"Digital Transaction Competency" Has the Most Significant Impact on Financial Behavior
Professor Yang Sejeong's Team at Sangmyung University Surveys 4,000 Financial Consumers in Korea
What are the core skills needed for effective personal finance management? A recent study found that "digital competency"?the ability to effectively use financial institution apps (smartphone applications) and online payment services?was the most important factor. The results of this study were published in the latest issue of the academic journal "Consumer Policy and Education."
On June 29, Yonhap News reported that a research team led by Professor Yang Sejeong at Sangmyung University (Department of Consumer Economics) analyzed survey and competency assessment data from 4,000 financial consumers in Korea. According to their findings, "digital transaction competency" had the most significant impact on sound financial behavior.
Professor Yang's team used statistical analysis on data compiled by the Korea Consumer Agency in 2022 to identify the main competency factors influencing individuals' financial soundness scores (on a 5-point scale). The soundness score evaluates whether a person spends and saves in a planned manner, makes investment decisions with risk in mind, and carefully examines product details before purchasing insurance.
The research team focused on three competency factors: financial knowledge, financial attitude, and digital transaction competency. Financial knowledge refers to understanding concepts such as compound interest, the effects of inflation, and how insurance compensation works. Financial attitude measures whether a person holds desirable values regarding retirement planning, diversified investment, and debt management.
Digital transaction competency is a comprehensive measure that goes beyond simply using financial and payment services well. It also assesses whether a person can distinguish between online advertisements and genuine reviews, and whether they can effectively resolve issues that arise during digital transactions.
The research team analyzed whether these factors had a statistically significant impact on financial soundness scores. They also examined whether the influence of these factors was consistent across different age groups (from people in their 20s to those aged 70 and above).
The view of apartment complexes in Apgujeong-dong and Cheongdam-dong, Gangnam-gu, seen from Eungbongsan in Seoul last May. (The photo is not directly related to the article.) Photo by Yonhap News
The results showed that only digital transaction competency consistently influenced soundness scores across all age groups. Whether the respondent was a young adult in their 20s just starting their career or a senior over 70, those with strong digital skills tended to have higher financial soundness scores. The effects of financial knowledge and financial attitude were not consistent.
For people in their 20s and those in their 60s, financial knowledge improved the soundness of financial behavior, but it had little effect for those in their 30s to 50s. Financial attitude only had a significant impact among people in their 30s and among those aged 50 to 70 and older.
The research team attributed these results to the rapid shift toward non-face-to-face and digital financial services. This is because people now access financial information through social media and messaging apps, and manage loans, stock investments, and pensions via smartphones. Ultimately, digital competency served as the foundational skill for sound financial behavior across all age groups.
Professor Yang's team emphasized, "There is a need to expand digital transaction education for all age groups, and especially to develop customized educational programs for digitally marginalized groups such as the elderly."
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