Why the Basics Matter for Financial Services
October 12, 2023 | 1 min read
Today, our world is more connected than ever before — from instant access to information and shopping at the click of a button to streaming live shows anywhere and at any time. But connected doesn’t necessarily mean inclusive. Although our devices and digital experiences can make us feel like we’re always connected to everything, there’s a big digital divide when it comes to who has access to that connectivity. And when it comes to financial services, that divide is critical and often life-changing. Banking isn’t an option or a luxury for people—it’s a necessity. But even so, many people don’t have equal access to financial services, leaving them underbanked and putting their financial lives at risk.
But what does inclusiveness mean? It means bringing people together, making services accessible to all, and fostering relationships that are a win-win for everyone. Technology has the power to level the playing field and fundamentally change people’s quality of life for the better. Here are five ways financial professionals can drive inclusiveness within their institutions.
Today, there are over 60 million people living with disabilities in the United States (roughly ⅕ of the entire population) and they are in urgent need of accessible online financial services.1 When we think about everything that banking entails from cashing and depositing checks and checking balance to transferring funds to pay bills, it becomes obvious that it’s a very involved process. Now picture doing those things without the use of your eyes or arms.
Even though there have been laws in place to make things easier for people with disabilities, not much attention was given to web services until recently. It wasn’t until the end of 2018 when the World Wide Web Consortium (W3C) released the Web Content Accessibility Guidelines (WCAG) 2.1, updating the standards for digital content in an effort to make the web universally accessible regardless of disabilities.2 And although this has gone a long way to make web services more easily accessible, financial institutions’ websites still tend to fall behind the standard when it comes to meeting these requirements.
A recent study at Shippensburg University of Pennsylvania evaluated 162 visually disabled participants to learn just how ineffective these websites are for them to use. Three out of five of the participants were unable to use the financial websites and apps tested at all due to their disabilities. And three out of four required help from a sighted person, putting their financial information at risk.3
With the use of technology, we can take accessibility to a whole new level for the visually impaired. We are now seeing apps that can help the visually impaired do some of these basic banking functions more easily on their own, without the need to rely on external sources. With voice assisted functionality on mobile devices, the visually impaired can take control of their finances and become fully self-sufficient.
Learning good habits at a young age can create positive change that lasts a lifetime. And that’s especially true when it comes to financial services. Kids that have a healthy relationship with money from a young age are more likely to manage their finances more responsibility as adults. And when it comes to learning better financial habits, parents can play a pivotal role. A research study analyzing the effects of parents’ values on children found a statistically significant positive association between parents’ savings rates and children’s savings rates.4
The lack of financial literacy in early childhood inevitably carries into young adulthood and beyond. “Students and parents agree that college students are not well prepared to deal with the financial challenges that lie ahead. Less than one-quarter of students or about 24% and only 20% of parents say students are prepared to deal with the financial challenges that await them in the real world.” And about “76% [of students] report that they wish they had more help preparing for their personal finances.”5
Unfortunately, most parents and adults struggle to manage or understand their own finances, making it hard to transfer good financial habits to younger generations. This is where financial institutions can step in. With the use of technology, financial institutions are well positioned to fill the void in financial literacy with advocacy. Digital tools such as personal financial management are not only helpful for adults, but can be gamified in app form to help kids become more familiar with spending and saving.
Perhaps the group most in need of inclusiveness when it comes to banking services is the working poor. According to the Census Bureau, in 2017 “1 in 8 Americans are living in poverty”, which is 40 million people, or 12.7% of the population. Almost half of those in poverty, around 18.5 million, were living in deep poverty, with an income below half of the poverty threshold.6
Most of us never think twice when it comes to banking services—they’re simply there when we need them. But American’s living in poverty face a very different reality. “The lack of access to traditional banking services makes millions of households turn to alternative financial services that charge exorbitant fees, leaving the unbanked and underbanked trapped in a cycle of poverty.”7 Fortunately, financial institutions have the tools and ability to positively impact these communities. Things as simple as “improved financial literacy among low-income consumers and the introduction of affordable products from private banks are necessary to increase banking participation and democratize access to basic banking services.”7 With financial advocacy programs and more affordable loan options, financial institutions can help combat the systemic problems that come from being poor in America. And with technology, these programs can be more easily disseminated among a broader portion of the population.
If you’ve ever purchased a smartphone or laptop, you know just how expensive technology can be. And it’s even worse for low-income adults and families. “In the US, roughly three-in-ten adults with household incomes below $30,000 a year (29%) don’t own a smartphone. More than four-in-ten don’t have home broadband services (44%) or a traditional computer (46%).”8 And the digital divide is only getting bigger. “On the one hand, sections of society already connected - such as higher income, educated White and Asian Pacific Islander households - are adopting newer technologies faster and are connecting even more. On the other hand, groups with traditionally lower rates for Internet and computer usage continue to lag far behind.”9
And when it comes to financial stability, the lack of access to technological advancements for the working poor can be terrifying. As more and more organizations adopt digital and mobile first technologies to stay ahead of consumers growing demands, they’re inadvertently leaving the working poor behind. But financial institutions can also use technology to level the playing field and create a win-win situation for everyone. At MX, we’ve developed software that’s capable of running on anything, from the most expensive computing platform to a linux device and even a $5 dollar Raspberry PI computer. This means that financial institutions can serve everyone in their communities no matter where they are on the socioeconomic spectrum. Ultimately, this type of technology gives low-income individuals the ability to manage their finances more proactively and start to build better lives.
The truth is, even Americans that aren’t in poverty still struggle to manage their finances. Today, “the typical American spends 61.3% of their annual income on [housing, transportation, and food].”10 And according to a recent Pew survey, “55% of U.S. households spend everything—or more than—they make most months, and many have little or no savings to deal with financial shocks.”10 But despite how important managing finances seems to be, only a minority of people seem to have a thorough financial plan in place.
However, current methods of financial planning and budgeting are cumbersome and time consuming. Even though we live in an age full of technological advancements, “people are [still] more likely to use a pen and paper (48%), or a spreadsheet (42%) to track spending.”11 And “just 14% of adults use personal finance apps...to keep their personal finances in order.”11 When it comes down to it, there’s simply too much burden placed on individuals. And with so much going on in people’s daily lives, they’re less likely to prioritize or stick to a financial plan if it doesn’t easily fit into their lifestyle. And that’s exactly where technology can come in and help. Financial institutions can use technology like guided financial advice and AI-driven personalized insights to help their customers make better decisions in real-time, building financial strength and increasing their engagement. Technology takes a lot of the heavy lifting out of the financial management equation, enabling people to proactively act on their financial information without having to piece it all together.
Technology has the power to change people’s quality of life for the better. And inclusiveness makes technology accessible and available to everyone. The future of technology driven solutions in the financial industry is a hopeful and exciting one. Innovative technologies make it so that anyone can proactively manage their finances regardless of where they are in their financial lives, or how they like to manage their money. At MX, we’re driving the charge of inclusiveness for everyone through the development of innovative technologies in the financial industry. We believe that inclusiveness is for everyone, and we build all of our products and solutions with the aim and vision of making that a reality for all.
October 12, 2023 | 1 min read
October 5, 2023 | 2 min read
June 13, 2023 | 3 min read