"Koreans' Digital Financial Literacy Falls Far Below OECD Standards"

Analysis of the 2025 Digital Finance Usage Survey
Lower Digital Financial Literacy Linked to Higher Risk of Delinquency
Need to Improve Digital Financial Literacy Among Vulnerable Groups

Gemini Generative AI

A recent study found that Koreans' understanding of digital finance is significantly lower than the standards recommended by the Organisation for Economic Co-operation and Development (OECD). Experts point out that there is a need to improve digital financial literacy, especially among vulnerable groups such as the younger and older generations.

According to the Capital Market Institute on January 12, the digital financial literacy score of Korean adults surveyed last year was 59.3, far below the OECD target score of 70. Digital finance refers to the full range of financial work conducted through digital technologies, including mobile banking, smartphone micropayments, and simple payment services.

According to the OECD, digital financial literacy is defined as an individual's ability to recognize and safely use digital financial services and digital technologies. Only 28.2% of those surveyed were classified as having high digital financial literacy, meeting the OECD's target score, while more than 70% fell into the low-literacy group.

The institute's analysis showed that digital financial literacy varied depending on age, experience with financial services, and income level. Financial literacy was lower among younger people, the elderly, and unpaid family workers, while those with experience using digital financial services demonstrated higher literacy.

Digital financial literacy was also found to be linked to actual financial well-being. The report analyzed how digital financial literacy scores affect the likelihood of delinquency among users of Buy Now, Pay Later (BNPL) services to examine its impact on financial well-being. BNPL is a postpaid service designed to allow consumers with limited access to credit cards to make small credit transactions, and is offered by platforms such as Naver Pay and Toss Pay.

The analysis found that for every one-point increase in digital financial literacy, the probability of delinquency among BNPL users decreased by an average of about 0.1 percentage points. This suggests that digital financial literacy is closely related to the outcomes of actual financial decision-making, beyond mere awareness. In addition, groups with lower digital financial literacy experienced a higher rate of monetary losses during digital financial transactions, such as duplicate payments and refund refusals.

Jung Sumin, a research fellow at the Capital Market Institute, explained, "These results show that differences in digital financial literacy lead to differences in actual financial behavior, and that lower literacy significantly increases the risk of reduced financial well-being." Jung emphasized, "With digital financial services already established as the primary channel for financial transactions, digital financial education is no longer optional but essential. There is a need for comprehensive efforts to create a safer digital financial environment, including expanding customized financial education for vulnerable groups, enhancing industry security systems, refraining from dark patterns, and strengthening personal data protection."