How Financial Literacy — or Perceived Literacy — Drives Engagement

Post contributed by Leah Hacker, CEO of Rebel

What people believe about money may have an outsized impact on how they engage with financial services and products. In a recently published report, The X Factor: Financial Literacy and Personalization, by Rebel, researchers found that an individual’s perceived financial literacy (e.g., how well they believe they are at money matters) is more indicative of their ongoing engagement and usage with financial products than their actual financial literacy level (e.g., how well they actually are at money matters).

As the financial industry continues to evolve and doors open for more advanced technology, there is an opportunity to rethink how services and products are delivered.

Rebel’s latest research revealed how a consumer’s self-perception can influence behavior and engagement.

Confidence in money matters. Fifty-eight percent of folks who believe they have an above-average financial literacy level also report high levels of confidence in managing long-term financial goals, compared to only 41% of those who actually have an above-average financial literacy level.

Translation: People who believed they were good at money management felt more confident in reaching their long-term goals. 

Positive feelings about money. Of those who believed they had an above-average financial literacy level, 79% reported they felt successful, hopeful, in control, happy, or secure when investing. Similarly outsized positive perspectives were reported for saving and money management activities.

Translation: People who believed they were good at money management reported positive emotions about money management. The key here is that this positive perspective impacts their outlook on the financial industry.

Positive outlook on the financial industry. Individuals who hold an above-average perception of their own financial literacy have a more positive outlook on the financial industry. For example, 85% of those with above-average perceptions reported that the financial industry provided products and services that were useful to their personal situation.

Translation: We know that people who have a more positive outlook on the financial industry are more likely to engage on an ongoing basis.

Higher product usage. Folks with high perceived financial literacy levels used more, on average, 5 financial products and/or services compared to those with low perceived financial literacy, only using 2 products and/or services.

Translation: Those who believe they are good at money management utilize the services and products that can help them manage their finances.

As financial services and products continue to serve a diverse population of consumers, there’s an opportunity to consider financial literacy as a strong foundation for designing more personalized experiences. 

Download the report to learn more:  The X Factor: Financial Literacy and Personalization.

Rebel is a research and strategy firm that works with finance brands to better help them understand who their audience is and what they need.