the same place. “A particularly telling statistic from our research is that 48% of parents find it challenging to identify trustworthy financial information online. This insight has strengthened our commitment to transparency in financial services and accuracy in our blog’s communication and educational content for the general public. We use this channel as a way to break down complex topics into digestible information for our customers and general consumers,” said D’Mello.
2. Design for two: Another strategy that D’Mello recommends firms should consider is taking a “dual audience approach” when developing products and communication strategies. This insight comes from data which shows that 40% of parents are worried about how relevant their financial advice will be as their children mature and that 70% of parents are willing to improve their own knowledge by trying out new tools and resources.
Some specific strategies that could enhance this type of product development are:
- Developing tools that facilitate in-app collaborative learning between parents and children.
- Creating content that helps parents explain complex financial concepts.
- Ensuring transparency in how products work, as this helps parents more accurately explain concepts.
- Providing resources that grow with families as financial needs become more sophisticated.
3. Build parent’s confidence and encourage conversations: For FIs that don’t have an extensive financial literacy strategy for younger consumers, one relatively easy place to start is focusing on providing talking points on what parents need to address when it comes to difficult topics like international finance.
“Having a standalone web page that’s dedicated to helping parents talk to teens about money would be greatly appreciated by parents and caretakers. Having information categorized for specific age ranges would also be helpful,” said Annie Cole, financial coach, book author, and founder of Money Essentials for Women.
Moreover, financial brands can also leverage different types of content like podcasts to engage both parents and children about money-related topics. Although not focused on international finance, one great example of this is the Million Bazillion podcast, sponsored by Greenlight, which tackles kids’ financial queries in a story-telling format while also including discussion questions and tips for parents on a supplementary website.
The bond of trust between parent and child can be an important driver of financial literacy, but it’s underused by FIs who primarily focus on casting the parent in the supervisor’s role. This is a missed opportunity. Especially because financial firms already occupy a position of trust in communities, combining it with a parent’s role in the home can create a powerful complement. This will h
elp FIs create more informed consumers for the future, and also invest in themselves becoming a trusted household name and brand.
Sidebar: The power of the dad-esque influencer
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