As Financial Literacy Month draws to a close, we reached out to Parker Graham, founder and CEO of Finotta. We wanted to hear his thoughts on what it means to be financially literate at a time of major digital transformation and technological change – both in financial services and in the world writ large.
Finotta enables banks and credit unions to personalize their mobile banking experiences for their customers. Headquartered in Overland Park, Kansas, and founded in 2018, Finotta helps smaller financial organizations generate new revenue streams, boost user engagement, and compete with larger financial institutions.
Finotta made its Finovate debut last year at FinovateFall.
What does it mean to be financially literate in 2023?
Parker Graham: For many people, managing their finances and staying financially literate is not just a challenge – it feels harder than ever.
With decades-high inflation and historic interest rate hikes, consumers are feeling the heat. Most workers reported that any salary gains they’ve received in the last year have been outpaced by inflation. We’re really seeing this hit young people hard. Half of Gen Z and Millennials are living paycheck to paycheck.
Many consumers don’t know what steps to take to get ahead. And with traditional digital banking channels lacking that personalized experience, they aren’t getting the advice they need. Banks and credit unions must prioritize financial education for their customers because they can’t afford to be left behind.
In today’s world, is digital literacy required in order to be financially literate?
Graham: Digital literacy is a huge challenge we’re facing in the banking industry. More than 15 million people are not digitally literate. Consumers should not have to know how to bank online to make good financial choices.
To tackle this, banks should ensure that customer experience is at the forefront of all of their technology decisions. Banking apps need to be easy to read, quick to navigate, and intuitive – even for individuals who are not digital natives. This is exactly why we work directly with users when building our technology at Finotta to make sure it is easily accessible, navigable, and understandable.
Banking tech also must go the extra mile and make it personal by providing Personalized Financial Guidance (PFG) to customers. This guides consumers through their financial journey, no matter where they are, by offering tailored advice on how to meet their financial goals.
How can we make sure technology is an enabler of financial literacy rather than an obstacle to it?
Graham: Banks have to remember that acquiring a new digital banking solution isn’t just about technology for the sake of seeming flashy or modern. A banking app can actually help with financial literacy by taking the guesswork out of what customers should do with their money.
Your banking app needs to deliver the right experience, service, or product to the customer based on their individual data. Then, it should offer users concrete suggestions, like opening a new savings account for college tuition, that help them achieve financially healthy lives. The cherry on top is offering in-app rewards, like badges and milestones, that recognize customers for their positive choices and make financial literacy fun.
How does personalization in digital banking help foster financial literacy? How can fintechs help digital banking customers turn insights into action?
Graham: Consumers are looking for financial guidance beyond typical personal financial management tools, which do nothing more than provide fancy pie charts that show a customer’s spending.
From a consumer’s perspective, getting alerts in their banking app that tell them how much money they spent at Starbucks over the last month (when that money could have gone towards a 401K instead) does nothing more than shame them. It’s essentially saying, “Hey, you’re in a hole.”
Instead, banks can take consumer data one step further by helping them take actionable steps to reach their goals – like setting up monthly direct deposits to save towards retirement. A bank using a personalized approach can say, “Hey, we see you’re in a hole, and here’s how you can get out.”
Finotta made its Finovate debut last year at FinovateFall. What was that experience like?
Graham: Debuting our technology last year at FinovateFall was incredible. It gave us an opportunity to tell the story of how powerful and impactful our platform is in a room of our customers and peers.
What can we look forward to hearing about from Finotta in the coming months?
Graham: The next few months for us are going to be about scaling with more and more customers. It’s been a journey building our software and now we are focused on replicating our successes with as many financial institutions as possible.
