On January 12th 2023, the three European Supervisory Authorities (EBA, EIOPA and ESMA) published a review on financial education initiatives.
The initiatives at issue are those carried out by National Competent Authorities (NCAs) (such as the AMF in France) in the area of financial education and digitalisation.
Unsurprisingly, the ESAs find that lack of financial education and lack of familiarity with digital practices are the main reasons why some people fall victim to fraud or scams.
A total of 127 initiatives were reviewed, which underlines the significant and long-standing effort of these NCAs in this area. Perhaps more surprisingly, only 13% of these initiatives targeted investors, customers of banks or insurers.
Moreover, only 8% of the initiatives were organized with private sector actors. Paradoxically, these few initiatives would result in a higher audience, which the ESAs welcome.
The relevance of gamification in educational inititives
The report highlights the relevance of using gamification and “edutainment” to better address certain segments of the population. It also points out that this is not done enough in current initiatives.
The financial education solution developed by Neuroprofiler has adopted this recommendation since its creation. EDUprofiler aims to be both didactic and highly entertaining in order to provide an excellent user experience on financial topics that are often dry and not very engaging.
The need for a differentiated approach
Finally, the report establishes the need to have a targeted and differentiated approach according to the target users. This principle is again at the heart of the ongoing development of EDUprofiler in order to offer versions of the financial education pathway that suit better to the needs of different users.
Financial education is more than ever a strategic issue. Greater participation by individual investors, which is more necessary than ever, will undoubtedly require greater education. It would seem that the European Commission is giving this a special place in its “Retail Investment” legislative project. Incidentally, it should be published in April 2023.
The full list of 12 recommendations
- Promote the inclusion of certain population segments which are not keen on technology.
- Work closely with teachers to understand their specific educational needs as well as develop adequate teaching support.
- Warn about scams and fraud in an accessible and timely manner. For instance, through the publication of a blacklist of fraudulent providers.
- When publishing a list of authorized financial entities, avoid giving the impression that the NCA endorses their offerings.
- Inform young consumers about the financial risks of new technology-based financial products and services.
- Include – where appropriate – fun and entertaining elements in financial education campaigns. For example through gamification.
- Increase the credibility of the initiative by making the NCA a trusted brand providing useful advice and clear information to achieve a wider scope of the initiative.
- When cooperating with other institutions, ensure commitment to the initiative at the highest level of the partner organization.
- Achieve good searchability of the initiative’s website so that it appears as one of the first search results in a search engine.
- Be aware of follow-up costs when developing an initiative to avoid wasting resources.
- Measure not only the attention an initiative generates, but also improvements in financial literacy.
- Apply a targeted approach to measuring the effectiveness of a financial literacy initiative. For example, by conducting focus group tests and ideally evaluating their evolution over time.
In conclusion of this review of financial education initiatives, once again the EDUprofiler is proving to be relevant to the needs of the financial sector. Indeed, this financial education module for clients or prospects of banks and life insurers seems both relevant and original in this context.
Do not hesitate to contact us in order to learn more about the solution.