The trust gap in digital product take-up
While millennials are eager to use digital providers there is still a “trust gap” that prevents them from fully engaging and ultimately taking up the product.
This is the assessment of Mark Jones, CEO of digital peer-to-peer lender SocietyOne.
Jones (pictured left) was speaking on a panel on financial literacy chaired by Finsia CEO Chris Whitehead.
On his experience with SocietyOne’s customers, millennials recognise that digital banking is easier and cheaper, but this recognition does not necessarily translate into product take up.
“While millennials start the application process with us online, the process is not fully completed. This age group tends to hesitate because of the terminology in unsecured lending,” Jones said.
He noted that in comparison, the 35 to 55-year-old age group are a lot more comfortable with the process because of their experience of taking up loans.
Here, brokers will be key, and Jones likens the role of brokers like giving “millennials a helping hand” when they are in the genius bar”.
“We have more of a focus on supporting brokers as it helps make the language easy. That level of contact is still important as there is still this trust gap in the digital environment,” he said.
The panel also explored innovative approaches to financial literacy.
For Shahirah Gardner, co-founder of fintech Finch (pictured right), it’s about engaging consumers well before they even think of saving – or what she calls the “pre- contemplative stage”.
Finch is a financial app for a person’s social life. It allows for peer-to-peer payments between friends and has a personal finance management tools that shows people where their money has been spent.
“We are trying to take a slightly different approach but linking a financial app with people’s social life. Behaviour is not rooted in a process,” Gardner said.
“It is about being with consumers at the pre-contemplative stage. That is engaging them at schools for example or at the very beginning of their finance journey.
“We want to make managing money fun and seamless while at the same time building trust and loyalty with our customers.
“So, when the time comes, we are there for them when they want to seriously save for a goal.”
ANZ’s approach is underpinned by a wholistic financial wellbeing.
“I have been involved with financial literacy and financial inclusion programs for 14 years. We do this in partnership with community groups and government.
“We have expanded our approach to financial literacy to touch on the well-being of people. Finances are linked to health and wellbeing, ANZ head of financial inclusion Michelle Commandeur (pictured second from left) said.
“We believe as a sector we have an important role in helping vulnerable people and making sure they are not left behind,” she said.
For Moneytree CEO Paul Chapman (pictured second from right), there are lessons for banks in driving financial literacy from the licencing of driving.
“The process to getting a driver’s licence is structured and meaningful. Drivers need to get their L-plates and P-plates before they are licensed to drive.
“Once you get that licence the outcome is very tangible, driving takes you places,” Chapman said.
“I think there is an opportunity for banks to take a bigger part in explaining and engaging people with their finances.
“Driving is an immediate benefit of course and the payback with finance is slower but there is still a big opportunity there.”