Oliver SCHMIDT opened the session, saying that it would cover how organisations deploy financial education, what experiences the panellists had with different delivery models and how to convince organisations to provide financial education.
Anna ZANGHI, from Mastercard, shared a guide that recommends industry practices for safe payment products for minors, developed with Child and Youth Finance International (CYFI) and other industry stakeholders. She explained that minors are often not "top of the list" for financial service providers and yet they are financially active members of society. Mastercard's recommended practices are intended for industry decision makers and product owners. These practices show how to respect and support minors' rights whilst protecting them. Products should encourage, support and guide the dialogue between parents and their children.
Zanghi shared these ten practices, which include: to restrict products and services that are inappropriate for minors, to promote responsible spending, to provide saving and payment facilities, to enable parents to choose payment types, to provide parental access to spending behaviour and to provide financial education tools to help minors manage their money1. She shared the example of Swedbank, which uses several of these practices. This bank and savings account allows parents to choose functionalities and track spending, while warning minors about the dangers of fraud.
Zanghi also explained that the success of products for minors depends on five main factors: 1) Public-private partnerships; 2) Product development that supports child rights; 3) The role of parents; 4) Financial education; and 5) Awareness & education on fraud. Mastercard and its partner authors will make the guide for safe banking and payment products for minors known and continue to evolve the practices.
Justyna PYTKOWSKA, of the Microfinance Centre (MFC), explained that MFIs need to understand their clients and monitor their performance over time. To that end, MFC developed a financial health check tool. MFIs can use this tool to work with clients and staff, and as a starting point for financial education. The tool scores the financial health of the respondent and provides tips and advice to improve it. Supported by her MFC-colleague Ewa Bankowska, she distributed an extract of the tool (questionnaire) to the audience.
Pytkowska argued that MFIs need to offer financial education. She shared six strategies for financial survival in delivering financial capability interventions, and explained the main pros and cons of these strategies. Two strategies focused on increasing income, from fees and services, or through grants and subsidies. The other four focused on decreasing costs, through the use of volunteers, cost-sharing through partnerships, integration of financial education into routine credit processes, and absorption into marketing or CSR budgets.
Johanna RYAN presented VisionFund International's embedded education model. She explained that efficiency is key, as 70% of their clients are in hard-to-reach locations. She added that VisionFund sees every contact with a client as an education opportunity. During these contacts, field agents take ten minutes to train them using short, simple and repeated messages, with illustrations and stories. Drawing on behavioural research, VisionFund designed education materials that require reduced training time for their field officers by including an easily accessible teacher's guide.
Ryan explained that VisionFund currently uses four education modules: 1) Avoiding over-indebtedness; 2) Saving wisely; 3) Budgeting; and 4) Insurance. Each module consists of 4-5 sessions, which are spread over 2-4 months. She added that training is based on adult learning: respect, affirmation, relevance, engagement and dialogue. Ryan showed one of the modules, a laminated flipchart in the local language, that field agents can easily carry when they visit clients. Ryan concluded that in VisionFund's experience, this embedded training has been very successful.
Yousra HAMED, from the International Labour Organisation (ILO), presented the organisation's approach2 and experience in financial education. She explained that ILO works on three different levels: 1) Macro, with policy makers; 2) Meso, with national partners and multipliers; and 3) Micro, with beneficiaries. ILO's financial education programme runs at both national and regional levels in Asia and Africa.
ILO's training is action-oriented, using adult learning principles. Hamed added that ILO's programme uses a consultative inclusive process with all stakeholders to determine and adapt a financial education curriculum and training method. This curriculum is based on a trainer's manual (that acts as a text book) and a participant's booklet. ILO uses a wide range of channels to transfer knowledge, of which she highlighted two examples: training of trainers and training workshops. In the training of trainers, ILO rolls out the training through micro-learning sessions, and trainers can obtain certification as a national trainer. ILO has trained over 700 trainers, reaching 100,000 beneficiaries in 2017.
Hamed concluded by demonstrating the ILO Financial Education Portal3, where ILO collects data on training activities by trainers and partners. This portal enables trainers and practitioners to access and enter training data, as well as to generate reports on different training elements by country and globally.
A member from the audience asked how the panellists assess the investments needed for an individual training component, when compared to an overall programme. Hamed responded that financial education is expensive, especially when working with classroom training, as ILO does. By working with partners on a national level, ILO has found that training can be done more efficiently. Moreover, Hamed argued that financial education is not a cost, but an investment. For example, in one of ILO's programmes in Cambodia, financial education reduced late repayment by 3.4%.
Pytkowska added that MFIs rarely measure the effects of their financial education on MFI performance indicators. Most often, MFIs only look at the satisfaction of their clients and how their clients rate the usefulness of their services. Therefore, MFIs try to keep the costs of financial education to a minimum.
Ryan argued that there is a trade-off for MFIs. MFIs are social enterprises, with the core responsibility to ensure the security of their clients, which is what their financial education focuses on. At the same time, they have to do this during the normal course of business, which limits what an MFI can do in financial education. As a part of World Vision international, VisionFund can use their materials and expert personnel to deliver education on a wider scale and in greater depth.
Zanghi argued that the developments in technology allow the sector to embed education into a financial product, giving the user a "contextual" financial education message when they use the product. Moreover, technology can help to monitor impact of financial education.
The discussion moved on to the question of impact of financial education. The moderator asked how to measure its impact, beyond customer satisfaction. Pytkowska responded that MFC plans to use its financial health check tool to regularly assess their client's financial health and to monitor their progress. Ryan added that delivering educational programmes is extremely difficult. She argued that, although everyone wants more evidence, it is difficult to impose additional research on MFIs and field agents. She urged the sector to better use the data that MFIs already have.
Hamed led the discussion to the macro-level, adding that after the financial crisis, many regulators are taking more responsibility to provide financial education to protect consumers. She shared the results of two evaluations of ILO training approaches in Cambodia, which showed a reduction in late payments, an increase in asset building, and a positive impact on financial attitude and risk management. She argued that research shows a clear link between financial education and the well-being of clients.