Are Europeans missing out on the investment opportunities in their own backyard? The European Commission’s Savings and Investments Union (SIU) aims to change that. By proposing reforms that make EU investment markets more attractive and accessible, the initiative hopes to increase participation from European citizens. But before looking at what’s changing, it’s worth asking: Why was such an initiative needed in the first place?
Why the Change?
Despite the size and depth of EU capital markets, retail participation has remained unexpectedly low. Recent surveys show that investors face a mix of structural and behavioural barriers — from historically lower returns and product complexity to risk aversion, fragmented servicing models, and tax-driven disincentives.
These factors reinforce a strong home bias, limiting citizens’ willingness to explore broader EU investment options and restricting access to efficient and competitive cross‑border opportunities.
Financial literacy compounds the issue. Only about 22.5% of EU citizens score 9 or 10 on standard financial literacy scales — the level typically associated with the confidence needed to invest in equities. Even within this group, investments often skew towards simple deposits rather than capital‑market products.
Patterns Across Europe
When comparing high‑literacy and low‑literacy member states, a clear pattern emerges.
- In Denmark, Sweden and the Netherlands, households hold less than 20% of their wealth in deposits and nearly 75% in equities, investment funds and pension products. These same countries top EU financial literacy rankings, with more than 27% of citizens scoring above average.
- Meanwhile, much of Southern Europe lags behind, with literacy scores below the EU average of 18%, where traditional bank deposits remain the preferred savings method.
This explains why European investors often favour their domestic markets or look across the Atlantic to the more familiar U.S. markets instead of exploring cross‑border opportunities within the EU.
What Needs to Happen Next
To truly unlock the potential of EU capital markets, financial literacy must become a foundational pillar. A unified, EU‑wide strategy — supported by national financial regulators and central banks — can empower citizens to make informed investment choices and take advantage of the opportunities closer to home.
The SIU reforms can play an important role by making investment products simpler, more transparent, and more comparable across the Union. When financial literacy programmes start incorporating SIU‑aligned guidance, it will help increase awareness and participation in EU markets.
Note: Financial literacy figures referenced are from Flash Barometer survey of Financial literacy in the EU conducted by Ipsos at the behest of the European Commission.
How Cognizant Can Help
Cognizant is uniquely positioned to support this transformation across the European financial ecosystem. Our global experience in digital modernization, investor‑experience design, regulatory compliance, and data‑driven personalization enables institutions to align with the SIU vision. Examples include:
- Simplifying investor journeys through intuitive digital onboarding, risk‑profiling tools, and product comparison interfaces.
- Building transparent, compliant product disclosures supported by AI‑driven document generation and regulatory intelligence platforms.
- Leveraging behavioural analytics to help firms tailor engagement strategies that increase financial literacy and long‑term participation.
- Supporting cross‑border service models with scalable cloud architectures and secure data‑sharing frameworks.
By combining technology, regulatory expertise, and human‑centered design, Cognizant can help financial institutions bring SIU ambitions to life — enabling EU citizens to invest with greater confidence and clarity.
