Digital Finance Cannot Be Inclusive Without Financial Literacy

Digital finance has spent years solving the problem of access. Banks and fintech companies have placed payments, savings, credit and investment tools inside smartphones, promising speed, convenience and broader financial inclusion. However, putting a service online does not ensure that people will understand it, trust it or see enough value to use it.

A new study suggests that the next digital divide may be less about who owns the technology and more about who possesses the knowledge and confidence to benefit from it. Published in the journal FinTech, "Perceptions of Online Financial Services: An Assessment of Usefulness, Ease of Use, Risk, and Trust" was authored by Amélia Carvalho, Ana Isabel Borges, Ângela Morais and Jaime Fernandes Teixeira of the Polytechnic of Porto in Portugal.

Based on a survey of 225 respondents, the research finds that age still matters, but mainly for usability. Education and income have wider effects, shaping whether users consider online financial services useful, compatible with their lives and supported by adequate skills and resources. Most importantly, education predicts distinct user profiles more strongly than age or gender.

Overall, the study asserts that financial inclusion cannot be built through technology alone. It also requires literacy, trust, relevant products and service design that reflects the fact that there is no single "average" fintech user.

The "Average User" Is a Fiction and That Changes Everything

Much research on digital adoption assumes that users form one broad population whose behaviour can be explained through average relationships between usefulness, ease of use, trust and risk.

The new study challenges that assumption. It combines the Technology Acceptance Model, the Unified Theory of Acceptance and Use of Technology and Diffusion of Innovations with measures of perceived risk and trust. It then moves beyond average correlations by using cluster analysis to identify how different perceptions coexist within individuals.

The results reveal three distinct profiles.

• The first group, described as "Favorable with Friction," sees online financial services as useful and reports relatively high trust, but struggles with ease of use and expresses high risk concerns. These are not anti-technology users. They recognize the benefits but experience anxiety because the service is difficult to navigate.
• The second group, "Pragmatic Skeptics," finds the technology reasonably easy to operate but sees limited usefulness, reports low trust and feels that the services do not fit existing financial routines. Their problem is not interface complexity. It is weak perceived value.
• The third group, "Ease-Oriented and Autonomous," reports relatively high usefulness and ease of use. These users place less importance on social influence and are more likely to value speed, reliability and independence.

This segmentation has direct commercial and policy significance. A simplified interface may help the first group but do little for sceptical users who do not understand why the product matters. Advertising may be equally ineffective if it promotes innovation without demonstrating practical benefits such as lower fees, greater control or faster problem resolution.

The study thus exposes the weakness of one-size-fits-all digital strategies. Users can experience the same platform in fundamentally different ways, even when they have similar levels of access.

Risk Has Moved Into the Background, but It Has Not Disappeared

One of the study's most intriguing findings concerns perceived risk. Trust and risk were negatively associated: as trust increased, concern about fraud or data breaches tended to decline. However, perceived risk showed no statistically significant relationship with usefulness, ease of use or compatibility. The authors describe this as a "decoupling" of risk from the central adoption factors.

The result appears surprising because security concerns are widely viewed as one of the strongest barriers to digital-finance adoption. The study offers a plausible interpretation: many respondents were likely already familiar with online financial services and may therefore have crossed the initial risk threshold.

For people considering a digital service for the first time, fear of fraud may determine whether they adopt it at all. Once they become users, however, everyday concerns such as utility, convenience and usability may become more important for continued use.

The distinction has strategic consequences. Cybersecurity communication, guarantees and visible complaint mechanisms may be crucial for acquiring new users. Retaining existing users may depend more on reliable performance, clear navigation and reducing the friction involved in routine transactions.

However, the result should not be overstated. The study measured risk and trust through single survey questions, which cannot capture the full complexity of privacy concerns, financial loss, identity theft, platform failure and dispute resolution. The authors also acknowledge that the apparent decoupling may partly reflect the sample's composition and measurement choices.

Education, Not Age, Is Becoming the Real Gatekeeper

The study identifies two different digital divides. The first is age-related. Respondents aged 55–64 reported significantly lower perceived ease of use than younger groups. Yet age did not significantly affect whether they considered online financial services useful. Older users may appreciate the advantages of digital banking but struggle with authentication procedures, small interface elements, unfamiliar terminology or multi-step transactions. The barrier is execution rather than motivation. It means age-inclusive fintech should focus on readable screens, simplified workflows, guided onboarding, clear error messages and access to human assistance. Treating older users as uninterested risks misdiagnosing a design problem as resistance to innovation.

The deeper divide, however, is socio-economic. Education emerged as the strongest predictor of differences in usefulness, ease of use, facilitating conditions and compatibility. Higher-income respondents showed similar, though somewhat weaker, patterns. People with higher education and income generally reported more positive perceptions.

Education also had a statistically significant association with cluster membership, while age and gender did not. Respondents with lower educational attainment were overrepresented among the "Pragmatic Skeptics", users who could operate the technology but did not trust it, see its value or consider it compatible with their lives.

This suggests that the digital divide is shifting from connectivity to capability. A person may know how to open an application yet remain unable to compare credit terms, recognize scams, understand fees or evaluate data-sharing permissions.

For developing economies, this issue may be even more consequential. Rapid fintech expansion can widen access while also exposing low-literacy users to unsuitable debt, misleading offers and increasingly sophisticated fraud. The broader implication is an analytical inference rather than a direct finding from the largely Portugal-based exploratory sample.

Inclusion Now Depends on Design, Literacy and Trust

The study offers a practical roadmap for financial institutions. For users who value digital finance but experience friction, companies should simplify interfaces, offer guided transactions and maintain accessible human support. For sceptical users, the priority is not more features but a clearer value proposition, plain-language communication and credible reassurance about security and redress. Confident users are more likely to respond to speed, reliability and autonomy.

Governments and regulators should treat digital financial literacy as part of the infrastructure of financial inclusion. Education programmes must go beyond teaching people how to use a device. They should cover fraud detection, borrowing costs, privacy, digital identity, complaint procedures and the risks of automated financial decisions.

The evidence also supports stronger consumer-protection standards. Users cannot make informed choices when products rely on technical language, opaque pricing or complicated dispute mechanisms. Trust must be built through transparent conduct, not only marketing claims.

The study relies on convenience sampling, uses a cross-sectional survey and includes small numbers in some demographic categories. Its three-cluster solution had only modest statistical separation, and the supplementary clustering method produced a less detailed two-profile structure. The findings should therefore be treated as exploratory rather than universally representative.

Future research should compare non-users, recent adopters and experienced customers across multiple countries. Larger probability-based samples, longitudinal designs and multi-item measures of risk and trust would help determine whether literacy shapes adoption consistently across different regulatory, income and cultural settings.

The future of inclusive finance will not be determined only by how quickly institutions digitize. It will depend on whether people can understand the services, trust the providers and connect the technology to their everyday financial needs