- Over one in ten (12 per cent) British adults have lost money due to not understanding complex financial language and terms in the past 12 months – averaging £1,009.40 per person. Equating to losses of up to £6,419,784,000 p/a*
- With the general election looming, almost one in five (17 per cent) would be more inclined to support a political party which prioritised schemes to improve financial literacy in schools. A statistic which leaps to a quarter of 25–34 year olds (25 per cent) and 35-44 year olds (24 per cent)
- One in five 25–34-year-olds (21 per cent) and 35–55-year-olds (19 percent) would also be more likely to support a government who prioritised initiatives which encouraged banks to use simpler and easy-to-understand language
- The research was commissioned by Klarna to mark the launch of its 'Financial Takeaway' series with rapper-chef Big Zuu and finance expert Bola Sol, to help improve the nation’s understanding of complex financial terms.
London, June 26th 2024: Today, Klarna, the AI-powered global payments network and shopping assistant, released the results of a national survey exploring financial language understanding across the UK.
The report, part of Klarna's commitment to improving greater transparency in the financial industry, reveals millions of UK adults (40 per cent) think mastering money terms is harder than learning to speak a new language - with young adults feeling the pressure most.
The study of 2,000 adults found 64 per cent of Gen Z believe picking up basic foreign words is easier than mastering money terms like APR, capital gains and compound interest.
Millennials face similar obstacles, with 57 per cent considering financial terms to be more difficult to learn than a foreign tongue.
But this drops to just 33 per cent of Gen X, with the older age group feeling more confident about their financial literacy.
It also emerged Annual Equivalent Rate, (28 per cent) County Court Judgement (28 per cent), adverse credit (25 per cent) and compound interest (26 per cent) are among the terms people are most confused by. And a quarter (25 per cent) of adults felt the language used by their banks was complicated to understand.
In a bid to promote greater transparency in the UK, Klarna recently launched Wikipink to encourage the wider industry to do the same. Where credit card companies had to be forced by the FCA to publish complaint rates, Klarna has done so voluntarily. By providing reliable, accurate, and unbiased information, Wikipink aims to educate and empower people to learn more about Klarna by sharing insights that are typically guarded secrets among traditional banks.
To help further tackle the issue, TV personality, rapper and chef Big Zuu alongside finance expert, Bola Sol have created the ‘Financial Takeaway' series - which brings to life some complex money terms in the form of a menu of tasty recipes, to help improve the nation’s understanding.
The study, conducted among 2,000 adults nationwide, also revealed that while 16 per cent of all adults are more interested in studying languages than money, the cost of not learning the latter can be significant.
Roughly 6.3 million adults (12 per cent) believe they have experienced financial losses due to not understanding complex financial jargon in the past 12 months – averaging £1,009.40 per person, equating to losses of £6,419,784,000.
As a result, 31 per cent of those surveyed believe schools should prioritise teaching students financial literacy over foreign languages.
With the general election looming, almost one in five (17 per cent) would be more inclined to support a political party which prioritised schemes to improve financial literacy in schools. This increases to a quarter in 25-34 year olds (25 per cent) and 35-44 year olds (24 per cent).
Whilst one in five (21 per cent) 25-34 year olds and 19 per cent of 35-55 year olds would be more likely to vote for a government if they prioritised initiatives which encouraged banks to use simpler and easy-to-understand language.
Coinciding with the survey, Klarna announced it will be releasing a redesigned app featuring an AI-powered shopping assistant. This assistant, fluent in over 35 languages, is a game-changer for helping consumers make purchases, manage Klarna payments, and handle customer service inquiries more efficiently.
Earlier this year, Klarna unveiled its refreshed brand, transitioning from a hyper real pink theme to a more mature and refined identity. "We recognise that our earlier branding, although successful in distinguishing us from traditional banks and competitors, may have inadvertently contributed to a general misunderstanding of the BNPL industry." explained CMO David Sandstrom. "As we’ve grown as a company and expanded beyond just BNPL, our branding needed to evolve too. Our new brand direction and updated app reflect steps we have taken to help consumers better understand and manage their finances.”
The Big Zuu X Klarna Financial Takeaway Series is now available to view on Klarna UK's YouTube channel.
TOP 10 MOST CONFUSING FINANCIAL JARGON
- AMC (Asset Management Company)
- IFA (Independent Financial Adviser)
- Adverse Credit
- Nominal Interest Rate
- Debt Relief Order
- AER (Annual Equivalent Rate)
- CCJ (County Court Judgement)
- Equities
- Annuity
- Compound Interest Rate