A joint whitepaper by Operation HOPE and Robinhood Markets, Inc.
Digital tools are crucial for financial inclusion.
In today’s digital era, it makes sense that financial institutions have leaned into supporting their clients in a variety of new ways. With mobile banking, peer-to-peer payment apps like Venmo, “buy now pay later” services (BNPL) like Klarna, and point-of-sale (POS) systems like Block, the way we make financial transactions has become easier than ever. Robinhood pioneered the elimination of trading commissions and account minimums and is an innovator in financial education, creating a complementary partnership to Operation HOPE’s financial literacy services. Both have evolved their digital offerings – providing better and more pervasive inclusion to previously excluded individuals.
Technology is a critical tool for scalable education.
According to Pew Research Center1: “Technology assets are strongly tied to the likelihood that people engage in personal learning.” Further, 82% of the US adult population with access to a smartphone and a home broadband connection have done some personal learning activity in the past year. This tells us that adult education is happening online, and technology can be a powerful force for increased financial education, especially for out-of-school learners.
What’s more, technology can allow for real-time learning and education; a crucial complement to increased access. The National Financial Educators Council2 estimates that “lack of financial literacy cost Americans a total of more than $388 billion in 2023.” It is necessary that we embrace the unique value – and economies of scale – that digital delivery of financial education provides.
The Schwab 2022 Black Investor Report3 found that when it comes to growing and protecting their assets, Black Americans are less trusting of people (32% vs. 45%) and more trusting of technology (31% vs. 21%), than white Americans. This suggests that technology not only makes education more accessible but also serves as an inclusive tool for financial empowerment. Building on this, advancements in fintech such as robo-advisors and AI-driven predictive analytics are democratizing access to personalized financial planning. These tools not only facilitate scalable financial education but also empower individuals by offering tailored solutions that were once limited to those with significant financial means.
Historically, there have been economic, emotional, and educational barriers to financial inclusion.
The historical practice of redlining, in which banks and other financial institutions discriminated against Black and minority neighborhoods by labeling them as “high-risk,” excluding them from accessing financial services like credit and insurance, has created pervasive distrust toward financial institutions. Likewise, immigrants face language and credit history barriers that add to a lack of literacy into our country’s capital and banking systems. With the introduction of credit scores as a gatekeeper to financial access, these exclusionary practices have become self-fulfilling prophecies that, although long abandoned, have produced millions of Americans with sub-prime credit scores, essentially locking them out of the free enterprise system.
2024 research shows4 “the stock market, even with all of its ups and downs, remains the most reliable and most effective way to increase wealth over time.” However, for generations, there have been barriers to participation; namely the requirement of minimum account balances or trade amounts to participate in capital markets. The report goes on to conclude “even a modest investment in a basic index fund can create a tremendous amount of wealth – if left to grow on its own…you can reap rewards that are truly life-changing.”
Largely thanks to technology, investing and financial services at large have become more affordable and inclusive in recent years. But the perceived lack of accessibility can still serve as a barrier to participation.
Furthermore, the 2024 TIAA Institute-GFLEC Personal Finance Index5 reveals that less than half of Americans (48%) are financially literate. While personal finance education is gaining traction—now required in 35 states, up from 23 just two years ago—only 15 mandate a semester-long course. This highlights an urgent need for supplemental programs to bridge the gaps in financial literacy and inclusion. But, it doesn’t address the education gap amongst adult learners and is what drives Operation HOPE and Robinhood to identify solutions.
How Robinhood and Operation HOPE have adapted to more inclusive digital models.
Robinhood’s embrace of self-directed investing strategies reflects a broader trend toward affordability and accessibility in the financial sector. Similarly, Operation HOPE’s focus on personalized guidance aligns with the growing emphasis on goal-based investing, ensuring clients can navigate their financial journeys effectively.
As a safety-first company6, Robinhood has a broad array of educational tools for customers and non-customers alike. Robinhood Learn, Robinhood’s online educational resource library, is built to provide foundational financial knowledge with articles covering everything from basic investing to options essentials. It has also built interactive learning modules, integrating education into their app with lessons that help customers build a knowledge base in real time. For example, their IRA Learn & Earn module is an educational program that teaches customers the basics about Individual Retirement Accounts (IRAs) and rewards them for completing different lessons.
Operation HOPE uses a Theory of Change framework to “educate, coach, and connect.” It acknowledges that learning in and of itself has limitations; experiential opportunities, step-by-step guidance, networking, and mentoring are all ways to amplify the learning process.
With the introduction of the “HOPE in Hand” app, the organization increased its ability to scale, using digital tools to impact more people. Without losing its unique brand of personalized coaching, the app allows the program to attain a higher percentage of clients while reaching people where they are, on their level. For example, the organization is creating new digital material with diverse characters that reflect its client base, situational learning that accounts for the majority’s paycheck-to-paycheck financial situation, and desired motivations such as tangible measurements including increases in improved FICO scores and increased savings. It also taps into preferred learning formats, including on-demand modules to accommodate busy schedules; options to track progress and receive reminders to encourage consistent learning; and content that includes practical exercises, success stories, and personalized feedback.
“We believe that coupling education with access is core to economic empowerment. Further, with innovations in technology a third factor – affordability – comes into play. Technological advancements have helped level the playing field for first-time investors and investors of limited means to engage in the markets in the same way the wealthy few have enjoyed for decades.”
—John Hope Bryant, Founder and CEO of Operation HOPE, written for the World Economic Forum
Without technology to enable accessibility and affordability, a critical tool for driving economic growth will once again be out of reach for many. We need to embrace the value of digital tools to enable the financial future that so many deserve.
A call to action: an empowered future for all.
Integrating long-term, sustainable practices into financial education initiatives can further enhance inclusivity. These practices align with the mission of the AI Ethics Council7, created by Operation HOPE Founder and CEO John Hope Bryant and Open AI’s Co-founder and CEO Sam Altman, of ensuring equitable access while promoting long-term impacts that benefit underserved communities. The Council is focused on the intersection of technology and humanity for positive, ethical, and transformative impact generally in the areas of economic opportunity for all, finance, education, policy, employment, accessibility, health and healthcare, and sustainability.
Operation HOPE invites partnership through its 1865 Project8, launched to facilitate growth, scale, and innovation so that it can effect greater systemic change through financial literacy in America. It believes in “turning check-cashing customers into banking customers, renters into homeowners, small business dreamers into small business owners, and uncertain disaster victims into financially empowered disaster survivors.” As more and more Americans are living paycheck to paycheck, the need for financial literacy services continues to grow – and digital tools unlock this future for all. Partnerships like Operation HOPE’s with Robinhood are essential in helping us get there.
Sources
- https://www.pewresearch.org/internet/2016/03/22/lifelong-learning-and-technology/
- https://www.financialeducatorscouncil.org/financial-illiteracy-costs/
- https://content.schwab.com/web/retail/public/about-schwab/Ariel-Schwab_Black_Investor_Survey_2022_findings.pdf
- https://www.nasdaq.com/articles/stock-market-greatest-wealth-generator-ever-devised-heres-proof
- https://gflec.org/wp-content/uploads/2024/04/TIAA_GFLEC_Report_PFin_April2024_07.pdf
- https://robinhood.com/us/en/about-us/
- https://operationhope.org/initiatives/ai-ethics-council/
- https://operationhope.org/the-1865-project/