How FinTech tools can help promote financial literacy among youth

Young individuals must evaluate the information and tools they use critically

FinTech firms design apps and platforms to simulate economic scenarios, making learning interactive and engaging. AFP

Financial literacy is an indispensable skill for today's youth, empowering them to make informed and effective decisions about their financial resources.

The advent of financial technology in particular, has significantly transformed the financial education landscape, introducing innovative tools for learning and managing finances.

These technological tools streamline processes, supporting the development of a more financially aware and empowered generation.

Generational perspectives

There is a hugely skewed take-up of FinTech towards the younger demographics versus the older.

For example, in the wealth space, the most significant transfer of financial assets globally in the history of human beings is happening over the next two decades as baby boomers pass over to Gen Z and millennials.

So, many more younger people will have wealth and need advisory services, which should be accompanied by a significant shift from human to digital advisers.

Currently, the most effective model for financial institutions in the wealth space is hybrid, which allows them to target all demographics.

They must focus on providing the benefits of artificial intelligence-powered services rather than just human advisory if they wish to keep up with the market and youth demands. Otherwise, they are likely to see clients leaving.

Financial challenges and solutions often differ significantly between generations. While older generations may value traditional banking and personal consultations, the youth lean towards digital, quick access and peer advice.

Ensuring solutions cater to both demographics involves understanding their unique needs and preferences – younger users might prefer mobile-first, gamified experiences, whereas older users may prioritise security and simplicity.

Bridging this gap requires offering tools and educational resources that respect these differences while promoting essential financial skills across generations.

FinTech firms design various apps and platforms to simulate economic scenarios, making learning interactive and engaging.

For example, virtual stock trading apps allow users to practise investing without risk, while budgeting apps provide real-time insights into spending and saving habits.

Other tools focus on demystifying complex financial concepts through user-friendly interfaces and simplified language, making it easier for young people to grasp and apply these ideas in their financial journey.

While FinTech provides numerous opportunities for enhancing financial literacy, challenges like information overload and the reliability of sources can be overwhelming.

Young individuals should be encouraged to evaluate the information and tools they use critically. Seeking guidance from trusted financial advisers or educational programmes can provide a foundation for understanding, alongside using FinTech tools for practical application.

Three steps to boost financial literacy

Engage with interactive learning tools: Utilise FinTech apps that offer gamified learning experiences, such as simulated trading platforms, budgeting apps or financial planning tools. These interactive elements make learning about finance more engaging and less intimidating.

Regularly consume financial content: Read blogs, watch videos, or listen to podcasts that discuss financial topics. Many FinTech companies and financial advisers produce content tailored to young audiences, breaking complex issues into digestible pieces.

Practise financial management: Apply the learnt concepts by managing a small budget, investing a minor amount, or tracking spending through FinTech tools. Real-life application cements learning and builds confidence in managing finances.

Financial literacy is an essential skill in the modern world.

As FinTech continues to evolve, it will undoubtedly play a crucial role in shaping financially savvy future generations equipped to navigate the complexities of the digital financial landscape.

Nicholas Wright is head of institutional sales at Saxo Bank