OPPORTUNITIES FOR Financial Literacy Education in Millennials with Arti fi cial Intelligence Chendon Gratie MDes Studio 2 Chen, Brendon, Gray, Katie February 2018
PROBLEM STATEMENT How Might we Apply Arti fi cial Intelligence to Increase Financial Literacy in Millennials?
Financial Literacy Basic Calculations can be de fi ned as measuring how well an individual can understand and use personal fi nance-related information Borrowing Money & Interest Measuring Financial Literacy Sandra J. Huston Investing & Risk Protecting your Assets
Why Financial Literacy? Financial wellness affects every aspect of ones’ life and plays a larger role in the health of the greater economy. In my early age, lack of fi nancial knowledge costs me a lot of money by overspending and not doing any budget. With fi nancial education, I’m able to plan and wisely spend my income which enables me to live a better lifestyle with less budget. -survey respondent
Why Millennials? • Statistically, they exhibit the lowest level of fi nancially literacy of any age group • They are under increased fi nancial pressure from student debt and + asset in fl ation (e.g. housing costs in growth markets) $ • A lack of fi nancial literacy cuts across income and education levels, allowing us to be inclusive in our design
Questions to Explore De fi nition What does it mean to be fi nancially literate? Prioritization How do they assign priorities? Current What are millennials behaviors and mindsets AI: challenges, What are some challenges and situation for consuming and saving? How fi nancially opportunities, advantages to educate fi nancial literate are the millennials? and role literacy with AI? In fl uencers What factors affect a person's fi nancial literacy? Methods of What are some methods to teach teaching fi nancial literacy effectively? Self-regulation Do millennials prefer smaller, immediate Content What content should be taught? rewards over larger, delayed rewards and why? to teach Aspirations What are millennials’ short-term and long term Existing tools Which fi nancial tools are out there? & fears goals? What are millennials’ fi nancial stressors? What is working well and what is not?
Our Research Methods Conducted literature Conducted 6 expert interviews reviews to gather with fi nancial advisors, university contextual information professors, and community organizers Administered surveys to Employed cultural probes determine baseline fi nancial to get a deeper understanding of the literacy and current habits users and the in fl uencing social factors [20 respondents]
EXPLORATORY RESEARCH Literature Review
What We Read Papers Articles Why Don’t Americans Save More Money? Measuring Financial Literacy Bloomberg Sandra J. Huston Why Financial Literacy Will Not Save America's Finances The Economic Importance of The Atlantic Financial Literacy: Theory and Evidence Annamaria Lusardi and Olivia S. Mitchell The Secret Shame of Middle-Class Americans The Atlantic The Role of Self-Regulation, Future Orientation, and Financial Knowledge in Long-Term Financial 2018 Better Money Habits Millennial Report Decisions Bank of America Elizabeth Howlett, Jeremy Kees, and Elyria Kemp The Millennial Consumer - debunking stereotypes Boston Consulting Group 2012 National Financial Capability Study Price, Waterhouse, Cooper Millennials, Technology, and the Challenge of Financial Literacy Forbes
EXPLORATORY RESEARCH Surveys
Survey < $20k $20k - $40k We developed and distributed a survey to explore broad trends, habits, and perceptions on the subject of fi nancial literacy. During this phase of research, we targeted millennials as a whole, collecting data from individuals across a range of income levels. $40k - $60k $60k - $80k $80k - $100k > $100k
EXPLORATORY RESEARCH Expert Interviews
Expert Interviews Rick Metters Brian Routledge Vice President, Corporate Community Relations Associate Professor of Finance Fidelity Investments Tepper School of Business, CMU David Martin Burton Holli fi eld 路 Client Analytics and Industry Research Professor of Financial Economics Fidelity Retirement Services Investment Solutions Tepper School of Business, CMU Suren Wanasundera Apoorva Havanur President Former President Moneythink CMU Moneythink CMU
EXPLORATORY RESEARCH Cultural Probe
Cultural Probe The purpose is to get a qualitative understanding of people’s perceptions of their own fi nancial wellness and independence. Respondents said they found the opportunity for re fl ection valuable. We put a lot of effort into the craft and aesthetic of the diary to make it more rewarding to own and fi ll out.
EXPLORATORY RESEARCH Key Insights
01 Key Insights: A New Financial Landscape Sources Survey The fi nancial landscape has changed — millennials face many of the same challenges confronted by previous generations, but Interview with David Martin key factors compound the natural inclination towards illiteracy: Interview with Rick Metters • massively higher student debt • accelerated necessity in fl ation • the increasing complexity of digital currency
Financial Landscape increased abstraction pressures ⬆ lifespan = asset new payment credit student ⬆ need for saving in fl ation technologies proliferation debt knowledge of considerations asset basic fi nancial interest risk investments budgeting protection calculations rates tolerance
02 Key Insights: Abstraction Sources Survey Cash is no longer the dominant form of payment for most millennials. Interview with David Martin Digital payment methods abstract and disconnect people Interview with Rick Metters from their money, skewing their mental representation. How often do you use cash to make purchases? Often Very rarely Sometimes
03 Key Insights: Short-Term Thinking Sources Survey People are hard-wired to think in + prioritize the short term rather than focusing on far horizons. Interview with Rick Metters Interview with Brian Routledge I've known about retirement savings options for a long time, and my lifestyle choices have made it dif fi cult to follow them. It constantly hangs over my head and is beginning to feel insurmountable. -survey respondent
04 Key Insights: Personalization Sources Survey How do you fi nd ways of making content relevant to the individual? Interview with Rick Metters How do you facilitate conversations that help people Interview with David Martin overcome their negative predispositions with money? Tutors connect to students at a personal level, providing personal examples and incorporating speci fi c situations that they may encounter into the lessons they teach. -Apoorva Havanur
05 Key Insights: Start with the basics Sources Interview with Apoorva Havanur Most millennials don’t have a basic understanding of fi nancial literacy. Interview with David Martin It’s important to start with basic concepts before working up to more advanced ones.
Design Implications Provide an easy way to understand and adapt to different fi nancial pressures Make the connection between people and their money concrete Customize and individualize fi nancial education by understanding users speci fi c fi nancial needs and offering relevant guidance Begin simple and work up to complex Helps facilitate longer term thinking in the context of fi nances
AI Opportunities AI Considerations Face to face conversation is often 01 01 AI could guide and assess fi nancial powerful in education — we should be wellness without judgment careful when implementing this with bots 02 AI could be used to reverse Qualitative insights (that 02 the psychological effects of go beyond canned responses) should be fi nancial automation prioritized for nuanced advice AI could encourage 03 03 There is no single right way to invest, intentional budgeting so building a system/strategy that helps people allocate their money is dif fi cult 04 AI could guide individuals in making smart investments
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