July 2, 2013

Young Adults, Financial Literacy, and the Future

Source: Alejandro Dinsmore is the co-founder of Sisasa, a company with the goal of “bridging the gap between financial institutions and young adults.”

It is no secret that many young adults have a difficult time keeping their personal finances in order. This holds true with high school kids who are just beginning to make money in the real world, college students who are dealing with everything from student loan debt to career planning, and those who are entering the working world for the first time.

Even in today’s day and age of advanced technology and the internet, many young adults struggle to make the right decisions.

Fortunately, most people are aware of this. From those looking for answers to their parents to the many financial institutions that serve them, making changes for a better future is something that everybody cares about.

Targeted Advice Worth Considering

Although it has only been about eight years since I graduated college, the world has changed quite a bit since then. For this reason, I don’t have nearly as much knowledge of what young adults are facing and feeling as many others.

The professionals at Sisasa are doing their part in making a positive impact by developing a mobile banking platform which allows community banks to better educate customers while also gaining an advantage over the competition.

Young adults love technology, so it is safe to assume that mobile banking is only going to become more and more popular in the years to come.

Below you will find some great information and advice from Dinsmore, a true expert on this subject:

1. What is the biggest problem you see with the younger generation today in
terms of financial literacy?

As a team of young adults, we know the biggest problem is finding effective channels to deliver financial literacy resources to our generation. Let’s face it, young adults are lazy, we’re used to having everything delivered to us through our smart phones and other devices. As young adults we are exposed to constant media influence that make us think about short-term reward. The short-term mindset is problematic because a crucial aspect of healthy finances is focusing on the long-term. Sisasa means “not now” in Swahili, because the habit of telling yourself “not now” when tempted by those overpriced shoes, or that beer at the bar, is so important. At Sisasa we focus on the difficult challenge of getting young adults to think about the future.

Another issue is lack of exposure; financial literacy is not included in the majority of curricula in U.S schools. Most young adults graduate from college without knowing about basic financial instruments like mutual funds or Roth IRAs. Take for example the upcoming federal loan interest change on July 1st, which will double the interest rate on Stafford student loans. I guarantee that most people with student debt do not know that they can lock down their current interest rate by consolidating their federally subsidized loans.

It would be great if young adults took the initiative to go out and educate themselves with the resources available online but unfortunately most will not search for the information until after the damage has been done.

2. How can technology help this generation better understand their finances?

This generation is exponentially more tech savvy than any previous generation. What they may lack in financial literacy they compensate with a stunning ability to interact with technology. For young adults smart phones are extensions of their own selves. If a smartphone were a person it would probably know more about its young adult owner than anyone else. At Sisasa we want to take advantage of how tech savvy this generation is and give them financial resources through the channels they engage with most, which happen to be their mobile devices and social media.

3. How are you guys bridging the gap between consumers and banks?

At Sisasa we are developing a mobile banking platform for community banks that gives them a competitive edge while also educating their customers. To put what we do at Sisasa into context, it is important to know that most banks outsource their mobile banking applications to large enterprises that provide cookie cutter solutions.

These large enterprises do not understand the expectations and needs of the young adult consumer but the Sisasa team does. Sisasa is developing the new standard of mobile banking software, which engages young adults by using the same mechanisms that make online social games (like FarmVille) so successful, and combining that with the utility of managing your own finances. Essentially, a consumer levels up and gets badges by reading financial literacy articles that are personally tailored to their interests and financial activities as well as meeting financial goals. The consumer can share financial goals with friends and even initiate and track shared goals, such as a group trip to Paris. The levels and badges translate to real rewards that are offered by the bank, such as free movie tickets, or local deals.

While providing the young adult consumer with information they need and want, our application also helps community banks compete against larger, less personal, national banks. A lot of young adults end up going to Bank of America or Chase because these banks have the resources to have branches in every region, which is appealing to the transient lifestyle of young adults. Sisasa wants to give community banks the tools they need to compete in this market. We are not just making another banking app, we are making the entire banking experience mobile, into something you do, not somewhere you go.

Final Thoughts

It does matter who you are: a young adult looking for help, a parent hoping to provide assistance, or somebody who is interested in the use of technology to better understand their finances, this information is invaluable.

Not only does Dinsmore and the entire team at Sisasa have a solid grasp on the financial mindset of young adults, but they are doing what they can to change lives.

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