INTERNATIONAL EXPERIENCE:FINANCIAL LITERACY STRATEGIES       AND PROGRAMMES                      Moscow                   ...
Structure of presentation1. What is meant by being financially literate?2. Why develop a national financial literacy  stra...
1. What is meant by being    financially literate?
What is meant by being financially                 literate?•     Having the knowledge, understanding, skills, motivation ...
Depends to some extent on         personal circumstances•    What it means to be financially literate     depends to some ...
Why is it important for people to be         financially literate?    People who lack financial literacy are less likely ...
2. Why develop a nationalfinancial literacy strategy?
Why develop a national strategy?    A variety of initiatives/channels/messages are     needed in order to reach and influ...
3. Tips for developing a    national strategy
Key components of a national strategy –      based on international good practices    Clear priorities are set – with the...
Developing a national strategy    Key stakeholders should be actively engaged – eg through     being consulted on, and he...
Developing a national strategy               (continued)    Project planning – and robust project management –     needed...
Countries with, or developing,      national strategies include:AustraliaBrazil                                   UKs init...
Leadership - and championing -                 needed    If everyone is responsible, no-one is responsible    Leadership...
Who is leading national financial     literacy work in other countries?Leaders include:    central bank (eg Bank Negara M...
4. Potential partners – whoare they and how can they        contribute?
Need to work in partnership    No single organisation can improve financial     literacy on its own. There are many     o...
Improving financial capability is a                win-win for:    Consumers – helps people make their money go further; ...
How can partners contribute?    Incorporating financial literacy initiatives into their other     activities    Developi...
Potential partners – some UK                  examplesA wide range of organisations have an interest in  improving peoples...
Potential partners – some UK           examples (continued)‫‏‬    Universities/colleges – helping young people manage    ...
Other potential partners    Foundations and trusts, including those     associated with financial services firms    Dono...
Financial services industry can play           important role– so long as its not, in reality, marketing, for example:   ...
5. Lessons from behavioural economicsand from social marketing       programmes
Insights from behavioural economics•    Behavioural economics provides pointers to     the sorts of approaches which are l...
Learn lessons from a range of social       marketing programmes•    Lessons which can be learned from a range of     socia...
6. Evaluating financialliteracy programmes andnational financial literacy          surveys
Evaluation and national surveys    Evaluation helps to establish what is effective    Evaluation should be built in from...
Thank you!     Shaun Mundyshaunmundy@hotmail.com
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International Experience: Financial Literacy Strategies and Programmes

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Shaun Mundy, international consultant, former Head of Financial Capability Dept., FSA, UK, presentation from the workshop launching the Financial Education Financial Literacy Program in the Russian Federation, Moscow, April 4, 2011

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International Experience: Financial Literacy Strategies and Programmes

  1. 1. INTERNATIONAL EXPERIENCE:FINANCIAL LITERACY STRATEGIES AND PROGRAMMES Moscow 4 April 2011 Shaun Mundy shaunmundy@hotmail.com International Consultant (Former Head of FinancialCapability Department, Financial Services Authority, UK)
  2. 2. Structure of presentation1. What is meant by being financially literate?2. Why develop a national financial literacy strategy?3. Tips for developing a national strategy4. Potential partners – who are they and how can they contribute?5. Lessons from behavioural economics and from social marketing programmes6. Evaluating financial literacy programmes and national financial literacy surveys
  3. 3. 1. What is meant by being financially literate?
  4. 4. What is meant by being financially literate?•  Having the knowledge, understanding, skills, motivation and confidence to make financial decisions which are appropriate to your personal circumstances.•  Ultimately it is about how people behave.•  The UK’s Financial Services Authority distinguished five components of financial capability: –  making ends meet –  keeping track of your finances –  planning ahead –  choosing financial products, and –  staying informed about financial matters.
  5. 5. Depends to some extent on personal circumstances•  What it means to be financially literate depends to some extent on a persons financial circumstances. For example: –  someone with little money needs to know accurately how much s/he has available, because consequences of running out could be severe. But may not need to know about investing. –  a wealthy person only needs to know in general terms how much money s/he has available – but may well need to know about investing.
