Money Sense: Financial Literacy in the US

Did you know that 2 in 3 adults don’t prepare written or digital household budget or that spending went down 3 percentage points in 2013?

Gauging the financial literacy of your members and customers is a necessary step to offer them the best services, tools and education to manage their money.

Below is an infographic from Online Accounting Degrees which details some interesting statistics about financial literacy in the US.

What do you think? How are you serving these knowledge gaps?
Dollars and Sense: How Wise Are We With Money?

Source: Online Accounting Degrees

Making the Grade: Are Americans Failing Financial Literacy? (Infographic)

April is almost over, which means there is one week left in Financial Literacy Month (FLM). Although there is extra attention on financial literacy in April, consumers should be aware of their financial heath year-round. A study by the National Foundation for Credit Counseling found that many Americans grade themselves with mediocre scores: a C, D, or F letter grade for financial literacy and money management skills.

The infographic below looks at where Americans could use some finance lessons.

Financial Literacy Month Infographic

Fast Facts: Financial Literacy

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Below are some updated Fast Facts on Financial Literacy in honor of National Financial Literacy Month.

2004 was the first year the United States Senate officially designated April as National Financial Literacy Month, with the House following in 2005. The overarching goal is to teach Americans how to establish and maintain healthy financial habits and make informed financial decisions.

FACT: Research shows that financial curriculum can have a positive impact on how consumers manage their finances.

  • Financial education is likely to increase savings, use of banking services, home purchases and improvements in overall financial health.
  • Prudent use of insurance products protects financial assets, including the consumer’s most valuable asset – the ability to earn an income.

FACT: Even after the pain of the most recent financial crisis, few Americans are making wise financial decisions.

FACT: Through the Financial Literacy and Education Commission, the Federal Government has developed a national financial education website and hotline, compiling information from over 20 agencies.

  • Efforts include teaching materials provided by the FDIC, Department of the Treasury, Securities and Exchange Commission, and Department of Education.

FACT: The Financial Services Roundtable member companies have focused much of their community service initiatives on financial literacy, completing 42,320 financial literacy projects in 2012.

  • Projects served a broad base of consumers, including students, adults, service members, the elderly, and un-banked or under-banked Americans.
  • The vast majority of Roundtable companies are engaged with Junior Achievement USA, fostering financial literacy to 4.2 million US students annually.
  • A full listing of programs provided by our members is available on our website, in addition to a financial literacy roadmap with free resources and curriculum for K-12 education.

FACT: The Roundtable Scholarship Foundation established a financial literacy scholarship in 2011 to encourage high school students to participate in financial education courses before entering college.

  • 17 students received the award in 2012, an increase from 9 students the previous year.

 

You can view all previous Fast Facts at www.RoundtableResearch.org.

Copyright © 2013 The Financial Services Roundtable, All rights reserved.

FI Spotlight: McGraw-Hill Federal Credit Union – Part One

McGraw-Hill Federal Credit UnionFor our latest FI spotlight, we had the opportunity to speak with Shawn Gilfedder, President and CEO of McGraw-Hill Federal Credit Union, on the eve of one of their Financial Literacy Series seminars in January. Shawn shared insights on innovative uses of mobile solutions, “Financial Wellness” and its impact on consumers, and how social media plays into their communications strategy.

Check out the video below for part one of our video interview.

Stay tuned for another upcoming video with McGraw-Hill FCU or follow them on Facebook or Twitter.

Think your FI deserves special recognition? Submit your FI here

New Technologies Are Coming for Unbanked, Underbanked

*This post originally appeared on MyBankTracker

In the past year, countless prepaid cards have flooded the nation to target the large portion of the American population that is either unbanked or underbanked. Acknowledging that the market for these alternative financial products is rapidly growing, more tech companies are catering to this group of consumers.

According to a recent survey by the FDIC, in 2011, 8.2 percent of U.S. households do not have bank accounts, up from 7.6 percent in 2009. And 20.1 percent of U.S. households have bank accounts, but rely on alternative channels for financial services (e.g., check-cashing, payday loans and money orders), up from 18.2 percent in 2009.

Even traditional banks have jumped on the bandwagon to compete against non-bank prepaid-card companies and get a piece of the prepaid-card market.

Last fall, Regions Bank started rolling out asuite of products and services that included a prepaid card and check-cashing and Western Union services. In July, Chase, the largest bank in the country, launched the Liquid prepaid card that does almost everything that a regular Chase checking account can do.

“As banks have steadily inflated the cost of banking, more and more depositors are seeking substitutes for bank accounts with escalating costs, high minimum balances and surprise fees,” said Jim Wells, president of Wellspring Consulting, a firm that specializes in solutions for the unbanked and underbanked.

But, with the proliferation of financial technology, the focus is shifting to serving the unbanked and underbanked through mobile devices.

Last week, at a Finovate conference, two companies demonstrated their versions of a mobile wallet for the unbanked or underbanked consumer.

