Money makes the world go round. However, money is not enough to have everything one needs. When one is financially literate, he becomes a smarter spender, builds financial resilience, and controls his finances more.
Thanks to technology, you can do plenty of things today. For example, you can pay using your iPhone and manage investments through an online broker. These are examples of financial technology, or fintech, a new technology that improves and automates the delivery and use of financial services.
Fintech companies are best positioned to provide Canadians with the tools, information, and resources they need to improve their financial literacy. With the help of fintech, financial knowledge becomes more accessible to people regardless of their finances and background, enabling them to make educated decisions about their money. In this article, you will learn about how fintech promotes financial literacy among Canadians.
Why Financial Literacy Matters in Canada
Seeing the importance of financial literacy, the Government of Canada established the Financial Consumer Agency of Canada (FCAC) in 2001 to protect and educate consumers of financial services and improve Canadians' understanding of the financial sector, including its products and services.
The National Financial Literacy Strategy 2021-2026 is a five-year plan to create a more accessible, inclusive, and effective financial ecosystem where Canadians can learn strategies for building financial resilience.
Canadians with proper financial knowledge can make wise decisions about spending their money and staying on top of their financial obligations. They can buy products and services they need, plan how to use their money for life goals, deal with government programs and systems, evaluate the financial information they get, and make the best use of all the resources they have.
Thanks to the FCAC initiatives, Canada is one of the most financially literate countries in the world. However, their financial literacy programs can identify the emerging opportunities and challenges Canadian consumers face when dealing with their finances. Common challenges include:
- Debt accumulation
- Housing affordability
- Retirement insecurity
- Underemployment and job insecurity
- Rising cost of education
- Healthcare expenses
- Lack of emergency savings
If these challenges are not resolved, they can have a lasting effect on individuals and the nation.
The Rise of Fintech in Canada
Canada is already home to over 1200 fintech companies. Some of these include:
- Wealthsimple - an automated investing platform
- FreshBooks - an accounting software for small and medium-sized businesses
- Mogo - offers different financial services such as loans, Bitcoin, and trading
- Payfirma – a multi-channel payment solution provider
- Borrowell – offers credit score tracking and personalized tips
- Mylo (Moka) - packed with micro-savings and investment tools
- Koho - a tool for budgeting and spending management
- RemitBee - a remittance and currency exchange service provider
Fintech has revolutionized how consumers and businesses interact with money. This technology has also changed how financial education is delivered, making it more accessible, interactive, personalized, and even gamified.
How Fintech is Promoting Financial Literacy
Financial literacy involves a wide range of topics, including balancing, budgeting, saving, investing, and understanding financial products. The rise of fintech companies has opened the doors to delivering financial education in innovative and engaging ways. Technology simplifies complex financial concepts, making learning about money more interesting.
Here are some ways fintech promotes financial literacy in Canada:
Personalized Financial Education
Fintech companies can offer customized solutions to users, even for their financial education services. The apps they develop can help users track spending habits. Based on the data gathered, the app can suggest how the user can further improve their money management. A fintech app that offers personalized learning pathways is Zogo.
Gamification of Financial Learning
Fintech gamification strategically incorporates game-like components into financial learning, services, and apps to encourage users to interact better and understand their finances. Game design concepts such as incentives, challenges, feedback, and competition are some of the concepts included in fintech apps to promote enjoyment and learning. Monzo is a fintech app that uses gamification to provide insights into a user's spending habits. This app has different challenges and goals that help users manage their finances wisely.
Access to Real-Time Financial Data
Real-time processing in fintech app development has paved the way for faster decision-making and exceptional customer experiences. This technology allows companies to analyze data once generated to ensure smarter operations and excellent personalization.
Bloom by Spring Financial is an AI-driven financial concierge mobile app for Canadians. It uses AI to make banking, spending, and budgeting transparent and hassle-free. With its intelligent financial assistant, Oscar AI, Bloom users can ask Oscar how much they spend on a certain app or subscription. They can also compare their spending habits with this fintech app in Canada. All these are possible since the app can access the latest data and use it to help users manage their wealth.
Expanding Financial Inclusion
Thanks to fintech, mobile phones and other gadgets with internet access have enabled low-income individuals and businesses to participate in the financial system via digital accounts. RemitBee, a currency exchange and remittance service provider in Canada, allows users to maximize their money through fair currency accurate exchange rates and affordable fees.
The Future of Fintech and Financial Literacy in Canada
Canada’s fintech is set to grow further. With improved financial conditions, more funding for fintech can be expected. With a bigger budget, fintech companies can improve their apps, products, and services, enabling Canadians to enhance how they manage their money further.
Conclusion
Fintech has transformed the way financial literacy is presented in Canada. By leveraging technology, complex financial concepts are simplified, and users can access personalized learning experiences. Thanks to fintech, innovative solutions are available that bridge knowledge gaps, helping individuals make wise decisions about their money. Canadians can build financial resilience and achieve their financial goals if they embrace these fintech tools.
