WSBI has been endorsing financial education for 100 years

Peter Simon
WSBI-ESBG Managing Director

At the sidelines of the WSBI International Retail Banking Leaders Conference which was held on 17 March in Cartagena, Colombia, WSBI-ESBG Managing Director Peter Simon held an interview with Colombian financial magazine “Portafolio”. The interview was originally published on Portafolio website in Spanish

What is the contribution of savings banks and retail banks to society?

The concept of savings banks have its ideological roots in the Age of Enlightenment, in the 18th century. On the one hand it is based in the principle of giving everybody a platform for self-help and on the other hand on the idea of investing the money of a region within the region to strengthen it for the well-being of all people living there. Savings banks were created with that idea in mind and aimed at the poorer classes who had until then no access to financial services – to empower them to prepare for the future. Savings banks were born at the heart of working communities and helped develop the habit of putting a little bit of money aside to build up resources to face difficult times. To this day, the role of savings banks continues to be essential to build strong individuals, families and communities who are ready to face adversities and can create prosperity by using their savings to create new sources of income.

What are the lessons learned from the pandemic?

During the pandemic, savings banks all over the world proved that in difficult times they back their single clients in problems as well as the local economies. But the pandemic showed also very clearly how important savings can be. Resilient people have savings, and resilient people make resilient societies. I can say that millions of people around the word were able to face the reduction or even complete lack of income during the steep economic slowdown created by the lockdowns thanks to their savings. I believe that the important role of savings and retail banks was very clear because they provide a safe way to keep and grow savings, and open the doors to people, including low-income people, to other financial products. I believe that the main lesson was that financial education is essential to build resilient societies and we should continue building financial education because it leads to people who are financially savvy and included. Most savings bank constantly conduct financial education programmes and these should continue and grow, and the role of the private and public sectors is very important to ensure that even the most vulnerable people are financially educated.

What are the main factors involved in the development of the sector?

There are many but I would like to highlight one that was boosted precisely by the pandemic: digitalization. Savings and retail banks are institutions rooted in a long tradition but also flexible institutions that are able to evolve with the times and one of the most current ways to serve customers of all sizes is digitalization. It is a trend that started a decade ago but was accelerated by the lockdowns imposed during the pandemic. Now, it is very important to continue in the path of digitalization hand-in-hand with financial education to ensure that no one is left behind in this new era, with particular focus on vulnerable groups and senior people should be included.
Another very important factor for our sector to thrive are proportional regulations at all levels. Savings and retail banks include institutions of all sizes and we believe that the regulations should be proportional to the size and capacity of each institution so that they can continue to thrive and are not burdened by unnecessary procedures that could jeopardize their resources needed to ensure excellent service to their customers.

Why has financial education only been discussed in the recent past?

No, financial education efforts have always been at the heart of savings banks and, as mentioned before, these date back to the 18th century. I am honoured to be the Managing Director of an institution founded almost 100 years ago. Indeed, the World Savings and Retail Banking Institute was created in 1924 in Milan at the first “International thrift day”. Already this first meeting dealt a lot with all questions around financial education and since then financial inclusion and financial education is a key element of the common DNA of our members.
To give you an example of he recent past: We have seen worldwide a trend towards a special focus on the financial education of women because there is still a dramatic gender gap and lots of room for improvement. For example, at the international level women have about 30-40% less pension funds than men when they retire while at the same time they tend to leave longer. This puts senior women in a vulnerable position and that is something that can be corrected with financial education and awareness about the importance for both men and women to take the lead of their own financial future.

What is missing to advance in a greater degree of financial inclusion that allows real access and use?
Customer-centric products and services are at the centre of successful financial inclusion. To achieve this, banks should really know their customers, including especially low-income customers, and truly respond to their needs. Last year the WSBI closed a six-year programme on financial inclusion called Scale2Save, a partnership with the Mastercard Foundation. In the framework of this programme we included 1.4 million people into the formal financial system for the first time in six African countries. One of the main takeaways of this programme was that banks can develop products for low-income people that work and that are sustainable and one of the keys is that these respond to people’s needs by having a customer-centric approach behind them.

What will be the main messages of the Cartagena meeting?

WSBI International Retail Banking Leaders Conference in Cartagena will focus on topics such as but not limited to cybersecurity and digitalization, sustainable finance and financial education and inclusion.
High level executives from four continents, including some of the WSBI members, will immerse in this academic event to reflect on how to move forward to continue serving in this changing world. How can we contribute to the sustainable future this planet needs? How can digital and cybersecurity measure help us thrive? How to continue building financial education and inclusion in the most effective way? These are all topics that we will discuss during the day. Some of our members will present their success stories and lessons learned on these topics, external experts and academics will also present their views. This will be a truly remarkable opportunity for leaders of our sector and we are thrilled to hold this, our first in-person event in the region since the pandemic hit. We are particularly grateful to our host, Mr. Diego Prieto, President of Banco Caja Social and regional president of the WSBI; and to Mr. Isidro Fainé, the WSBI President, President of the “la Caixa” Foundation, and a truly remarkable unique personality in the business and philanthropic sectors.