Global inequality deepens as financial literacy fails to keep pace with technology

The study deeply examines structural drivers that influence financial literacy. The authors synthesize international studies showing persistent disparities linked to education levels, socioeconomic background, gender norms, mathematical proficiency and professional status. In many countries, financial literacy remains concentrated among individuals with higher income and education, leaving vulnerable groups at greater risk of financial instability.

Financial literacy is no longer sufficient for a world shaped by digital finance, fintech apps, algorithmic decision-making and global shocks. A new academic review argues that societies must radically rethink how financial literacy is taught, measured and embedded into public policy, or risk widening inequality and weakening economic resilience in the digital age. 

The findings come from the editorial “Reframing Financial Literacy for the Twenty-First Century: Foundations, Digital Transformations, and Pathways to Sustainable Empowerment,” published in the Journal of Risk and Financial Management. The study maps how financial capability must adapt to the realities of the twenty-first century.

The authors argue that financial literacy has become a multidimensional competence intertwined with digital access, behavioural decision-making, sustainability goals and structural inequalities. They warn that without significant innovation in education, policy and research, the global push for financial inclusion will stall and leave millions unprepared for rapidly evolving financial systems.

A global shift from basic knowledge to complex capability

The review dismantles the outdated assumption that financial literacy is merely knowledge-based. Historically, financial literacy initiatives focused on numeracy, budgeting, saving habits and basic financial products. The authors assert that such a narrow approach is no longer viable in an era defined by mobile banking, digital payments, algorithmic credit scoring and crypto-assets.

They frame financial literacy as a dynamic capability, shaped by:

• Cognitive understanding of financial concepts
• Behavioural skills such as self-control, planning and risk assessment
• Digital competence, including the ability to navigate apps, platforms and data-driven services
• Ethical and sustainability awareness, particularly around long-term planning and responsible investment

This shift aligns with the rise of digital finance ecosystems, where consumers are expected to interact seamlessly with platforms that combine finance, communication and consumption. As fintech companies integrate financial services into everyday behaviour—sometimes invisibly—citizens must develop capabilities far beyond memorizing interest rate definitions.

The authors argue that financial literacy must now function as a protective asset, enabling individuals to safeguard themselves against fraud, predatory lending, data misuse and high-risk digital products. This makes financial literacy an essential tool for economic empowerment and digital citizenship.

Financial literacy as a structural and social construct

The study deeply examines structural drivers that influence financial literacy. The authors synthesize international studies showing persistent disparities linked to education levels, socioeconomic background, gender norms, mathematical proficiency and professional status. In many countries, financial literacy remains concentrated among individuals with higher income and education, leaving vulnerable groups at greater risk of financial instability.

The Special Issue’s research highlights that inequality in financial knowledge is not accidental; it mirrors long-standing social divides. For example:

• Women continue to face systemic barriers to financial education.
• Individuals with limited schooling or weak numeracy skills struggle to participate fully in financial markets.
• Socioeconomic status influences early exposure to saving habits and financial decision-making.
• Migrants, informal workers and rural populations remain excluded from financial systems that require digital access.

The authors argue that treating financial literacy as an individual skill ignores the social, cultural and institutional factors shaping people’s ability to navigate economic life. Instead, they call for policymakers to understand literacy as a structural capability requiring coordinated intervention from schools, governments, industries and communities.

Digital transformations expand both opportunity and risk

With smartphones, digital wallets, buy-now-pay-later apps and instant credit services becoming embedded in daily life, financial decisions are increasingly shaped by the digital environment rather than by traditional financial institutions. One of the most striking insights is that digital financial inclusion is no longer guaranteed simply by providing access to platforms; users must also understand how to evaluate digital products and manage their risks.

Research from Brazil, included in the Special Issue, shows that fintech adoption has grown rapidly, but without adequate financial and digital literacy, consumers may enter financial products they do not fully understand. The editorial notes similar concerns in other markets where digital financial services expand faster than regulatory protections.

One study discussed in the review introduces a Digital Financial Capability Scale, designed to measure how individuals manage financial tasks in digital settings. This tool reflects the growing complexity of financial environments, where people must interpret digital interfaces, verify information, use cybersecurity best practices and recognize manipulative design elements.

The authors warn that digital transformation makes financial literacy more urgent, not less, because digital tools can obscure risks behind seamless user experience. As a result, consumers may take on more financial exposure than they realize.

From digital inclusion to sustainable economic empowerment

The editorial also highlights research connecting financial literacy to sustainability, entrepreneurship and long-term socioeconomic resilience. Studies from Morocco, Latin America and Islamic financial markets demonstrate how financial literacy drives responsible investment, promotes entrepreneurial activity and influences ethical financial behaviour.

The authors emphasize that sustainability is no longer a peripheral concern; it is central to global economic strategy. Financial literacy plays a pivotal role in enabling individuals and businesses to understand sustainable finance, assess environmental risks and participate in green investment markets. Consumers equipped with strong financial capability are better prepared to:

• Evaluate long-term environmental and social impacts
• Make informed investment choices
• Manage household finances during periods of economic instability
• Support sustainable entrepreneurship

This reframing positions financial literacy as a foundational element of achieving the UN Sustainable Development Goals, especially those related to poverty reduction, gender equality, decent work, reduced inequality and responsible consumption.

A call for interdisciplinary, policy-driven action

Despite global efforts, financial literacy programs remain fragmented and often outdated. The authors stress that significant gaps exist between what financial education provides and what citizens need in modern economies.

They call for governments, financial institutions, educators and international organizations to build integrated strategies that combine:

• Lifelong financial learning embedded in schooling, workplace training and community programs
• Digital literacy initiatives that equip individuals to navigate technology-dependent financial systems
• Stronger regulatory frameworks that ensure transparency and protect consumers from digital exploitation
• Sustainability-oriented financial education that aligns with global environmental and social goals

The authors argue that without cross-sector coordination, financial literacy efforts risk lagging behind the rapidly changing financial landscape, deepening existing inequalities and leaving vulnerable populations unprotected.