How can banks prevent an inter-generational epidemic of poor financial literacy? 

Research from the Social Market Foundation reveals that only 14% of schoolteachers feel confident teaching financial education

 
Exclusive data from Eligible assesses the impact of poor financial education on today’s youth 
 

• 23% of 18-24-year-olds feel confused by the correspondence they receive from their bank
• 18% of 18-24-year-olds have already encountered permanent implications to their borrowing and spending, due to poor financial literacy
• 25% of Gen Z and Millennials claim that communicating with their bank worsens their mental health
• 17% of “older millennials” (35-44-year-olds) disregard missed payment letters as they do not understand the language used by banks

 
New research from the Social Market Foundation (SMF) has found that just 14% of schoolteachers feel confident teaching financial education, leading to a meagre 1% of primary school teachers feeling that their students possessed adequate financial literacy skills appropriate for that specific age group. The SMF’s research highlights a concerning intergenerational cycle of poor financial literacy, whereby tomorrow’s adults are set to inherit the low levels of financial literacy that currently pervade the British economy, with the UK currently ranking 15^th for financial literacy amongst OECD countries. In light of this news, exclusive research from Eligible, the UK’s first AI platform used by lenders to support customers through tailored financial support, reveals the impact of poor financial literacy of today’s youth.

According to Eligible’s nationally representative survey, almost one quarter of 18-24-year-olds feel confused by the correspondence they receive from their bank, far above the national average of 12%. The consequences of this have already resulted in detrimental outcomes for young people across Britain, with 18% of 18-24-year-olds reporting that they have already encountered permanent implications to their borrowing and spending, due to a lack of awareness of their financial situation. 

Eligible’s research also reveals the self-perpetuating culture of stigma and shame that can result from confusion induced by financial jargon, this follows a study from Pluxee which found that over half of UK employees are embarrassed by their level of financial literacy. According to Eligible, 25% of Gen Z and Millennials claim that communicating with their bank worsens their mental health. 

Zahra Hassan, co-founder of Eligible, asserts that the advent of new technology, particularly artificial intelligence, can allow banks to “break the cycle” of financial exclusion, through communicating with customers on an unprecedentedly personal level – tailoring their communication style to the unique needs of customers from a variety of backgrounds. The overarching aim being the facilitation of a proactive, two-way communication between banks and their customer base.
 
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 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.”