  6. 6. Why is it important for people to be financially literate?  People who lack financial literacy are less likely to use formal financial products – ie they are more likely to be financially excluded  Many people are not saving enough – or at all  Consequences of not being insured, or being under- insured, can be devastating  Increasing range and complexity of products – which give rise to risks which people may not understand  There have been a number of fraudulent “get rich quick” investment schemes – people who lack financial literacy are more likely to be cheated out of their money
  7. 7. 2. Why develop a nationalfinancial literacy strategy?
  8. 8. Why develop a national strategy?  A variety of initiatives/channels/messages are needed in order to reach and influence a population. People learn in different ways – and messages often needed to be repeated to have effect  A national strategy helps with: engaging a broad range of stakeholders; providing focus, drive and coordination; and setting priorities  Reduces risk of both unplanned gaps and unnecessary overlaps
  9. 9. 3. Tips for developing a national strategy
  10. 10. Key components of a national strategy – based on international good practices  Clear priorities are set – with these priorities taking account of impact, reach, sustainability and scalability  Is based on partnership working  Uses a variety of approaches and channels  Financial education is provided to schoolchildren, beginning at an early age  Starts with the basics – potentially builds on that for those who need to have more sophisticated knowledge and skills  Communications are relevant and clear - and lively and engaging  Monitoring and evaluation built in from outset  Reaches out to people – doesnt wait for them to come to you
  11. 11. Developing a national strategy  Key stakeholders should be actively engaged – eg through being consulted on, and helping to steer, development of strategy  Prioritise – dont try to do too much too soon. If resources spread too thinly, little gets done – resources are wasted and disillusionment sets in  Priorities should take account of opportunities as well as areas of greatest need (eg: in some countries, financial education is provided in workplaces – not because those in work have greater needs than those who are not in work, but because workplace financial education can potentially reach large numbers of people)  Priorities should take account of impact, reach, sustainability and scalability
  12. 12. Developing a national strategy (continued)  Project planning – and robust project management – needed  Strategy should be monitored and regularly reviewed, and adjusted where appropriateDeveloping a national strategy is a means to an end – not an end in itself. Important not to devote so much time and effort to the development of a strategy that there is no capacity to develop financial literacy initiatives on the ground. On the other hand, important not to rush ahead with initiatives – which may turn out not to be the best priorities – while a strategy is being developed
  13. 13. Countries with, or developing, national strategies include:AustraliaBrazil UKs initial priorities:Canada   Wide-ranging; but coherent andEastern Caribbean Currency Union realisticHungary   SchoolsIreland   Young adultsKenyaMalaysia   Employees in workplacesNew Zealand   Community groupsSingapore   New mothersSouth AfricaTanzania   Website – and securing links from other websitesTrinidad and TobagoUganda   Personalised advice (non-UK product-specific)USA
  14. 14. Leadership - and championing - needed  If everyone is responsible, no-one is responsible  Leadership particularly important in field of financial literacy because – ideally – broad range of partners will be involved  In some countries (eg UK, US, Kenya and Philippines), the leader of the national strategy is supported by a steering group of senior stakeholders  Senior level champion can be very useful, eg in bringing in additional partners and in securing media coverage
  15. 15. Who is leading national financial literacy work in other countries?Leaders include:  central bank (eg Bank Negara Malaysia, Central Bank of Trinidad and Tobago, Central Bank of Azerbaijan, Eastern Caribbean Central Bank)‫‏‬  Government/Government agency (eg US Treasury, New Zealand Retirement Commission)‫‏‬  financial services regulator (eg Australian Savings and Investments Commission, South Africa Financial Services Board)‫‏‬
  16. 16. 4. Potential partners – whoare they and how can they contribute?
