Financial education without borders: 5 key success factors

Financial education without borders: 5 key success factors

November 26, 2020

On October 15, Développement international Desjardins (DID) hosted an international webinar on the topic of financial education without borders. This issue is all the more relevant given the major toll that the pandemic is taking on the financial situations of many families around the world. Some 700 participants from more than 30 countries attended presentations by high-level players in Canada, Burkina Faso and Haiti.

It's estimated that only one-third of the world's population is able to understand basic financial concepts, and that rate is dropping rapidly in developing countries. This observation, coupled with the economic challenges caused by the COVID crisis, clearly highlights the importance of financial education in helping people acquire sound financial behaviours.

But where should financial institutions start in order to have a positive impact on their members and clients? Here are some key success factors, inspired by DID's experience and the discussions that took place during October's webinar.

Offer guidance rather than deliver information

It's better to encourage people to think about their financial habits rather than tell them which habits to adopt. This enables them to choose the changes to make for themselves. It may sound simple, but this is a demanding approach that requires a great deal of flexibility and creativity from trainers.

Consider a person's training needs as a whole

Financial education is linked to a number of aspects of our lives, such as self-confidence, the division of labour within a household, proficiency with digital technology and risk management. All of them deserve to be taken into account if we want to make a real and lasting impact. The topics addressed in training sessions should therefore be chosen based on an analysis of each person's situation and needs.

Leverage informal learning

Several types of knowledge and behaviour are conveyed informally. Therefore, this type of learning occurs through observation and imitation. A good financial education strategy should take this type of learning into account and use trainers who are close to learners, so they can more easily decode informal lessons. It should also tailor educational activities to different ways of learning (e.g., videos, sketches, role-playing, radio programs, mentoring) and use proximity technology, such as WhatsApp or Facebook, where possible.

Start early and work in partnership

Someone who is taught about saving before adulthood is more likely to make informed financial decisions. Governments and schools play a vital role in preparing future generations to make sound financial decisions. Financial institutions should therefore work in partnership with them.

Be flexible in evaluating results

Based on our experience, it's best to avoid targeting a specific outcome and to keep in mind that the goal is to develop a learner's ability to make informed financial decisions. Of course, an informed financial decision can vary from one person to another, so you should avoid measuring financial education results by observing a single behaviour. For example, acquiring a financial product may be a good decision for one client, but it might be better for another client to postpone their borrowing plans.