Recent research has revealed a concerning trend: people with low financial literacy are often financially worse off compared to their higher-literacy peers, even when their income levels are similar.
A study by abrdn confirms that financial literacy plays a critical role in financial well-being, particularly in areas like pensions and savings. The findings are alarming:
Lower-income individuals with low financial literacy are missing an additional £10,000 in their retirement savings compared to those with higher financial literacy.
The gap is even more stark for higher earners - those with low financial literacy have £87,500 less saved for retirement than their financially literate counterparts.
Savings:
Only 80% of high-income earners with low financial literacy have any savings at all, while 94% of those with strong financial knowledge are saving for the future.
For lower-income earners, the difference is just as significant: 66% with low financial literacy have savings, compared to 79% of those with a better understanding of their finances.
The pattern is clear – those with higher financial literacy are better positioned to save more for the future. As a company that specialises in video communication for financial services, we see this as an opportunity for financial institutions to step up their efforts to educate their customers.
A lack of financial literacy can lead to poor financial decisions, inadequate savings, and ill-preparedness for retirement. Financial institutions, while focused on providing financial products and services, also play a vital role in helping customers understand and thrive in the financial world. In fact, financial firms have a standard of care to maintain when adhering to the Consumer Duty set by the Financial Conduct Authority. The Duty sets high standards for considering customer outcomes, including enabling and supporting customers to pursue their financial objectives. The challenge lies in making complex financial information accessible and easy to digest.
This is where the power of personalised video shines. Research shows that individuals retain 95% of a message when they watch it in a video compared to just 10% when reading text. Videos can break down complex financial concepts into engaging, visual experiences that simplify understanding and drive action. By incorporating customer data, personalised videos create a one-on-one experience, offering clear, tailored explanations of everyone's finances.
Our team have helped numerous financial institutions create personalised and interactive video campaigns that translate technical financial information into comprehensive, actionable messages. Over the years, we’ve helped our clients achieve success and recognition in their industries.
We have delivered award-winning campaigns that effectively adhere to the standards of the 2023 Consumer Duty for many years. Royal London, the largest mutual life insurance, pensions and investment company in the UK, won a Gold Workplace Pension Ratings Award for revolutionising their pension customer’s annual reviews with personalised video. Each video featured up to 15 points of personalisation in both text and audio, providing highly tailored video messages for every customer. Interactive call-to-action buttons at the end allowed members to view their full pension statements and check if they were on track for their desired retirement lifestyle. This approach led to impresive results, with a 328% uplift in industry average email click rates and 98% of videos played till the end. This campaign stands as a great example of how breaking down complex financial concepts with captivating video can foster better financial outcomes for customers.
Another campaign of note, delivered in partnership with a top pension provider, gained industry recognition for using personalised video to simplify their pension statements. This campaign was designed to simplify complex pension information, providing clear and engaging visual representations of each member’s retirement savings. The videos not only explained how current contributions would impact future living standards but also included interactive elements, such as calls to action that encouraged members to download their statements and use retirement calculators. As a result, the campaign saw an 88% email open rate, a 95% video completion rate, and an 86% interaction rate with the calls to action, leading to a marked increase in customer engagement and understanding of their pensions.
While we’re proud to be part of these award-winning projects, the real value lies in the tangible benefits our clients’ customers experience - simplified financial information, improved literacy, and empowered decision-making.
Financial services companies can have a direct, positive impact on the financial well-being of their customers by investing in tools and solutions that educate and inform. As financial literacy becomes increasingly important, video communication stands out as one of the most effective ways to simplify financial concepts and drive engagement. With personalised, easy-to-understand video communications, financial institutions can help bridge the gap in financial literacy, and ensure that their customers are well-equipped to make smart financial decisions that impact their future, helping to achieve positive outcomes.