The CAT (Cash and Transact) mobile wallet, by Emida, is an app that is based solely on the consumer’s smartphone. Through participating retailers, users can refill their CAT accounts with cash (for a convenience fee of $1.50). Then, they can use the funds to pay for purchases through the app.

The Flip mobile wallet, from PreCash, is an app that allows users to perform instant mobile check deposit and make expedited bill payments — two services that were never before available on a prepaid card account.

“Although these mobile-enabled, prepaid card-based accounts are attractive to far more than just low-income consumers, one key to success will be in making the services available via even the simplest of mobile devices,” said Wells.

In countries where financial institutions are hard to come by, mobile devices are the preferred channel for financial transactions. For example, more than 17 million mobile subscribers in Kenya use a mobile-phone-based money transfer service called M-Pesa, which enables users to deposit and withdraw money, pay bills, buy phone minutes and send money to bank accounts or other users.

In the U.S., the decreasing cost of smartphones may make it seem like everyone has a smartphone — but non-smartphones are still the most common mobile devices among the low-income population.

According to the Federal Reserve, 64 percent of the unbanked have access to a mobile phone (18 percent have a smartphone) while 91 percent of the underbanked have access to a mobile phone (57 percent have a smartphone).

Regardless of the types of mobile devices, the demand for alternative financial products and services is there.

And, history tells us that unbanked and underbanked consumers could be the users of the next wave of financial innovation.

In last year’s fall Finovate conference, card-linked offers made regular appearances on stage. Since then, card-linked offers became more available to bank customers. Bank of America, Capital One, American Express and many other financial institutions began providing card-linked deals.

Considering that the conference offers a good idea of what products and services we’ll see in the near future, it wouldn’t be a surprise to find that, by this time next year, there are more prepaid card accounts and other financial services that live on mobile devices.

 What are you offering your customers? Let us know in the comments below!

The Next Banking Generation: The Mobile Teen

April is Financial Literacy Month, and many organizations and financial institutions are providing information and tips to help consumers take the right steps on money management. One demographic driving numerous campaigns for Financial Literacy Month is the pre-teen and teen demographic, the next banking generation.

A recent infographic developed by Safely shines light on how frequently pre-teens and teens are using mobile devices; 75 percent of 12 – 17 year olds own a cell phone. These teens don’t just have phones to call home in case of emergency — they are heavy mobile users who talk about 835 minutes a month on their phones and receive/send an average of 1,200 texts a month. They are also heavy app users, with an average user downloading 11 apps a month.

As financial institutions and organizations help educate consumers for Financial Literacy Month, it is important to keep in mind the new financial generation is a generation that will approach finances with a mobile perspective. See below for the full information from Safely and more stats on the mobile teen:

How are you helping your financial institution’s youth? Tweet at @Bankingdotcom or let us know in the comments below.

Drew Brees Tackles Financial Literacy

Drew Brees discusses the importance of educating children and young adults about finance from an early age and previews the game: Financial Football. Financial Football, which is sponsored by Visa and the National Football League, is designed to teach financial concepts through an interactive game. Answering questions correctly moves your team up the field to score touchdowns. To watch the full video and see a demo of Financial Football click here.

As a financial institution, it is important to tap into the younger customers and members to jump-start their financial knowledge from an early age. What is your institution doing to educate children and young adults? Let us know in the comments section below.

Drew Brees on CBS News

Demo of Financial Football

Let Banking.com Help You Reach Your Customers and Members

Rightfully so, financial management and literacy is a topic on many financial services leaders’ minds today. It seems that there are many initiatives in the marketplace to help consumers and small businesses better understand financial matters — from printed brochures, to Websites, to large-scale events.

So, what are you doing to help educate consumers about their overall financial picture?

Banking.com is a resource to use to learn how to manage every facet of your customers’ and members’ financial lives. Educational tools provided on this site will help to improve your customers’ and members’ ability to manage their own finances while improving your operational efficiency at the same time.

It comes down to this: Customers and members of all ages are looking for better ways to manage their financial lives through a trusted partner – their financial institution. Financial institutions that help their customers and members see their entire financial picture will prosper in the future by creating a day-to-day online relationship and ultimately becoming their customers’ and members’ primary financial hub for all of their financial management needs.

And don’t forget about small businesses!

Small businesses generate $6 trillion in revenue each year. That’s equivalent to the second largest economy in the world. And since two-thirds of small business owners still use personal bank accounts for business, you won’t have to look far to find them. They’re already your customers and members. Don’t forget to think big about your small business strategy as well.

We’d appreciate your thoughts. Feel free to leave a comment and let us know how you are reaching and serving your customers and members.

What Goes On Your Credit Score?

During a segment on Good Morning America, Mellody Hobson discusses what affects consumers’ credit card scores. While this is common knowledge for FI’s, are your customers informed about how their financial habits are affecting their credit scores? Providing brochures and online information about credit scores will help your customers and members become more educated about how their day-to-day actions can affect their credit score.

Below, Mellody offers tips to help consumer effectively manage their credit scores.