It’s all relative: Delivering financial education when it’s strategically relevant
The following is a guest post written by Lucinda Revell from Boost Capital, a platform that enables small businesses to access financial services and learning through smartphones.
I have three school-age children. It’s hard for me to find time to sit and quietly read the news. But as I carved out a few moments to check the online headlines today, I noticed a banner ad marketing school backpacks. A critical corner of my brain thought, “It’s June. Who buys a backpack when the school year is about to end? Try me in August when I’m psyched for back to school.”
The marketing algorithm successfully identified me as a parent, maybe due to my search history filled with inquiries such as “cheapest Lego set on a per block basis” and “what’s a normal age for my daughter to start teenage angst?” But the algorithm marketed me a relevant product at an irrelevant time. Better marketers are talking about how “it’s no longer sufficient to just know who the customer is. We’re entering an era where being relevant to those customers means building strategies around timely marketing to ensure you’re reaching them when they’re ready to engage.” It’s not a new idea… “Right message, right time has always been a goal of marketing, but now marketers can do it on the audience’s terms. Leading marketers are no longer looking only at demographic audience characteristics or at look-alike audiences. They’re looking for marketing signals that indicate people are at the right moment in life, or when audiences are telling them that they are open to a message.”
Offering interesting and impactful financial education content at the relevant moment
This idea doesn’t apply to only consumer products. At Boost Capital, where we’re working with Strive Community to prove that financial education training can de-risk and expand small business credit, we’re applying these marketing concepts to chat-based financial education. Proving our hypothesis could positively affect millions of small businesses globally. But to show how financial education can expand small business credit, we need people to be interested in that educational content.
We believe that it’s a waste of resources to push financial education on someone when the content isn’t relevant to where they are in their financial life cycle. That means offering financial education that is interesting to a customer at that moment. For example, financial education about the merits of saving for a child’s education is wasted on someone who is nowhere near having children. A small business owner applying for a loan doesn’t want to hear about opening a savings account at that moment. Though different priorities for liquidity and different timescales for financial products mean that often it makes sense for a customer to borrow and save simultaneously, urging someone to save more when they’re trying to borrow money doesn’t make sense.
In addition, considering what financial education content a customer would find the most impactful at a given moment is also critical. If a bank customer has just taken out a loan, then educating them about how making timely loan repayments affects their credit report, and how their credit report impacts future borrowings has a high impact. It’s a timely message that can affect their actions (paying on time or making late repayments) positively. But that same borrower won’t be as impacted by presenting financial education about the importance of discussing finances with their family. That information would have had a higher impact right before the customer applied for a loan, when they could get input from their family about the financial decision.
What we learned by experimenting with interesting and impactful content
How do we know that offering financial education that is interesting to a customer at the right moment increases uptake?
Boost’s technology works through chat, which customers like because they don’t have to download or learn to use a new app. Our tech powers the loans and savings applications of banks that want to offer their customers a digital channel. We interweave financial education into the application process; customers are offered financial education at different points in their chat-based application. Because this process is entirely digital, we can granularly measure the uptake rates and consumption of financial education.
So, for example, when our system has just rejected a small business customer who had been applying for a loan, we can offer the now-declined applicant financial education with the idea that it will improve their future chances of getting approved for a loan. (“Hi Sophy, while we cannot offer you a loan right now, we think you would benefit a lot from these FREE financial lessons we have specially prepared for you!“) We find that 35% of customers who see this message then click over to consume financial education.
This shows that, when people think that financial education can improve their chance of qualifying for a loan, and the message is delivered at a relevant time (the moment when they need a loan, demonstrated by submitting a loan application), then they have a high rate of uptake for financial education content.
We also present financial education to customers who are in the middle of a loan application, letting them know that studying can improve their chances of receiving a loan. (“We have also designed some special lessons about loans that will help to improve your likelihood to get a loan”) In this case, the uptake rate rises to an impressive 57%.
But when we present to these same applicants (those in the midst of a loan application) a message that focuses only on savings education (“Want to learn about how opening a savings account can help your financial health?”), then the uptake rate drops to only 38%.
The takeaway is not that financial education about savings isn’t great and important to provide. It’s that uptake will be better if financial education is delivered at a relevant time. Our data shows that consumption of financial education has the best uptake rate when presented at a moment when:
- the content is highly relevant to the specific point in the customer’s financial life cycle, and
- the benefit of studying is clear to the customer.
How do we know that offering financial education that is impactful to a customer at the right moment increases engagement with training content?
Examining SMS click-through rates for training content sent to customers who have just received loans shows that 3% of those who receive generic financial education content click the SMS to study, compared to 5.3% who receive targeted content. Targeted content includes educational material about the benefits of making on-time loan repayments or the negative impacts of making late repayments. This shows that a targeted message about on-time repayments and maintaining a good credit rating has a higher uptake rate at the point when it makes an impact (at the beginning of a loan) than more generic messaging delivered at the same time.
Timing and targeting matter for small business financial education
Digital players have a crucial advantage in marketing financial education. They can leverage the multitude of data points about where the customer is in their financial journey and micro-target educational messages by placing digital “billboards” along that journey. If a customer is applying for a savings account, a loan, or an insurance product — or has just been rejected for one of these — the digitally savvy service provider can deliver the content that is the most interesting and the most impactful at that point. And the reverse is true as well: if a curious customer studies the topic of financing their small business, we can direct that learner to financial providers who specialize in small business savings and loans.
This interweaving of financial education and financial services is at the core of Boost Capital’s work with Strive Community. We sit at the crossroads of financial service providers (our chat-based tech allows customers to apply for microloans and savings through Messenger, Telegram, and WhatsApp) and financial education (we offer free chat-based financial education with a focus on small businesses). So we can establish a virtuous cycle where those who consume financial literacy training become more creditworthy in the judgment of banks, and students can reap the reward of greater access to financial services — all within a digital ecosystem that cultivates the highest uptake rates by delivering financial education when it is strategically relevant.
