Financial education and inclusion as essential elements to promote justice, equity and progress. That was the main conclusion of the first day of the EduFin Summit, a global meeting organized by BBVA’s Center for Financial Education and Capability, being held in Mexico City.
Education and financial knowledge are fundamental tools to move toward a more equitable, and therefore just, world. But the real challenge is including people in the financial system to help them get ahead and contribute to their present and future well-being.
This process should start at an early age and continue throughout life, according to the participants in the different panels, and focus not only on the most disadvantaged sectors in society, but on the entire population. As the Chairman of BBVA Bancomer’s Board, Luis Robles, noted, “The economic crisis taught us that even highly education people with knowledge of the financial system and high levels of income need financial education. Just think of all the sizeable estates that were lost across all socio-economic levels and in many developed and developing countries.”
Chairman of BBVA Bancomer’s Board, Luis Robles
Robles also stressed the importance of financial education in the current context where “populist movements with unsubstantiated economic proposals have emerged in Western democracies.” In this regard, he suggested “incorporating fundamental economic concepts in the different initiatives, which removed from ideologies, make it possible to transmit capabilities managing personal finances, as well as knowledge to be able to make an informed vote.” Alejandro Díaz de León, Deputy Governor of the Bank of Mexico, underscored the strategic importance of financial education and inclusion to progress toward a more just, equitable and prosperous society. “Financial inclusion is the key the improving the population’s well-being,” stressed Irene Espinosa, Treasurer at the Mexican Secretary of Finance and Public Credit.
In his presentation as moderator of the New Financial Education panel, Toni Ballabriga, Global Director of BBVA’s Responsible Business, defined new financial education as a reality that “has many faces”. “It’s about working on all possible routes with the involvement of all actors and all available tools.”
Helen Gibbons, Board Member of the Better Finance; Annamaría Lusardi, Academic Director of the Global Financial Literacy Excellence Center, and Elisabeth Rhyne, Director of the Center for Financial Inclusion agreed on the importance of listening to people’s need to adapt the content of the financial education programs to every need. And they highlighted how important it is that this content be clear, simple and entertaining. “The goal of financial education is to change people’s behavior and not just transmit financial knowledge,” added Gibbons.
Jorge Sicilia, Chief Economist at BBVA Research, moderated the second panel, which analyzed how people’s behavior affects the economy and how this behavior is largely determined by financial knowledge.
Carlos Ramírez, President of CONSAR, the public agency that promotes retirement savings in Mexico, explained the reality in the country. Of the 57 million Mexican workers who contribute, 39 do not make any voluntary contributions to the retirement savings system. This means that a Mexican worker will receive the equivalent of 30% of their salary when they retire. Ramírez explained how CONSAR is managing to change this behavior through financial education and a series of initiatives to facilitate contributions to retirement plans in convenience stores or pharmacies.
Hugo Ñopo, Lead Researcher at the Analysis for Development Group (Grupo de Análisis para el Desarrollo - GRADE) discussed the situation in Peru, where only one in every four adults has a savings account, two in three does not have access to the financial system and young people have a growing rejection of the financial system.
The third panel was an exhibition of successful initiatives in financial education and inclusion. Initiatives like RoosterMoney, Aflatoun International, Revolution Credit and Fundación Capital were explained by their founders – all of which are rooted in innovation.
Leora Klapper, Lead Economist at the World Bank’s Development Research Group and expert in financial inclusion, was in charge of moderating this panel. She denounced that more than 2 billion adults do not have access to banking services in the world, according to the World Bank’s latest Global Findex report. To overcome this situation, she focused on the need to work with young people and use technological developments to innovate financial inclusion methods.
“Financial education works. If we combine financial education with other types of initiatives, we not only give them knowledge, but we help them change their behavior. We give them a better future,” said David Hernández, Director of Business Development at Aflatoun International.
From the banking side, Carlos López-Moctezuma, the Head of New Digital Business and Financial Inclusion at BBVA Bancomer, explained the new financial education model the bank promotes, based on the digital transformation. “It’s a model with better products and better use of them to ensure a more satisfactory customer experience and greater social impact,” he said.
The second day of the EduFin Summit – this Friday – will focus on analyzing the global agenda and national strategies on financial education and their impact on people’s lives. José Manuel González-Páramo, Chair of the Center for Financial Education and Capability’s Advisory Board, will give the closing presentation at this global meeting promoted by BBVA, which seeks to foster a global movement to improve financial education and inclusion.