3 Reasons Financial Education Programs for Adults Can Help During and After the COVID-19 Pandemic

With the emergence of COVID-19 bringing social distancing measures to communities around the world, banks and credit unions are closing their branches and reaching out to their communities to lend a helping hand like never before.

It has never been more important for banks, credit unions, and financial institutions to ensure their consumers feel supported and have access to financial education programs for adults that help them understand their options during the crisis.

Before coronavirus arrived on our shores, EVERFI conducted research on consumer financial attitudes and behaviors and found a surprising trend.

An Approachability Gap Existed Before COVID-19

Half of Americans with bank accounts do not feel comfortable talking to their bank or credit union about financial products and services, according to the survey of 1,300 banked consumers.

When asked about the barriers stopping them from engaging with their bank or credit union, hesitant consumers said:

1. They aren’t sure what questions to ask.
2. They don’t know “the lingo” (what banking terms and acronyms meant).
3. They are concerned they won’t understand the answers to their questions.

What this revealed was a gap in approachability between financial institutions and their customers or potential customers.

This gap is widest for a certain type of consumer. Across income levels, consumers with lower financial capability and low levels of satisfaction with their current financial situation are also less likely to feel comfortable talking to their bank. This group, which makes up just under half of all banked consumers, is also much less likely to feel confident that they can achieve their financial goals (56% were at least somewhat confident they could, compared to 89% of their peers).

COVID-19 & Consumer Financial Confidence

EVERFI completed this research before the emergence of COVID-19 in the U.S. and the associated economic impact, but it isn’t hard to imagine that recent social distancing measures, school closures, and growing unemployment numbers have increased financial stress and decreased financial confidence — and that anxiety about approaching financial institutions is particularly high stakes at a time when consumers need support more than ever.

Online Financial Education Programs Bridge the Gap

The good news is that research also provides evidence that online financial education is a tool to bridge this approachability gap, increasing the odds that consumers feel confident enough to approach their financial institutions for their needs.

Online financial education programs are positively associated with:

1. Increased approachability. Consumers who have received financial education in the past are more likely to have improved financial capability and feell comfortable approaching their bank or credit union to talk about new products or services (56% are comfortable, compared to 45% of those with no prior financial education).
2. Improved confidence. Financial education is related to confidence that individuals can achieve their financial goals (80% of those who have had financial education believe they can achieve their goals, compared to 71% without financial education).
3. More financial products. Those with prior financial education hold more financial products than those with no prior education. This is particularly true of wealth-building products, including retirement accounts and non-retirement investment accounts.

In this environment with COVID-19 and the resulting social distancing, financial education can no longer be delivered through an in-person consultation in your bank branch. Digitally delivered financial education is uniquely positioned to reach consumers at home and deliver on the potential of financial education: building relationships through approachability, impacting financial capability through confidence, and influencing the adoption of appropriate financial products.

The value of digital financial education isn’t new, though. In consumer research EVERFI conducted in early 2019, we found that 78% of consumers wish they had more information when making financial decisions. And consumers prefer online over any other channel for finding the information they need.

What’s more - when we asked consumers what would help them reach their financial goals, 74% said financial education would help. But many of the other responses consumers gave are also hallmarks of high-quality digital education, including:

• Easy access to reliable financial information
• Budgeting or savings tools or apps
• Personalized advice from their bank or credit union

In this environment with COVID-19 and the resulting social distancing, financial education can no longer be delivered through an in-person consultation in your bank branch. Digitally delivered financial education is uniquely positioned to reach consumers at home and deliver on the potential of digital & online financial education for adults: building relationships through approachability, impacting financial capability through confidence, and influencing the adoption of appropriate financial products. 

The value of digital financial education isn’t new, though. In consumer research EVERFI conducted in early 2019, we found that 78% of consumers wish they had more information when making financial decisions. And consumers prefer online over any other channel for finding the information they need.

Hallmarks of Quality Online Financial Education Programs for Adults

What’s more - when we asked consumers what would help them reach their financial goals, 74% said financial education would help. But many of the other responses consumers gave are also hallmarks of high-quality digital education for adults, including:

• Easy access to reliable financial information
• Budgeting or savings tools or apps
• Personalized advice from their bank or credit union

We’re all navigating trying times right now, facing new challenges and finding new ways to connect at a distance. But there is every indication that consumers and financial institutions can benefit from bridging “the approachability gap” to connect consumers with the products and services they may be after, but are just too intimidated to pursue. And financial education is a key tool to building that bridge.