Lack of knowledge of financial products, great difficulty in making simple financial calculations, poor command of percentages… Each new study confirms that Europeans are not very well educated financially. In addition to posing very real problems in their daily lives, this poor financial education is a major obstacle to investment. All the more so in light of the new MiFID II directive, which has made it mandatory to assess the financial knowledge of individual investors via a knowledge test, rather than via self-assessment. Thus, to comply with the regulations, many financial institutions find themselves unable to sell certain products. So how can we improve the financial education of savers?
Financial education: the Achilles heel of savers
Financial education is recognized as an essential element of individual financial empowerment and overall financial system stability. This is an observation shared by both governments and their citizens. However, nothing has been done about it, the level of financial education of savers stagnates – or even declines – year after year.
“Many people lack financial literacy. On average, in G20 countries, less than half of adults (48%) were able to answer 70% of financial knowledge questions (the minimum target score) correctly,” thus illuminates a 2017[1] OECD report. France, which is nevertheless positioned as the best student of the G20 in this study, cannot be proud of its results, since 69% of French people consider their knowledge of financial matters to be average or poor (Banque de France, 2021[2]). This data is consistent with the study conducted by Neuroprofiler in July 2021.
These shortcomings foster a sense of incompetence and self-censorship in investment choices.
Lack of financial literacy: a barrier to investment
Until now, financial institutions could accommodate this low level of financial literacy, using self-assessment or verbally correcting false answers given by their customers. Except that since 2018, the regulator has tightened the screw, so that it is no longer possible to sell financial products to investors who do not understand them.
Paradoxically, the enthusiasm for financial subjects does exist: 80% of respondents believe that financial education is necessary for school and a similar proportion would be receptive to corporate training. So, it seems that there is fertile ground for improving financial education for investors, provided that the right tools are used.
Gamification: a simple and effective solution to improve investor education
By using the mechanics and dynamics specific to the world of games, gamification helps to promote participant engagement. Because it significantly improves the level of financial education, gamification is a technique favored by the various European regulators.
Financial education: 3 good reasons to use gamification
- Your customers are not willing to put in the effort. Even though finance is a concept that interests individuals, it is not an easy or attractive subject. The majority of your customers are not pro-active learners, they are more service-oriented. It is therefore necessary to provide them with a simple, engaging, and stimulating solution to improve their knowledge, which is what gamification allows you to do.
- You must not only inform your clients but also ensure that they have understood and integrated complex financial concepts. To be MiFID II compliant, you can’t just send documentation to all your customers: you need to test their knowledge through a test. By making complex concepts affordable, gamification is the solution.
- Your advisors can’t multi-task. To be fully compliant, your advisors would have to spend several hours with each client to explain in detail the subtleties of each financial product. Not only does this method require colossal resources, but it is not adapted to the new expectations of investors who are fond of practical and well-thought-out digital solutions. Because it requires only a few minutes of effort per day, e-learning is favored by investors. Opting for a gamified e-learning solution will match their consumption habits, like apps such as DuoLingo.
EduProfiler: a fun e-learning platform to educate investors
Convinced that gamification is a great tool to democratize the world of investment among savers, Neuroprofiler has developed an EduProfiler: a fun e-learning platform to assess the knowledge of individuals and to familiarize them with the mechanisms of financial products, in line with MiFID II requirements.
With EduProfiler, the client begins with an adaptive knowledge test, compliant with MiFID II, which allows them to personalize their course. They can then follow several training modules, either independently or in the presence of their advisor. Each module lasts 3 to 6 minutes and is dedicated to a financial product, with several infographics and interactive texts. Each module is then validated by a knowledge test that allows the client’s MiFID II profile to be updated in real-time, to give them access to more products. Indeed, as soon as a module is consulted or validated, the financial advisor is notified, so that he can contact his client to arrange a meeting if necessary.
Already used by renowned financial institutions, EduProfiler allows you to significantly improve the financial education of your customers, so you can increase your sales of financial products in full compliance. Are you interested in the possibilities offered by gamification? Request a demo of EduProfiler!
———
[2]https://www.banque-france.fr/sites/default/files/medias/documents/cp_enquetes_educfi_13122021.pdf