Community Service with the Personal Touch

September 23, 2014
/   Insights

Question: Community branch, personal service, mobile banking—which is the odd one out? Answer: None. Otherwise, the industry is in trouble. For some time now, there have been discussions about the future of community banks...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

Mobile Banking Engagement: Data from Digital Insight

June 24, 2013
/   Spotlight

Intuit Financial Services has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several...

Fast Facts: Financial Executive Economic Outlook Report

February 1, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of it’s Fast Facts, reliable, bullet-point research about issues facing the financial services industry. This series is the The Financial Services Roundtable’s first bi-annual Financial Executive Economic Outlook...

Do you feel more financially literate?

It’s a valid question—we’re at the end of Financial Literacy Month, designated as such by the government. So has it worked? Have Washington and the all the state capitals involved moved us to make things better?

Let’s start with the designation itself. Everything about the government is byzantine, of course, and even something as innocuous as encouraging people to become more money-savvy is no exception. Turns out this initiative was actually by a non-profit group back in 200, and the U.S. Senate signed on to a youth-oriented version in 2003, although by that time at least eight states already had their own version. A few years later, the National Foundation for Credit Counseling took up the cause.

In 2006, the Financial Literacy and Education Commission, backed by a lengthy roll call of government agencies and departments, delivered a comprehensive study titled Taking Ownership of the Future: The National Strategy for Financial Literacy. Supported by reams of data and credible subject matter experts, the report lays out a broad series of initiatives and goals that are designed specifically to help individuals enhance their management of financial issues.

The report also serves a perfect snapshot in time, not because it’s obsolete now—in fact, the advice may be even more valid in today’s difficult market—but because it captures the apparent widening gulf between the real and the aspirational. The resources, the desires, and the motives are all there to do things better than we should. And yet. . .

One good example is how much money we put away without spending. The report bemoans the steep decline in this area, pointing out that 35 years earlier, in the mid-’70s, 9.4% of disposable income was set aside for personal savings (some estimates have it even higher.) By 2004, the figure had plummeted to 1.3% (some estimates have it even lower.) Then Chairman of the Federal Reserve Board Alan Greenspan is quoted as saying that while domestic savings will be critically important, actual performance in this area would be dictated by largely by the “behavior of the members of the baby-boom cohort during their retirement years.”

Of course, the year 2006 could be seen as increasingly distant from the dot-com crash at the turn of the century and closer to the financial meltdown that began, at least publicly, in 2008. But where are we now?

Savings got closer to 6% during that period (dubbed the “new frugality”) but went back down to 3.5% late last year. That’s much lower than most retirement groups recommend. In fact, those who get started late in life—say, the age of 45—at the savings game need to put away a good 18% of annual income to assure a comfortable retirement after turning 70.

Can we do this? The current Chairman of the Federal Reserve Board, Ben Bernanke, had an interesting take on this before taking the job: As an economist at Princeton University, he theorized that the problem isn’t Americans saving too little, it’s foreigners saving too much. In particular, excess savings by Chinese individuals caused them to lend money to the U.S. at low rates, which effectively financed American consumption and caused a mountain of debt.

Of course, there’s much more to financial literacy than just personal savings—we need a better handle on everything from home mortgages and health insurance to tax rates and student loans. The irony is that all these issues are playing out on a national stage right now, courtesy of the presidential election.

In sum, the information and resources exist for us to learn more and do better. It’s in our own best interest to make the effort. Otherwise, every month—including those dedicated to helping us become more financially literate—will be like the one that came before.

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Compelling voices and contributed content from around the web

James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.