SEATTLE—Credit unions hang their hats on providing consumers with financial education, but one analyst believes there is a great deal of room for improvement.
Credit unions can do better, according to Rob Levy, managing director for the Center for Financial Services, both in giving consumers the knowledge they need to make sound financial decisions and having that education lead them to the proper products. The key, he said, is in better targeting financial education.
“The most innovative credit unions today are finding ways to bridge the gap between financial education and the products they offer,” Levy told CUToday.info during CUNA’s America’s Credit Union Conference here.
Levy said that too often financial education from credit unions is a once-a-month seminar on starting a small business or how to buy a mortgage, and other general topics.
“But how do we get the financial education connected to the product,” said Levy. “So if I am going to open up a credit card, that is the time when I need to learn about credit card debt, credit score and managing my credit score. I don’t think enough of the industry is bringing the education and the product together closely enough.”
Levy emphasized that kind of targeted education is not only needed at the moment the person is considering a product or actually taking the service, it’s also needed a month later or six months down the road when the person is late on a payment.
Where Technology Can Help
Levy said that technology plays a key role, with digital financial education solutions able to be reached around-the-clock.
“People have busy lives, especially the people who are struggling financially,” said Levy. “They likely have a job that makes it very hard to get to a seminar at 2 p.m. on Thursday or even a Saturday. But if they can watch a video via an app on their phone at home late at night, or on the bus, or they can read something . . . They should also be able to get educational information while they are online and about to pay their bill, so the matter is actually top of mind for them. Technology can make the education more timely and available for people who have really busy lives.”
Levy stressed the importance of targeted education versus general education programs.
“CFSI did some research on this concept we call financial capability,” explained Levy. “Financial capability means you are focusing on how do we change behaviors. Financial education has often been too focused on what people know. When it comes to financial behavior change, we actually want to change what people do. So good financial education is timely, actionable, relevant and ongoing.”
Levy explained that timely means at the moment the person is actually thinking about a financial product or service.
“So tell me about student debt when I am applying for my student loan and when I graduate,” said Levy. “And education should be actionable. So if you give me information about opening a checking account I should be able to open up a checking account right then, whether it’s on my phone or in the branch.”
Being Relevant
Being relevant with education, Levy said, means “you are speaking my language—so if that means you have to do it over a tweet or a snapchat to capture Millennials or in person in Spanish to capture Hispanics, that’s what you do.”
Finally, the education should be ongoing.
“One-and-done does not work,” Levy said. “You got to keep that education coming, keep it up to date, so every time a financial decision is being made the consumer has good advice so they can make the best choice.”