EduFin Summit 2019: digitalization and financial education to create new opportunities

Carlos Torres Vila, president of BBVA, has championed the role of education in general and financial education in particular in the fight against poverty and the improvement of prosperity. “Education is the best lever to put an end to inequality and to promote sustainable development”, he explained during his speech, in which he also mentioned the role of technology and digitalization, in areas such as task automation assisted by digital technology, including savings. In his opinion, “digital technology enables us to promote financial inclusion”, he explained to all those present.

The third edition of this summit has taken place this year in Madrid, having been previously held in Mexico City and Buenos Aires. During the 11 and 12 July, the auditorium of BBVA City became the platform for some of the world’s foremost experts in financial education. The opening session was provided by José Manuel González-Páramo, BBVA Executive Board Member and Head of Global Economics & Public Affairs. “It has become increasingly clear to me that an investment made in education and knowledge is an investment with the highest rate of return, even from a social perspective”, he stated during his welcome speech to all attendees.   

Risks and opportunities 

Flore-Anne Messy, head of the Financial Affairs Division of the Organization for Economic Cooperation and Development (OECD) was the first expert to take the floor on the subject of digitalization and financial health: “Digitalization offers great opportunities to consumers and has become particularly important in developing countries”.

Among the benefits of using technology in the financial sector are, better access to products and services and a more satisfactory and cheaper experience for the customer. Nevertheless, there are also risks, an issue that has been very present throughout the EduFin Summit. These risks include, according to Messy, the misuse of digital products, new types of fraud, inadequate information, problems with data security, etc. “Increased digitalization without proper financial and digital education will lead to new kinds of exclusion”. 

Technology and financial education hand in hand

Financial education for everyone and how to avoid an excluding digitalization was the main subject of the panel moderated by David Tuesta, former finance minister of Peru, with the participation of: Rolando Arellano, president of Arellano Consultoría para Crecer; Verónica López Sabater, general manager of the Fundación de Analistas Financieros Internacionales de España (Fundación AFI) and Fernando Tejada, head of the Market Conduct and Claims Department of the Bank of Spain.

These experts agreed as to the main advantages that digitalization can offer to consumers, such as ease and immediate access, but once again addressed the risks involved in this. In light thereof, the solution lies in education. “Financial education and digital education must go hand in hand”, stated Fernando Tejada. For his part, Rolando Arellano explained how financial decisions should be made: “First, to understand; second, to want to do it, and third, to act. The problem is that often it is a case of step two and three, without step one”. According to this expert, the immediacy provided by digitalization aggravates this problem: “Accelerating access to credit without having educated on how to manage it leads to the perverse effect of increasing financial exclusion instead of inclusion”. For this reason, Verónica López Sabater agreed with the rest of the panel on the need to merge financial and digital education, but also on the need to involve all players associated with digital transformation to remove taboos and poor financial habits.

Learning from practice 

The next round table was devoted to the analysis of the issue of digital financial education by a number of speakers spearheading important initiatives in the industry. This time the moderator was Liliana Pozzo, Advisory Services Manager for Latin America at the International Financial Corporation (IFC-The World Bank); this panel comprised Wang Wei, president of the Finance Museum of China; Raymond Frenken, head of communication and corporate responsibility of the European Banking Federation (EBF) and Silvia Singer, head of the Interactive Museum of Economics of Mexico.

Raymond Frenken gave a demonstration of the operation of the European Money Quiz, an international competition organized by the national banking associations of Europe, coordinated by the EBF and with the online learning platform Kahoot! as a technological partner. This initiative forms part of the European Money Week which in 2019 was attended by over 100,000 students: “We must educate young people to make the right decisions. This is one more skill required for these new times”.

On her part, Silvia Singer explained the operation of the Interactive Museum of Economics (MIDE), a pioneering project in Mexico which includes, in addition to a museum, an information center, workshops, courses and a cultural program: “We do not want people to become economists; we want them to understand that this is important for their everyday lives”. Wang Wei contributed his perspective from the social and cultural view of a country in which the population mistrusts money, which the Museum of Finance of China counteracts by educating on cutting edge topics such as the ‘bitcoin’: “We try to disseminate knowledge looking to the future”.

Education for development

The panel that followed, moderated by José María López Jiménez, head of SCR at Unicaja Banco, and of its Edufinet program, included Maria Demertzis, deputy director of Bruegel; Blanca Narváez Vega de Seoane, head of Junior Achievement España and Ryan Swift, vice president of financial education at EVERFI. López Jiménez spoke of the financial education initiative Edufinet and highlighted the need to encourage good criterion when using digital products, particularly among the younger population. “The ‘millennials’ have adapted to digital transformation, but we must narrow the digital gap and the reduction of critical thinking among financial services users”, he said.

