Americans are increasingly spending their time online as we continue to face social distancing restrictions due to the ongoing COVID-19 pandemic.
According to recent research, 39% of Americans say they’ve relied more on their cell phones during the pandemic due to social distancing requirements and travel restrictions.
But the reliance on phones and other mobile devices extends beyond entertainment and staying connected to loved ones—it’s changing how Americans control their money, with a majority of those under the age of 65 (71%) reporting that they have changed how they manage their finances in the last year.
Social networking platforms like Instagram and TikTok are growing in popularity among all generations and are serving as a go-to resource for financial information.
20% of Americans say they use social media as a top resource for financial information and one-third say they trust social media content to help them make financial decisions. One-third of Americans also say they trust social media influencers and celebrities for financial advice.
The reliance on social media for financial information could have real implications for Americans’ financial wellbeing, especially as more than half of US adults say their household finances changed significantly due to the COVID-19 pandemic and one in three say their finances were negatively impacted.
44% of households making less than $50,000 a year say it is unlikely they will be able to save more for retirement going forward, highlighting the long-term financial impact of the pandemic.
The utilization of social media for financial advice coupled with the hardships of the pandemic means there is a significant need – and opportunity – for the financial services industry to help improve Americans’ financial outcomes and provide trusted, digital financial tools.
First, technologists within financial service providers need to have a clear understanding of where consumers are looking for information. While there is an increased reliance on social media, 63% of survey respondents still say financial services providers’ online tools are the most trusted resource for financial advice, and three in ten say they are interested in using digital tools that aggregate information across their financial accounts.
Americans are also more likely to use new devices like home voice assistants, smartwatches, and their financial provider’s chatbots to help manage their finances. Understanding how to reach multigenerational audiences across platforms is key to improving financial wellbeing.
Financial services leaders should also encourage consumers to consult a variety of trusted resources before making financial decisions. While sound financial advice is available online — including on social media – seeking advice from multiple sources and understanding how that advice applies to individuals’ own financial wellness is critical before they make any decisions.
Financial acumen is also key to helping more Americans rebound from the economic impacts of the pandemic. Increasing access to online financial educational tools like retirement saving calculators, tips for contributing to an emergency fund, and advice for managing multiple types of debt will help consumers learn more about how to manage their financial health and wellbeing.
Encouraging regular financial health check-ups online or in-person can also improve financial outcomes and is something that more than half of those under the age of 65 say they’re interested in receiving.
Social media is great for keeping us connected and entertained as we continue to navigate the impact of COVID-19 on our daily lives, but social networks, influencers, or celebrities are not always the appropriate resources for tailored personal financial advice.
It is up to financial services companies to provide the tools and technology to meet customers where they are online, help identify trusted resources for financial advice, and ultimately improve financial outcomes.