  17. 17. Need to work in partnership  No single organisation can improve financial literacy on its own. There are many organisations with an interest in improving peoples financial literacy who can potentially contribute  Improving financial literacy is challenging! It requires long-term behavioural change – a single programme is unlikely to have much impact on its own  Need to reach out to people, in ways with which they will engage, through a variety of channels and using many different approaches
  18. 18. Improving financial capability is a win-win for:  Consumers – helps people make their money go further; protect themselves against unexpected events; avoid unnecessary risks, being over-charged or becoming over-indebted; and avoid falling victim to financial frauds. Less likely to be financially excluded  Financial services industry – consumers who are informed and engaged are more likely to buy appropriate financial products and services (increases business volumes; reduces marketing costs; fewer complaints)‫‏‬  Central Bank and other financial services regulators – less need to deal with results of poor money management skills among consumers  Government – boosts the economy and economic welfare  Employers – employees with money worries may be less productive  Educationalists – being able to manage your finances well is an essential life skillAll of the above are potential contributors to financial literacy work
  19. 19. How can partners contribute?  Incorporating financial literacy initiatives into their other activities  Developing materials  Distribution – eg of booklets  Expertise and experience – eg in how best to reach particular groups  Providing trainers  Undertaking projects  Securing further partners and support  Providing funding
  20. 20. Potential partners – some UK examplesA wide range of organisations have an interest in improving peoples financial capability – though this interest may need to be pointed out to them! These include:  Financial services regulators  Government Departments  Financial services firms and their trade associations  Employers and trades unions  Schools education bodies
  21. 21. Potential partners – some UK examples (continued)‫‏‬  Universities/colleges – helping young people manage their own money (money problems one of main reasons that students fail to complete courses)  Support groups (eg for disadvantaged young people, single parents, elderly, those with mental health problems, ex-offenders) – money problems behind many of problems their clients face  Midwives – they distribute (free of charge) to expectant mothers the Parents Guide to Money. (They are willing to do so because expectant mothers with money worries are less likely to be able to focus on midwives messages regarding health care.)
  22. 22. Other potential partners  Foundations and trusts, including those associated with financial services firms  Donors and development agencies  Micro-finance institutions  Rural outreach organisations  Broadcasters and other media  Cell phone and utility companies
  23. 23. Financial services industry can play important role– so long as its not, in reality, marketing, for example:  Indonesia: financial education taken forward initially by Banking Education Working Group, with a focus on banking customers education. Now being expanded into a national financial education programme, which covers the financial services sector generally  the Prudential conducts ‘Investing in Your Future’ seminars (highlighting key issues involved when making financial decisions at different life stages – single; married; family planning; child’s education; retirement) in China, India and Vietnam to raise financial capability among women, who often have responsibility for household finances  Citi has undertaken a range of financial education initiatives, including developing financial education curricula for children, teenagers and adults
  24. 24. 5. Lessons from behavioural economicsand from social marketing programmes
  25. 25. Insights from behavioural economics•  Behavioural economics provides pointers to the sorts of approaches which are likely to be successful. People tend: –  to be overwhelmed and do nothing if too much information or too many choices –  to be over-confident about their ability to manage their personal finances and to ignore information which calls into question their views –  to struggle to make good decisions – need training/coaching on good decision-making.
  26. 26. Learn lessons from a range of social marketing programmes•  Lessons which can be learned from a range of social marketing programmes, including financial education initiatives, are to: –  keep things as simple as possible –  use relevant and engaging language and contexts –  repeat messages –  use a variety of methods and channels.
  27. 27. 6. Evaluating financialliteracy programmes andnational financial literacy surveys
  28. 28. Evaluation and national surveys  Evaluation helps to establish what is effective  Evaluation should be built in from the outset – otherwise, there will almost certainly be gaps in what can be assessed  Evaluating financial literacy projects is challenging – eg in obtaining objective information on whether behaviour has changed (some behaviour change may take years to happen) and in establishing the impact of the particular intervention  A national survey can establish a baseline; and future national surveys can then measure overall impact of financial literacy initiatives. World Bank is developing a survey for use in a range of countries
  29. 29. Thank you! Shaun Mundyshaunmundy@hotmail.com

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