Coping with Financial Illiteracy Using Fintech Solutions

According to research by Adjust and Apptopia, the Covid-19 pandemic has spurred demand for financial apps and services. From January to June, the average number of sessions grew by 88%. Experts believe that the digitalization of financial services promotes the financially literate behavior of the population.

Financial literacy is a necessary set of knowledge related to the formation, distribution, and use of one’s budget within the framework of one’s own economic activity. When people know the basics of financial literacy, they can manage and plan a budget, various payments, including payment cards, loans, and much more. When a person gains this basic knowledge, he or she can deal with more complex things, such as investing or buying cryptocurrency.

A lack of financial literacy can lead to unwise financial decisions that can adversely affect a person’s financial condition and even drive them into debt. There is also a big risk of falling for the bait of scammers and losing the savings. The National Financial Educators Council (NFEC) revealed that Americans lost $415 billion in 2020 because they couldn’t command their finances in the right way. However, not only customers but also banks and financial institutions should be interested in improving financial literacy.

When people understand financial matters, they will be able to take out a loan and repay it on time, freeing the bank from the headache of overdue loans. The Federal Reserve Bank states that the US residents’ credit card debt totaled nearly $1 trillion in 2020. But banks need financially successful customers who will offer more banking services and bring them a profit. A high level of financial awareness among the population contributes to social and economic stability in the country.

Many banks and financial institutions have already launched educational programs for the population. For example, the Federal Reserve Bank of New York publishes economic comic books on the website. The American Bankers Association created a guide for the banks on how to develop financial literacy programs for the customers. In addition, people can use various financial apps and services provided by fintech companies that can help them manage their money wisely.

Financial Literacy: Why Is It Important for both Banks and Clients?

Surely every person at least once in their life found themselves in a situation where they quickly spent their money, and there are still a few days left before new receipts. Then they have to borrow money or save hard on everything. To avoid these situations, people need to properly plan their future expenses and income. Simply put, they should learn how to draw up a budget. For this purpose, they need to understand how much money they can spend next month so that they don’t have to borrow. To do this, people need to calculate how much was earned and spent in the last month; therefore, it’s necessary to record all their earnings and expenses during the month.

Of course, they can account for income and expenses using internet banking applications that categorize receipts and expenditures and provide the transaction history. However, it’s an inconvenient method when customers use payment cards from different banks and sometimes pay in cash. In this case, they will have to install several apps on their phones, but it’s much more comfortable to apply an all-in-one app.

Meanwhile, the MX 2021 Banker’s Survey demonstrates that 48% of people use banking apps to control their money. 17% of respondents prefer third-party financial apps, 35% use Google Sheets or Excel, and 39% of people record all their spendings manually. But come on, we live in the 21st century! There are many ready-made solutions in the market that allow users to automate this process.

For example, people can download and install very simple and intuitive apps like Money Manager or Wallet. Money Manager allows users to keep a journal of expenses and income, plan a budget for different spending categories, manage credit and debit cards, view expenses by category on infographics, transfer funds between assets, and set repeated transactions (e.g. to repay loans). The app is available for both iOS and Android, has light and dark themes, a help center, 270k reviews, and was downloaded 17M+ times.

Wallet is a financial accounting program designed for long-term planning. It was built as a strategic application with numerous useful features. The app syncs with 15k banks and cards all over the world. Users can set credit limits, track their cash flows and spending, import information from the banks, and export data to the tables. Customers appreciate it for convenience, smart operation management, and multicurrency interface. At any time, they can receive detailed reports allowing them to accurately control their funds.

There are more advanced applications that can sync with banks’ mobile apps and e-wallets. For example, Coinkeeper automatically recognizes bank SMS, reminds you of the maturity of loans, allows you to save money for specific purposes, supports all world currencies, allows families to use a common profile, syncs data between various devices, and has a lot of other useful features. It has a user-friendly interface and supports several languages.

Some solutions represent home accounting systems. For example, Toshl Finance connects to almost all banks around the world, supports 283 currencies, more than 50 cryptocurrencies, precious metals, and much more. Users can connect multiple devices and sync data between them, as well as create various reports and view charts.

Those who travel frequently and need to report their travel expenses will appreciate the Expensify app. Customers can just take a photo of their receipts and then add them to the app. Thanks to SmartScan technology, it scans the amounts and transfers them to the reports. The app has a lot of other features, such as charting, analyzing, credit card import, tax tracking, and others.

By the way, there are hundreds of financial apps available on the App Store or Google Play. How to induce people to choose your financial app? Keep on reading our article to know how to make your solution attractive for the customers.

How to Create a User-Friendly App that Helps Increasing Financial Literacy

When people choose the app, they usually take into account the following features:

Security. Since mobile financial applications deal with personal data, the task of any developer of such a solution is to ensure the appropriate level of protection. This can be two-factor authentication, fingerprint scanning, Face ID, and other security methods. Moreover, every app must comply with the General Data Protection Regulation (GDPR) and similar rules protecting private information.

Features that can meet their expectations. When choosing the appropriate application, people are focused on their needs and preferences. If they have only one source of income and they don’t take loans, they download a simple solution that records expenses and earnings only. If several members of their family spend and earn money, they may need a service that can be installed on several devices and synchronized between them. If they have their own business, customers will appreciate a comprehensive bookkeeping platform that is connected to several banks and capable of generating numerous reports and graphs. Therefore, you should consider your target audience when creating a financial application.

Regardless of whether it is a simple or complex application, it should have an intuitive and user-friendly interface that simplifies data entry and system operation. Any app has the minimum necessary functionality allowing people to enter income and expenses, calculate them automatically, review the account balance, plan a budget, and so on. The app may include the following functions:

  • Proving a flexible reporting system;
  • Allowing to plan a budget for different periods of time;
  • Supporting various currencies;
  • Accounting for deposits and investments, as well as calculating profitability;
  • Providing a loan calculator;
  • Syncing with various payment cards and banks;
  • Having push notifications and transferring information via messengers;
  • Joint record keeping; and
  • Language support.

Responsive customer service. In spite of the fact that any app is thoroughly tested, users may face bugs during the operation. Therefore, make sure that your app has a support service that can solve user problems as soon as possible. They won’t wait for weeks for an answer and immediately uninstall your solution. It’s cool to have as many ways to get in touch with developers as possible. For example, these ways can include communities in social networks, chats in messengers, FAQs, Knowledge Bases, and so on. Allow your customers to quickly and easily solve their problems.

Bottom Line

The level of financial literacy among current and potential users of financial services has significantly grown thanks to the rapid spread of digital technology. Numerous financial apps and services help people look for, evaluate, and choose financial services in order to improve the quality of their lives regardless of their education and background. Users are becoming more informed, responsible, and selective in their financial decisions.

It is also important to form good financial habits from childhood, teach children to manage money wisely, gradually tell them about general economic concepts, such as loans, lending, investments, and so on. Thus, children will have great opportunities in the future, and banks will receive financially literate customers. By the way, fintech is ready to help both banks and parents in this regard. There are different financial literacy apps for kids in the market, such as Savings Spree, Renegade Buggies, Bankaroo, and many more.

Elinext is pleased to see that the world is changing for the better thanks to the digitalization of financial services. Our company is also ready to help the population improve their financial behavior by developing and delivering new-age applications and platforms. For example, our specialists have created a fully functional financial app that allows users to generate PDF invoices from photos and add events from the website into their smartphone calendar. It provides a financial calendar, exchange rates, a knowledge base, and much more. If you have a financial literacy app idea to launch, the Elinext experts are ready to help you. For more detail, please contact our support team.

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