Narváez Vega de Seoane explained the importance of financial education at an early age with practical actions such as how to run errands, manage pocket money or having conversations about money within the family. Meanwhile, Swift highlighted the role to be played by financial institutions which, in his opinion, “should use technology to increase customer loyalty, both in terms of content and of experience, particularly among the younger segment”.

On her part, Demertzis underlined the need to encourage financial education as a lever for development in countries, as it has an effect on aspects as important as GDP, social inequality and exclusion.

New products, new opportunities

The EduFin Summit has also acted as a showcase for new products and services being developed by the financial sector to improve customer experience and assist customers in making informed financial decisions. Guillermo Jr. Cárdenas, Director of Evaluation and Best Practices at BBVA Research Mexico described the digital financial education initiatives carried out by the organization in this country.

In a highly visual presentation, Fabián Goldberg, head of the Microfinance and Culture Campus of the BBVA Microfinance Foundation explained the workings of ‘Heroes’, the institution’s educational initiative to bring its purpose to life: promoting sustainable development of vulnerable entrepreneurs in Latin America, using financial products and services, financial education and capability. “‘Heroes’ is an interactive experience that recreates the relationship of advisors with these entrepreneurs, allowing them to appreciate the impact of our role in their development”, explained Goldberg. On her part, and on behalf of BBVA, Luz Martín Manjón from the Digital Transformation Department and Ana María Hernández Moratilla from UX Leadership and Design, presented the savings tool Programa tu Cuenta [Program your Account]. This brought the first session to a close.  

Fighting inequality

The second day – which began with a speech by Carlos Torres Vila, president of BBVA- continued with the intervention of Pablo Hernández de Cos, governor of the Bank of Spain, who presented attendees with an analysis of the results of the Financial Competency Survey, a joint initiative of the Bank of Spain and the Spanish National Securities Market Commission (CNMV) which shows, according to its conclusions, “the low level of financial education that still exists” in Spain. “The lack of financial knowledge is particularly high among the elderly and the younger segments of the population. Training actions must focus on these communities and measures must be systematically assessed in order to determine those which are most successful”, explained Hernández de Cos.

The data challenge 

The role of digitalization resumed its leading role at the round table moderated by Antoni Ballabriga, global head of Responsible Business at BBVA. This panel included José María Roldán, president of the Spanish Banking Association (AEB); Helen Gibbons, member of the Board of Directors of Better Finance; and Diana Mejía, senior specialist on Productive Development and Competitiveness at CAF Banco de Desarrollo de América Latina. Ballabriga highlighted the role of financial institutions as custodians of people’s data. “The knowledge we have of the customer enables us to personalize and customize products in order to offer only what the customer needs. Moreover, it enables us to identify any gaps in knowledge or capability that prevent the customer from using these products properly, highlighting financial vulnerability behaviors. This knowledge, enables us, in short, to identify where and when financial training may be required”.

The president of the banking association also defended the role of the financial sector in this area: “The banking industry is in a very good position to provide guarantees of confidentiality and security to customers”, a message he had already advanced a few days ago in an interview published at bbva.com. However, he insisted that the customer must take on an active role in terms of his or her own protection because, in his opinion, “the first stumbling block in the fight against cybercrime are the users themselves, who must be aware of the risks of the new digital era”.

For her part, Helen Gibbons highlighted to need for financial institutions to strengthen their relationship with consumers: “Banks should become agents of trust”. This was corroborated further by Colombian Diana Mejía, “in a digital environment where one click can provide credit in just five minutes, the bank must be aware of the customer’s consumer pattern and prevent his or her over-indebtedness, by offering advice”.

Data also played a leading role in the talk given by Helena Koning, senior executive director at Mastercard. She touched, among other subjects, on initiatives such as Mastercard’s Center for Inclusive Growth and on the human aspect of ‘big data’. Koning argued the need to respect the autonomy of individuals, using their data to prevent damage in a fair way, making them easy to understand and explain: “If we do things properly in terms of data, we can benefit the communities that need it”.

Technology to improve financial health

Precisely, the use of technology as a driver to improve people’s financial health was the main topic of the last round table in the summit. This panel was moderated by Darren Easton, senior director of Financial Health Network with the participation of Hania Farhan, senior director of Methodology at Gallup; Bart de Langhe, associate professor in the department of marketing at ESADE and Dagmar Van der Plas, global director of the Think Forward Initiative and sustainability manager at ING. They all agreed with the other experts in the summit on the need to combine financial education and technology and restore confidence in the financial sector: “We must use technology to define what is effective and what is not, and do what is best for the customers”, stated Farhan.

EduFin Summit 2019 came to a close with a presentation on conclusions reached by José Manuel González-Páramo who reviewed the main issues addressed over these two days. “Financial education requires a collective effort and thinking in the long term”, he concluded. These words summarize an event in which Madrid became, for a few days, the world capital of financial education.