For many years, technology has been used in an oblique way in the financial world – a tool to create better underlying systems and enable faster trading. Finally, according to CNBC, technology is making banking more inclusive of people that are traditionally on the periphery.
Banking is more open, saving skills are widely shared, and with it, financial literacy is booming. Technology has been the vanguard of serious change in the personal banking world, and that has started with saving. The average American needs to do better with their savings account, and tech is here to help.
Improving The Picture
Despite the saving rate increasing, it is still a fact that Americans don’t save enough. According to Time, a large proportion of the population wouldn’t be able to cover a moderate financial situation, such as a $400 loss. Tech tools are helping to rectify that.
The gamification of saving, where people are provided with the means and tools to scrimp away at the cents and single dollars that every seasoned investor knows really does matter, has changed matters to a significant degree. Of particular interest are roundup savings accounts, which add every purchase up to the nearest dollar and then invest those pennies in savings accounts. Drip by drip, this is showing Americans the value of saving.
For every handful of Americans that struggle to save, there’s an individual who can’t access bank services at all. This can be down to a number of factors, including homelessness, a lack of identification documents, and mental health issues.
According to the World Economic Forum, this is another area of focus where technology is having a significant impact – not just in the USA, but globally. Around 1.7 billion adults have no access to bank accounts, but the advent of open banking has enabled them to start getting even basic services. With that, they can get greater access to the economy which has become increasingly digitized in the wake of COVID-19.
Improving Financial Literacy
The sum of these improvements has been a widespread uptick in financial literacy, according to Capital Monitor. Banks realize that educated customers present the best hopes of larger investments and returns in interest savings accounts, and they know that presenting that education will improve their capital base.
Delivering consistent financial lessons via digital mediums, whether that be in handy savings apps or open banking formats that present information clearly and concisely, is of obvious benefit to the industry. With improved financial literacy will also come a new generation more switched on to the needs of the financial and banking industry – and with that awareness comes the potential for new and even more transformative platforms.
Transforming how people bank and giving them financial skills is an essential part of forming a modern, educated, and happy population. Finance is so central to much of American life that being bereft of these skills is in itself exclusionary. Tech is changing the record.
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