The Challenge of Achieving Attractive and Quality Financial Education

Since 2015, as a joint initiative of CNMV and Banco de España, the first Monday of October is celebrated as Financial Education Day to raise awareness about the importance of being trained in this area and to highlight its impact on the development of our daily lives.

Under this premise, elEconomista, sponsored by CECA, has held the “Financial Education” Observatory, which featured prominent speakers such as Mónica Malo Serisa, Director of Communication-External Relations and Sustainability at CECA; José María López Jiménez, Director of Sustainability and CSR at Unicaja Banco and coordinator of the financial education project Edufinet; José Manuel Mourelo, Coordinator of the Corporate and Institutional Social Responsibility area of Afundación Obra Social ABANCA; Roberto España Seijas, Head of the Division of Information and Services to Banking Customers at Banco de España; Gloria Caballero Núñez, Deputy Director of the Education Area of CNMV; and Eduardo Bandrés Moliné, Director of Public Spending, Regulation, and Welfare at Funcas.

The event began with Mónica Malo’s intervention, emphasizing the value of financial education in the current context. “It is a tool that promotes financial health and is very relevant for several reasons. First, because life expectancy is increasing, and therefore we must be more concerned about maintaining financial health,” she explained. “Second, for the need to complement that public pension with other incomes; and third, because the financial system and the management of personal wealth and saving is increasingly complex. There are numerous alternatives today, and thus we must make decisions based on information and knowledge.”

Eduardo Bandrés stated: “The lower the level of education, the worse financial decisions are made,” echoing the sentiment of the Director of Public Spending, Regulation, and Welfare at Funcas. “We are convinced this is a crucial issue because the lower the level of education, the worse financial decisions are made. Financial education has a high public good component, just like education in general.”

The CNMV and Banco de España are working on the new edition of the Financial Education Plan 2022-2025, which will be signed in autumn with the aim of contributing to the improvement of citizens’ financial culture by providing them with tools, skills, and knowledge to make informed financial decisions.

“The plan has primarily been oriented towards secondary school students; however, we believe we must reach new groups of citizens with new content,” explained the Head of the Division of Information and Services to Banking Customers at Banco de España.

In this regard, the Deputy Director of the Education Area of CNMV detailed: “We will target new groups, primary school students, university students, vulnerable groups, and will cover new areas of action such as sustainable finance, fraud, or digitalization.”

Gloria Caballero also indicated that “the website www.finanzasparatodos.es has been renewed to improve content and establish ourselves as a reference portal. For this, changes have been made in design, content architecture, and user experience, to make it more practical and interactive.”

Indeed, one of the challenges of promoting financial education is “to make people interested in these topics. We must make citizens aware that they have a tool for freedom to improve their financial lives,” assures Roberto España.

Current Situation

In Spain, financial education still represents a pending subject. And as the data shows, one in four adolescents has significant gaps in financial knowledge, according to the latest PISA report. “The challenge is to ensure that financial education is attractive and of quality according to the audience and age to which it is addressed, especially at early ages,” points out José Manuel Mourelo.

In this sense, Afundación Obra Social ABANCA is carrying out the initiative Segura-Mente, in which students are proposed to virtually traverse the Camino de Santiago while learning about finance, but also about history, art, or literature. Since its launch three years ago, it has reached more than 190,000 students aged 6 to 17 across Spain. Similarly, the program “The Crazy Adventure of Saving” based on gamification and aimed at students from 1st to 6th grade intends to teach them to manage money correctly, save, and be supportive while preparing financially for adult life.

On his part, José María López believes that in addition to focusing on the general area of financial education, such as school stages, “we must bet on financial education aimed at vulnerable groups.”

“To be more effective, it may be preferable to design tailored training actions. The smaller number of beneficiaries is compensated by the greater success of the educational action. In the end, it is not so much about transmitting knowledge as it is about competencies and skills. Knowledge can be forgotten, while competencies help to make the best possible decision in an economic or financial situation,” he added.

Moreover, to have sufficient knowledge in financial matters, users need to first acquire a set of digital and computer skills, which are crucial in the fourth industrial revolution we are experiencing. CECA has noticed that digital presence has increased over time, particularly with the health crisis. “Financial education programs in the digital realm represent 86% of the investment,” Mónica Malo stated regarding CECA’s initiatives.

Frauds and Cybersecurity

During the Observatory, the discussion also addressed how financial education can help protect people from being victims of financial fraud, a type of crime that is becoming increasingly common, especially during the Covid-19 epidemic, which has caused a large number of clients to connect to the Internet.

Roberto España noted that in the complaint service of Banco de España, this is “the star topic,” experiencing the greatest growth during 2020 and 2021. Furthermore, in general terms, total complaints at Banco de España have increased over the years.

Regarding fraud, José María López noted that “not only young people can be victims, but they can also be co-perpetrators of the crime with a prison sentence of many years, hence the concern is twofold.”

“The lack of digital skills favors the emergence of this fraud, but an excess of trust also contributes to it, especially among the younger ones, who may underestimate the implications of their digital activity,” added Roberto España.

At this point, Mónica Malo emphasized the increase in investments in bitcoin. “Especially among young people aged 18-20 who invest in bitcoin without realizing the stability of these currencies.” Indeed, the financial risks of investing in cryptocurrencies should not be underestimated. Specialists from the Financial Conduct Authority of the United Kingdom (FCA) indicate that 59% of young people who invest in cryptocurrencies could suffer significant financial harm in case of losses or devaluation of cryptocurrencies.

As for the importance of cybersecurity in certain sectors, the banking sector stood out. Indeed, banking has become the main target of hackers and is the sector that receives the most cyberattacks. However, to become invulnerable, this sector continues to increase its investment. “The entities that make up CECA invested over 1.6 billion in technology in 2019, of which 57.7 million were directed to cybersecurity and 84 million were dedicated to training to protect against hackers,” explains the Director of Communication-External Relations and Sustainability at CECA.

Pension Plans

Another issue that raises general concern, both in Spain and in many other European countries, is that citizens are not saving enough for their future retirement.

“It is necessary to diversify the sources of income for the elderly,” declared Eduardo Brandés. “The trajectory of the public pension system will be decisive in people’s lives. Therefore, it is important to explain that there are not only private pension plans but also alternatives that many people do not know. Ultimately, this is not about questioning the public pension system but complementing income with other options.”

José María López Jiménez stated: “In addition to pension funds, we need to provide more and better information about foresight.”

“We need to inform more and better about foresight, no longer just about pension funds. I believe that objectively we citizens must be more aware of what we will encounter upon retirement,” pointed out the Director of Sustainability and CSR at Unicaja Banco.

Future Challenges

To conclude the event, the speakers debated the challenges that financial education faces in the future. The Director of Communication, External Relations, and Sustainability at CECA expressed that from a sectoral point of view, analyzing the impact of initiatives is one of the significant challenges to determine what works best and to design initiatives better. “Additionally, we want from CECA to connect financial education with the SDGs, as it is closely linked to sustainability,” declared Mónica Malo.

Similarly, José Manuel Mourelo emphasized the “extension of the impact of projects to reach all age groups, educating in values throughout life, ensuring that financial education is fundamental from the base.”

For his part, Roberto España advocates for “extending our reach to new specific groups, exploring new forms of communication, and deploying new content. Additionally, we want to broaden the network of collaborators in the Financial Education Plan.”

Finally, Eduardo Brandés highlighted three aspects. “First, evaluation. Monitoring to see if the teachings have a significant impact when received and analyze if they influence decisions afterward. Secondly, cybersecurity, and thirdly, sustainable finance. These topics will be priorities in the future,” he concluded.