As consumers face rising financial risks — from social-media algorithms that amplify risky behaviour and “finfluencers” spreading poor advice to  large-scale online scams and harmful products like buy-now-pay-later  (BNPL) schemes and crypto gambling — banks remain the last real line of defence.

To fulfil that role, they must move beyond compliance to  educate  and protect customers through science-backed, personalised experiences that build financial resilience, trust  and long-term value.

Financial inclusion has long been promoted as empowerment, yet too often, those being “included” end up worse off, as inclusion turns from solution to threat.

First, there are the legal but debatable offers across the financial sector. BNPL, sold as “democratising credit,” has pushed many young consumers into debt, much like payday loans once did. Elsewhere, speculative trading or crypto gambling, and hidden fees in digital services often erode rather than create value, hitting the most vulnerable hardest.

Second, digital commerce and social media have opened a new frontier for scams. The Global Anti-Scam Alliance reported that in 2024, fraudsters stole more than $1 trillion worldwide. Even advanced markets such as Singapore rank among the hardest hit. 

The Readiness Gap

As vital as financial inclusion is for stable societies, the real issue is not access but readiness. In many low-income countries, people turn to risky products to chase income amid stagnant wages, rising costs  and limited opportunity.

Today’s global volatility and digital assets have added new layers of risk. Financial inclusion has never been more needed, yet without preparation, it easily turns into exploitation.

Financial education as part of a state-of-the-art KYC

Financial services must expand know-your-customer (KYC) into understand and protect your customer. KYC today is focused on compliance: verifying identity, preventing fraud and meeting anti-money laundering (AML) rules. If banks want lasting trust and sustainable customer bases, KYC must also include financial literacy.

Customers who don’t understand credit, digital assets, or repayment obligations are more vulnerable and more likely to default. Educated customers, by contrast, are resilient, engaged  and more valuable over time. Embedding financial education into KYC and customer engagement can strengthen both customer resilience and institutional trust over time.  Imagine KYC not just confirming who a person is, but also gauging their financial readiness and offering ways to improve it. In the age of AI, Web3, gaming and behavioural data, this is entirely possible.

Using technology for good

Financial education shouldn’t mean dull brochures or classroom lectures. The same industry that  embedded banking, such as BNPL loans at e-commerce checkouts, can  embed financial readiness into customer journeys. Gamified and interactive learning can make education engaging and practical.

Emerging tools, including blockchain-based credentials, may help individuals without traditional credit histories demonstrate reliability for loans or employment.

With billions of people engaged in gaming globally, combining online platforms and emerging Web3 technologies offers new ways to reach those outside traditional banking systems. Over time, responsibly applied data and AI could further personalise learning and guidance, supporting smarter and more informed financial decisions. This blend of behavioural science, gamification  and AI can turn financial education into continuous, personalised support.

Beyond duty: A strategic opportunity for banks

Across the industry, risk and compliance dominate boardroom priorities, while customer engagement often receives less attention. Integrating financial readiness into compliance frameworks bridges both concerns. Financial inclusion without education may raise short-term revenues but repeats cycles of debt and disillusionment. When education becomes part of a holistic Know and Understand Your Customer approach, banks can turn risk into resilience and resilience into lifetime value.

Practical solutions already exist to embed financial education into customer journeys. By applying data, behavioural insights  and AI, banks can help customers make better financial decisions and strengthen trust. Institutions can explore different approaches, such as co-developing educational content, integrating learning tools into KYC processes, or collaborating with external partners. Financial education benefits both customers and institutions — it builds resilience, reduces risk and fosters lasting relationships.

Matthias Kröner is the managing director of  Mogaland Academy, designed as a gamified financial literacy platform. He is  the  founder of Fidor Bank and DAB Bank