On July 31st, the CARES Act offered a massively debated unemployment compensation package. Perhaps, the cause of debate is due to people’s anxiety, lack of awareness, or little hope for assistance. It is also possible that now people are running out of their funds. Around 30%, 1/3 of the population, paid their household bills by using stimulus checks. Therefore, banks must proceed with an influential campaign of economic empowerment via financial literacy.
It is necessary to educate the public through promoting financial literacy, digital access, etc.
Education
Using accessible education is necessary to spread financial literacy between clients, both regular and potential ones. The level of financial literacy is lower in the United States, which is why many Americans struggle to make financial decisions confidently in real-world circumstances. According to the research of FINRA, around 66% of Americans can answer only five questions related to the finance and economic situations that they experience daily. Some questions asked that Americans were not able to answer involve topics such as:
- Interest rates and bond charges
- Financial and economic inflation
- Risk and diversification laws
- Compound interest effects
- The impact of a total interest payment term over a mortgage life
The best chance to educate the public is for banks to empower their regular clients by teaching about financial wealth and stability. Around 10% of applicants put off their credit requests due to the fear of rejection. A Federal Reserve research study on the Economic Well-being of American Households confirmed this statistic. You cannot avail yourself of financial opportunities by having only self-selected credit. In order to gain financial leverage, you must have an ample amount of credit history with a good credit score. This has a drastic influence on car purchases, house mortgages, educational opportunities, entrepreneurship, etc.
Banks should conduct financial literacy programs to empower communities and customers. Well-renowned banks have already started this campaign. For example, First Republic Banks promotes implementing these programs at a young age. They conduct financial literacy sessions for elementary students through a portal on their website. In this way, all learners become aware of the financial concepts needed for better decision-making in the future.
MyTrailhead is another financial literacy program that educates customers. This platform promotes learning from financial experience, rather than just understanding the financial management system. With this program, banks provide onboarding knowledge about finance to their clients via gamified learning, where customers can earn ranks, badges, and points to validate their accomplishments.
Banks must be sure that financial literacy awareness is accessible from any device. Bankers can customize their content to meet the unique requirements of their customers. They also establish a specific module discussing the CARES Act stimulus check and the effect of its expiration. With these programs, customers will also learn the best way to manage their accounts and transactions, along with their overall finances.
Awareness
Checking up on the more financially weak clients is a core responsibility of all banks. Direct or online communication is the best way to solve problems, as an honest discussion can be a rather influential solution. Banks can also share useful tips with other financial institutions to build relations with advisors who forecast on-going and upcoming financial happenings. They are the best helpers to facilitate effective growth plans.
The well-known Ally Bank’s policy indicates how banks use marketing to spread financial literacy among clients. These banks also use different social media platforms like Twitter, Facebook, and Instagram, etc. They post influential financial literacy content on these channels to share with influencers and address financial wellness strategies during difficult times. Clients build their interest due to proactive communication. They also receive customized messages regarding their unique preferences and situations.
A bank can learn and manage their customers’ preferences and behavior by considering client segments in order to gain useful insight. Banks can then communicate with their targeted audience by using message facility platforms to keep them on track by delivering relevant financial and supportive information. By utilizing these message alerts, banks can also update their clients about market variations and events that will impact their finances.
Access
What is next for banks after expressing their existence in the market? A bank must then use their recognition for something positive, such as promoting financial literacy. For example, they can conduct different seminars regarding credit card applications and financial planning. Banks must also have a responsive mobile application or portal in order to access all desired information easily.
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