01 Jul Bridging the financial literacy gap.
The levels of financial literacy in South Africa are concerning, with about 49% financially illiterate. It is no surprise that only about 6% of South Africans can retire successfully, and South Africans have an extreme level of indebtedness.
Currently, we have some admirable education programmes which take financial literacy into schools, and other spheres. But how do we transfer those lessons in financial principles, instruments, and institutions into daily awareness and application?
We have surpassed the Fourth Industrial Revolution, characterised by the integration of data. We have all or most of the data we need, including financial behaviour. We deploy machine learning effectively to predict behaviour and risk. Enter the Fifth Industrial Revolution, with AI at its centre. At its best, it builds on the advancements of the Fourth Industrial Revolution and recognises human-centric goals.
Machine learning enabled financial services companies and others to recognise behaviour, anticipate a developing need, and spit out an offer when the time was right. It focused on ‘spending’ and ‘gratification’ but not ‘educating’ through grasping ‘impact’.
If the user inputs short-and long-term goals into a machine, and their data and behaviour was interwoven, they would know in real-time of the impact of accepting or rejecting the offer. And in doing so, improve financial literacy on-the-go.
The adoption of human-centric technology fulfils a real gap.
The irony is that those who need financial planning the most cannot access it. Try getting a professional, high commission-earning financial planner to take on a young adult wanting to know what to do with the R 2 000 pm that they want to save or invest.
Educating people on financial instruments, budgeting and retirement planning is one thing, but it cannot be a one-off. The technology available today allows it to be a continuous process between humans and machines, developing financial literacy and promoting inclusion.
Salt Employee Benefits is South Africa’s largest independent retirement fund administrator with over 900 000 members.