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The power of financial literacy tools for community banks

Sep 29, 2022

Financial services education enables customers and members to make informed decisions in relation to their money. Community banks are the perfect institution to support loyal customers with information that teaches them how to use the latest financial products and services across a consumer’s lifespan.

Traditionally, financial institutions were known for their ability to develop personal relationships with each customer. However, that in-person relationship has gotten more complicated due to the ease of doing business online, particularly since the pandemic.

As a result, community banks will need to find digital avenues to meaningfully connect with current and future customers as the rate in which they consume information continues to increase. 

Using social media to educate customers and members makes sense since the average American spends 2 hours and 14 minutes per day scrolling through their smartphone checking their social media updates.

This presents a prime opportunity for community banks to bump up their financial services education campaigns on popular platforms such as TikTok, Instagram, and Facebook. The benefits of financial services education include:

  • Build brand loyalty and awareness of the latest money management apps and tools.
  • Teach customers how to use their financial products and services step-by-step.
  • Make personal finance fun and approachable.

But what financial literacy topics would be most interesting for community bank customers while they engage with their favorite social media platforms?

More than just saving for college.

A college savings plan may be the first thing that comes to mind when Gen Z parents think about being able to afford the rising cost of college. However, there are many other life events that parents don’t consider until an unexpected emergency happens. Think about the cost of braces, unforeseen health challenges and costly insurance products.

Using social media to help millennial parents choose what financial products are best to support the needs of their Gen Z children not only helps the parents to save money; it also offers an opportunity for parents to model positive financial habits.

Gen Z already has a spending power of $44 billion and that is expected to grow as they become the largest consumer group over the next four years. However, less than half of Gen Z’ers actually have a bank account with a traditional financial institution.

This presents a great opportunity to help Gen Z’ers to learn how to save a portion of their allowance for big items they may want to purchase with cash like their first car. There are also opportunities to demonstrate how college savings calculators help Gen Z savers to determine how to afford the school that best suits their goals.

Manage expectations around preparing for a recession

As the news is flooded with warnings of a recession, community bank customers want to know how they can best guard their money and investments. This is where community banks can educate their customers and members on financial products that most may not be aware of.

A recent survey revealed the shocking number of Americans who currently live with credit card debt.

  • 30% have between $1,001 and $5,000 in credit card debt
  • 15% have $5,001 or more in credit card debt
  • 6% have more than $10,000 in credit card debt

What’s even more concerning is that 15% of Americans have been in debt for at least 15 years. The rising cost of living expenses makes it necessary for consumers to depend on credit cards to make everyday purchases like gasoline and groceries.

This is a great time for community banks to educate their customers on responsible credit card usage and paying down their debts. Customers would also benefit from learning more about what savings products best fit their family’s needs.

Remember to share reasons why your bank’s products win over the competition. This helps your customers to alleviate fears around talking openly about their debt and spending habits as they face the threat of a recession.

Build a credit score from scratch

There are around 45 million adults in the U.S. who have no credit score or a limited credit history, blocking their ability to build a credit score. This statistic includes the younger

Gen Z demographic who are too young to have a credit score. However, let’s not forget that low-income consumers make up a separate demographic that is disadvantaged by the current credit system with 45% of adults in low-income neighborhoods having no recorded credit score at all.

Given these statistics, it only makes sense for community banks to look at how technology can support these demographics to access credit using other means. We’ve previously shared how artificial intelligence is helping financial institutions to review the creditworthiness of customers by analyzing data from traditional sources like utility bill payments, rental payments, and job history.

Using social media to teach underrepresented groups how these new tools can help them to increase their savings for emergencies, begin a positive relationship with credit, and to gain access to low interest loans can be a great way to bridge the gap in communication.

How Wipfli can help

Wipfli can support your community bank with a digital upgrade or a  roadmap of your financial services education marketing strategy. We can help you overcome your greatest challenges while staying in compliance with a digital tech strategy tailored to your institution. Learn more on our financial institutions digital services web page or check out these articles:

Author(s)

Zak Dabbas
Principal
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