Intelligent Fin.tech Issue 22 | Page 49

SPECIALIST INSIGHT

THE NEXT ITH RACY ANKING

just a burden to bear . It is also a great opportunity for banks to build trust and familiarity with a new generation of customers . Over the longer term , this will pay off in the form of increased customer lifetime value , as consumers stick with a bank – graduating from pocket money savers , through to becoming a HENRY ( high earner but not rich yet ) and beyond , across the course of their entire lives .
How might poor financial literacy in the younger generation affect the economy , and could the reliance on simplified FinTech and banking platforms lead to complacency ? What are the potential downsides of this dependency ?
There ’ s a risk that poor financial literacy , combined with simplified fintech and banking platforms , could prevent people in the next generation from making informed financial decisions . Buy Now , Pay Later schemes are a real case in point – the provider may give top-level information about the offer they are making , but obscure the broader details from the customer ’ s view . This may result in a young and inexperienced customer purchasing an expensive smartphone , for example , without fully understanding the implications of the interest they will be paying as a result .
If they are unable to do detailed due diligence , fully understanding how much interest they will owe , they may end up spending hundreds of pounds more in interest than they could have done with a different payment option . The guise of ‘ user friendliness ’ often does not provide enough detail , leading to myopic decisions , with consumers paying much more than they could have done .
From a bank ’ s perspective , overly simplified fintech can reduce the amount of information they have on the
Machine Learning and AI hold the key to banks understanding the needs of young customers . www . intelligentfin . tech
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