Stiven Muccioli, Founder and CEO of BKN301, a worldwide financial services platform, discusses how FinTechs are adjusting how we make our financial decisions from improving our financial literacy with online services to Artificial Intelligence advancing to a significant business tool.
The evolution of FinTech has significantly changed the outlook of the financial industry. A major revolution in the financial environment has been ignited by the emergence of financial technologies, which has transformed the personal finance landscape as well as paved the way for a modern era of finance characterised by convenience, accessibility and innovation. In addition to improving the way we manage money and conduct financial transactions; financial technologies have also played a significant role in promoting financial literacy and inclusion.
The technology-enabled innovations in the financial sector have broken new grounds, revolutionised the established practices in finance and paved the road for enhanced financial services. It has provided people all over the world with unmatched levels of convenience and access to the best-in-class financial services and products. In light of this, the significance of financial literacy has increased considerably. At present, it has become more crucial than ever to equip customers with the requisite knowledge and capabilities to successfully navigate the digital shift in the FinTech landscape and make sound financial decisions.
With only limited access to traditional banking systems and services, a large segment of the global population currently remains unbanked. In the Arab World, this problem is particularly acute, with approximately 69% of the population remaining unbanked. The MENA region, in fact, has the world’s largest unbanked population with around 50% of its people still out of the current financial system. Being financially educated is essential for achieving financial stability and well-being in the present day where transactions can be completed at the touch of a button.
The world of FinTech covers a wide spectrum of financial services and technologies that utilise digital innovations to streamline and improve financial procedures. This encompasses robo-advisors, peer-to-peer lending, mobile payment apps, cryptocurrency platforms and Internet banking, among others. These ground-breaking innovations have rendered the financial industry to be more efficient, cost-effective and accessible to a global audience. With FinTech anticipated to continue transforming the financial environment, the necessity of financial literacy is growing further in importance as a key to achieving financial success.
The significance of Artificial Intelligence (AI) in promoting financial literacy cannot be overlooked. The importance of education and guidance becomes critical, considering that 1.4 billion adults lack access to banking services and 64% of them require assistance to use financial institution accounts. By making FinTech more accessible, educative and convenient, AI is emerging as a powerful tool for empowering and educating individuals to better navigate the financial sector. AI has become a significant tool for businesses in the financial sector as it substantially enhances efficiency, transforms services and procedures and enriches customer experiences. With the ability to process a huge amount of financial data more rapidly and precisely, AI provides in-depth and valuable insights into market trends, enabling individuals to keep abreast of industry developments. Furthermore, AI-driven chatbots and virtual assistants also assist individuals in assessing and managing various financial risks, in addition to educating them about various investment strategies by creating real-time financial simulations.
Financial literacy is an umbrella term that is used to describe one’s ability to efficiently handle their personal finances. It includes understanding digital payment systems, investment options and possible risks and threats related to online financial activities.
Given the expansion of digital payment platforms and applications, customers are currently required to better understand how to successfully navigate this evolving financial environment. They must have a thorough knowledge of the numerous payment options, such as contactless payments, mobile banking applications and e-wallets. Additionally, customers should also be aware of how crucial it is to safeguard their personal financial data by utilising reliable authentication techniques.
FinTech has been successful in democratising the investment landscape. However, customers must have the necessary information to evaluate risk, diversify their portfolios and understand the effects of their financial actions, in order to make wise and informed investing decisions. This includes being informed of the possible dangers and risks that may come along with highly volatile assets, such as cryptocurrency. Furthermore, as the number of financial transactions conducted online rises, customers must also be thoroughly informed of the most prevalent cyber threats, including phishing scams and identity theft. They must also educate themselves on the ways in which they can safeguard their private information and money, as well as on how to report suspicious activities.
Modern FinTech products and services further provide savings and budgeting features, which aid customers in managing their finances. Financially savvy people can leverage these innovative tools to efficiently establish their financial objectives, monitor expenses and build savings. Despite certain security and privacy concerns, FinTech provides numerous opportunities to improve one’s financial literacy. To aid customers in making sound decisions, several FinTech businesses have incorporated educational tools and resources onto their platforms. For instance, various budgeting applications offer educational resources and videos with the sole objective of improving customers’ financial literacy. Investment platforms further include instructional material on risk management and other asset classes. Cryptocurrency exchanges also provide customers with the opportunity to explore more about the blockchain technology that powers digital currencies.
Bridging the financial literacy gap and accessing better opportunities in the FinTech era calls for a concerted and collaborative effort from individuals, financial institutions and policymakers. The responsibility for educating oneself on the financial products and services one uses rests solely upon the customers themselves. Financial organisations can continue to include more educational materials in their FinTech services and products offered, which is a guaranteed approach to enhance the financial knowledge of customers around the world. Policymakers, on the other hand, can promote financial education initiatives and regulations that shield consumers in the digital financial space.
The future of financial education will be more influenced by AI innovations as they continue to develop and evolve, eventually enabling people to make more confident and wise financial decisions. As FinTech develops, innovation and financial literacy will play a crucial part in ensuring that customers benefit from digital finance while minimising potential risks.