While the world has been busy compensating for the time lost due to the pandemic, many industries were rapidly adapting to new realities. Tech disruption has been a common thread across existing and emerging businesses, from e-commerce and logistics to sustainable finance and virtual assets.
Blockchain has been a major tech disruptor, giving people and businesses much-needed monetary infrastructure that paved the way for them to keep up with mass digitization. As far as budding entrepreneurs and aspiring investors from the Millennial and Gen Z generations are concerned, the proliferation of cryptocurrencies has been breaking down barriers to entry and contributing to the overall advancement of the financial inclusion agenda.
However, we cannot rest our case there. We still have a long way to go in our advocacy of prudent personal money management and financial inclusion.
Consumer protection and economic participation The era of pandemics and the 4th Industrial Revolution have awakened us to the need for taking personal finance into our own hands and adopting an active approach to investment. In addition to improving an individual’s financial standing by furnishing valuable insights into financial concepts and products, financial education helps prevent fraud and leads to better decision-making, enabling people to evade financial risk, loss, exploitation and excessive debt.
Empowering youth on future of finance
While financial catalysts such as technology, innovation and digital solutions continue to gain momentum, personal finance education is falling behind. Financial literacy seems to be playing catch up with the fast-paced developments in the financial industry. We can no longer afford this reality, especially as we embark on a journey to prepare our youth for the financial markets of tomorrow.
According to the OECD, surveys show that young adults have some of the lowest levels of financial literacy. This is reflected in their inability to choose the right financial products and their lack of interest in undertaking sound financial planning.
In the UAE, the Digital Lifestyle Report by the Telecommunications and Digital Government Regulatory Authority (TDRA) shows that over 11 per cent of the population is actively invested in digital assets, making educational resources on these concepts a much-needed requirement Children must develop the necessary skills that help them choose wisely from different career and education options, and enable them to manage any discretionary funds they may have—whether from allowances or part-time jobs. These skills will come in handy at a later stage in life, helping people manage their finances, utilize their savings and generate differentiated returns.
Role of the private sector
Although they are few and far between, some companies realized the importance of financial literacy long ago. For instance, Mastercard offers a financial education program to help consumers manage their budgets and control their spending. Large enterprises and SMEs have a collective role to play in eradicating financial illiteracy.
There has been no shortage of effort to make consumers financially literate. We are gearing up for the launch of the DIFX Academy, an online resource center aimed at educating the masses on trading, financial strategies, digital assets, wealth management and portfolio diversification. The Academy will help us achieve our mission of furthering financial literacy for all, allowing users to leverage blockchain and enjoy autonomy in their personal finance.
Digital - financial - divide
According to a study conducted by Google, Temasek and Bain & Company, over 60 per cent of adults in Southeast Asia are underbanked or unbanked. The underlying reasons for this discrepancy compared to other regions include the fear of the unknown, hidden charges, varying income levels, government policies and perhaps most importantly; the lack of financial education. These challenges highlight the importance of initiatives such as Global Money Week, where children aged 13 to 15 and financial professionals convene to raise financial awareness. Our hope is to see more global movements of this nature targeting all age groups, eventually narrowing the financial literacy gap between nations.
Low levels of financial competence have far-reaching consequences, both at micro and macro levels. People who are financially savvy tend to exert better control over their finances and make responsible choices when faced with everyday ‘spend, save or invest’ situations. Financial literacy gives people answers to their most pressing questions, including How often should I eat out? Which car loan should I get? What should my disposable income be? Should I save, borrow, invest and what can I invest in? And many more...