Financial and digital inclusion must move forward together

Saving doesn’t mean giving up

José Antonio Herce, President of the Expert Forum of BBVA Pension Institute, talked about how savings act as a shield that protects the young and the elderly from financial vulnerability. The key to savings is “save more, save better and save enough. »Savings also as a tool for preparing for retirement.

Herce also dispelled some notions that can be a barrier when it comes to planning for retirement from a financial perspective. “Saving does not mean giving up live in the present. It means imagining yourself in the future without enough savings and doing something about it, ”he explained. In his opinion, “it is enough to set aside a certain amount for our finances to cover our current expenses and our future prosperity. “

Reduce financial vulnerability

Alfonso Arellano, senior economist at BBVA Research, moderated a round table with a panel of international experts which included Payal Dalal, Senior Vice President, Social Impact, International Markets, Center for Inclusive Growth, Mastercard, Mayada El-Zoghbi, General manager, Center for Financial Inclusion at Accion, and Wim mijs, CEO of European banking federation. “Financial education, digitization and financial inclusion go hand in hand,” Arellano said during his introductory speech.

The experts addressed the the effects of the digital transition which is accelerating in recent times due to the global pandemic and the need to support the population in this transition process. In this sense, Payal Dalal explained the results of a ‘online’ scanning program deployed by Mastercard’s Center for Inclusive Growth to help people digital and financial skills. “64 percent of participants said it helped them improve their financial health; 50 percent said they now feel more secure; and 50 percent responded that they were more comfortable with the idea of ​​managing their money ‘online’, ”she explained. “These three figures bear witness to the link between financial education and digital education», She underlined.

New technologies are changing the way financial services are delivered, opening the door for new market entrants. “Financial providers play a key role and must ensure that their relationship with customers mitigates potential risks” said El-Zoghbi.

For his part, Mijs stressed the need to regulate the activity of these providers to ensure that it is beneficial. In his opinion, these new suppliers “can help improve the service offering and build digital capabilities. “

Gamification and user-friendliness

Mijs explained how gamification platforms and applications help users, even children, save and organize their finances. These instruments, he said, are accompanied by very clear texts and provide a truly user-friendly experience and are a simple and attractive money management tool. The CEO of the European Banking Federation also shared some examples of applications offering a visual representation of the digital piggy bank and how it, in his opinion, helps users become more fully aware of their money.

These tools can help disseminate financial education. “We have to be able to make it easy to understand and implement and deliver it on time. Gamification is essential ”, said Payal Dalal. As for digitization, “new clients must have a positive first experience with digital financial products to build a base of trust with them and then focus on their loyalty. And a very effective way to build that trust is Word of mouth“, she said.

The challenges of vulnerability

“Trust is an important issue when it comes to attracting a person to something they don’t know,” said Mayada El-Zoghbi. “People already use and trust informal financial services like savings clubs, despite the risks associated with the informal economy. The reason they prefer this type of service, especially in the case of women, is social, economic and cultural barriers that they must overcome to achieve inclusion. “For women, even owning a phone is already a barrier,” she concluded.

Wim mijs presented the experience of India as an example of financial inclusion. In this country, banks have started offering checking accounts to vulnerable people, who cannot read or write, with solutions that are easy to access to credit. In the agricultural sector “The bank asked them to take a photo of their harvest and send it to them. This will allow the corresponding deposit to be received, ”he explained.

In the closing section of the panel, experts discussed other important factors to mitigate financial vulnerability. “We have to think in terms of gender”, Dalal explained. “There aren’t many financial products that take into account the specific needs of women.” For his part, El-Zoghbi, focused on the importance of safety nets. “We need to anticipate possible future shocks and think about how the financial system can work with governments to protect people”, said the CEO of the Center for Financial Inclusion at Accion.

Finally, Wim Mijs spoke about the importance of public-private collaborative efforts involving financial institutions, the education system and policy makers as a tool for building financial resilience. “The European Commission is working on a framework to foster recovery from the pandemic. We cannot be successful without creating an environment in which people learn to make the right decisions and learn the right skills. “

Next session: interactive workshop

In today – May 20 – EduFin Summit 2021 session, experts in PinBox solutions, CAF Latin American Development Bank and Nantik Lum share their views on the role of collaborative frameworks in improving financial education. After, Noelia Cámara, senior economist at BBVA Research, will host a interactive workshop to discuss the main challenges facing different frameworks for working together to promote financial education.

If you wish to follow the different live sessions of EduFin Summit 2021, please register for free by filling out the available form here.

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