Financial Democratization, the Rise of Fintech, and the Need for Financial Literacy

Knowing how to properly engage in financial activities such as borrowing money from a bank or investing in the stock market is important to building wealth and increasing ownership of assets. With access to credit and investing at an all-time high due to major deregulation of the United States financial sector and financial technology (fintech) increasing avenues to engage in financial activities, it is pertinent to ensure everyone has proper access to financial literacy resources to mitigate the risks of borrowing and investing. Vulnerable groups such as the elderly, poor, and marginalized communities have lower rates of financial literacy and are more likely to be victims of financial institutions (e.g. predatory lending). It is important to support these groups as they pursue wealth building and financial democratization increases in the United States. The following technical and STS theses will discuss the in-depth importance of financial literacy and provide potential solutions to shrink the financial literacy gap.
The technical thesis proposes a solution to teach financial literacy to K-12 students in the United States through an artificial intelligence-driven virtual voice assistant. Students can call a phone number and go through a ten-minute lesson of their choice based on the six financial literacy benchmarks for each grade level set by the Jump$tart National Standards for Personal Finance Education: employee and income; spending and saving; investing; credit and debit; risk management and insurance; and financial decision making. These lessons can be incorporated into personal finance courses throughout a student’s progression in school. The three stages of this project consisted of writing the lesson plans, building the lessons using Google Dialogflow’s chatbot software and telephony integration, and conducting a system evaluation to ensure the voice assistant was both effective and robust. By providing an interactive way to learn financial literacy throughout a student’s schooling, this voice assistant will be able to help them receive holistic, long-term financial education that will aid them in their adult lives.
The STS thesis explores how the positive relationship between increased access to the financial markets and greater risk for vulnerable groups to be victims of financial institutions creates a need for financial literacy for all. The thesis delves into lessons learned from the deregulation and democratization of the financial markets, the social construction of fintech, an analysis of financial literacy research, and future applications of financial literacy.
As banks became more unified and powerful from deregulation in the past fifty years, this led to both positive impacts such as an increase in homeownership and negative impacts such as an increase in predatory lending and the Financial Crisis of 2008. Fintech continues this trajectory of financial democratization and many of the same risks apply to borrowing and investing using fintech. Financial literacy is essential to combating these risks so everyone can safely engage in financial activities and build wealth.
I would like to thank Tariq Iqbal and MITRE, specifically Jennifer Kuczynski and Jyotirmay Gadewadikar, for supporting my team throughout the project.

The technical portion of this project was sponsored by MITRE.