This week is the 9th annual ‘My Money Week’, the national activity week for primary and secondary schools that aims to improve the skills, knowledge and confidence of the younger generation in money matters.
It’s as good a time as any, then, to reflect on just how much general awareness there is about financial management. Recent evidence suggests that there is plenty to do, not only in schools but also across the spectrum of generations.
Earlier this year, research we conducted as part of ‘Credit Awareness Week’ found that more than half the population (55%) has never checked their credit score. Experian is one of the credit reference agencies to provide credit scores for free, so that fact is perhaps surprising.
Added to that, 86% said that they think credit decisions should be made clearer, while 26% of respondents wrongly think a credit reference agency decides whether to turn down an application for credit. Moreover, 75% falsely believe that credit refusal has had an impact their credit score
Whether you are consumer looking to buy your first home, or a small business looking to secure a loan, checking your current financial situation should be a first point of call. But it’s fair to say there is room for improvement around the process which leads to the decision on a mortgage or loan.
Affordability remains a big issue for both businesses and their customers – will the financial products offered be just as affordable when the first payment is made as the last? We all need to develop a broader understanding of how they can make proactive, rather than reactive decisions about their financial lives. However, there is also a big opportunity for businesses to drive financial confidence, by providing a better customer experience, using the power of data to take the guesswork out of the decision-making process.
Change is required in the services offered by providers to match the emerging new generation of customers. The younger generation have never known anything other than online and see no reason why major financial decisions on cars and homes cannot be made on the web.
They don’t just want – they expect – a seamless customer journey, with decisions about their access to finance made quickly and in a way that is simple to understand. Processes could be clearer and more transparent, helping to build a wider understanding of how the system works, delivering better and more appropriate outcomes for our customers.
So, what is the customer outcome we are striving for? Well, it’s when an individual doesn’t have to cast around and apply for several different types of credit, only to be refused and not understand why. It’s applying for credit that he or she can afford and understanding the criteria required to get approval.
With the amount of data available today, we can deliver far quicker, cleaner, easier and more appropriate access to finance for everyone. This is important, because it should help build self-assurance in money matters.
If we can couple this with improved financial education in schools and at home, there is a big opportunity for the UK to set new standards when it comes to our collective confidence with our own money.