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Time for the financial industry to jettison the jargon

Dr Ylva Baeckstrom

Lecturer in Banking & Finance

27 September 2021

The language of the financial services industry can be complex and of-putting for people regardless of their background or gender. Its culture is often – consciously and unconsciously – exclusive rather than inclusive. Everyone loses out as a result: people do not invest enough; the industry and our society do not maximise their economic potentials. The worst sufferers are marginalised people who do not currently, but desperately need to, invest to secure their financial futures. For these people, the barriers to entry are the highest and financial services feel complex and out of reach.

Boost to confidence

This makes financial education more important than ever. In my research I find that feeling excluded, having low levels of investment knowledge and confidence make people less motivated to focus on their personal finances. But after attending investment education seminars where they learn about pensions and investing, their financial knowledge increases and people feel more confident and motivated as a result. Improved financial capabilities enable people to take action and address financial matters that they had been putting off for years – matters which have caused them a great deal of anxiety.

Our society and the financial services industry are poor at providing accessible financial education, education that should start at school. But education is just the first step. Policy-makers and the financial services industry also have the important role of enabling people to form healthy and rewarding relationships with money and investing. An industry in which the language and culture are inclusive is key to that. Together with financial education this can transform people’s lives.

Inclusiveness

To investigate the jargon in financial services, I conducted a study of a selection of UK-based financial institutions: traditional banks, new entrants with online platforms and mutual fund managers. Overall, when examining their communication with new and existing customers, it was encouraging to see how the language has become more gender neutral with a strong emphasis on gender equality, diversity and inclusion.

Traditional institutions remain brand-confined and focus on accessible and inclusive initiatives. For example, Lloyds’ “boost your skills” research centre and Barclays’ “beat the fear of financial jargon” online section contain articles, videos, quizzes and dictionaries. Mutual fund managers BlackRock, Aviva and Hargreaves Lansdown use jargon busters, glossaries and libraries to address the complexity of financial language. The tone and language of more recent market entrants is user-friendly. For example, digital bank Monzo’s promise of “banking made easy” and commitment to use accessible language is simple, clear and non-intimidating.

More accessible

However, while the visible language has become less alpha male gendered and more inclusive, financial jargon remains complex and the unwritten language excludes many. The industry, the regulator and policy-makers can do more for financial services to become accessible to those in need. This can be done by providing accessible financial education and revamping the language and culture. Instead of creating jargon busters and dictionaries, financial language can be reinvented and simplified to allow everyone to understand it and enable them to establish beneficial relationships with their personal finances.

It takes time to change the culture of an industry but traditional institutions risk losing out to new entrants who get this right. We should not need a dictionary to understand how our pensions work: investments and pensions should be explained to us in language that can be understood by all.

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Ylva Baeckström

Ylva Baeckström

Lecturer in Finance

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