OFFICIAL DOCUMENT 2010 - Citigroup€¦ · has changed. Latin America has changed. Brazil has changed. We have a country grow-ing through both economic stability and credit. The big

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OFFICIAL DOCUMENT 2010

FEBRABAN and FELABAN · October 21 and 22, 2010

I LATIN AMERICAN FINANCIAL

EDUCATION CONGRESSOfficial Document

summaryLatin American Financial Education Congress

Summary | 3

OPENING | Educating for sustainable growth 4PANEL 1 | The importance of financial education and skills 10NGOs, an icon between banks and citizens 13Public education will set the regulatory dose 15Investing is not enough. We need to evaluate results 17PANEL 2 | How technology can be helpful in Financial Education 22A museum to attract attention 24The Internet has taken Visa’s program to 20 countries 24Financial entertainment, a simple way to educate 26PANEL 3 | Financial education for children and youths 30In Brazil, the project aims to reach 900 schools 32Colombia: efforts to avoid over-indebtedness 34PANEL 4 | Social inclusion, the key to economic growth 38A project to reach over 2,000 people 41Família no Azul 42PANEL 5 | Bancarization to increase financial inclusion 46In Maranhão, clients want more 48Neither misers nor loan sharks 50Microcredit, a social issue. Profit is a consequence 51PANEL 6 | Financial Education for the bancarized population 54Education for long term planning 55Training employees and avoid the saying “the shoemaker’s son always goes barefoot” 56Catching up with your budget, a FEBRABAN project 58PANEL 7 | Learning to save and investing to prosper 62Lack of regulation makes indebtedness grow in Chile 63The Central Bank of Brazil prioritized the education of financial institutions 65After saving, learn to invest 65PANEL 8 | Responsible finance, profitable banks 68In 2011, the Consumer Code for Latin America 70Say a clear “no” to those in debt 71Closure 74

openingEducating for sustainable growth

Opening | 5

If it depends on the efforts of financial institutions to disseminate financial education,

Brazil will grow with sustainability in relation to credit as an ally of development. “We

are convinced that we can contribute to the welfare and improvement of living condi-

tions in Latin America”, said Ricardo Marino, president of the Latin American Federation

of Banks (FELABAN), an entity that promoted, alongside the Brazilian Federation of

Banks (FEBRABAN), the Latin American Financial Education Congress, held on October

21 and 22 in São Paulo, Brazil.

During the two-day event, with Citi Foundation, Itaú, and Santander as the main sponsors,

technical discussions and presentation of cases showed the awareness of financial institu-

tions regarding the need to invest in education. Obviously, without government support

in education and sustainment of stable macroeconomic indicators and modernization of

infrastructure, there will hardly be any good use of the efforts in financial education.

What is seen is the formation of a multitude of professionals and volunteers to dis-

seminate basic concepts of economics and banking products and services. “The world

has changed. Latin America has changed. Brazil has changed. We have a country grow-

ing through both economic stability and credit. The big challenge is to help people use

credit as a tool for growth, not as a product which generates difficulties in the future, as

happened in many countries”, says economist Marcos Lisboa, vice-president of FEBRA-

BAN and Itaú Unibanco.

Credit is slowly being rediscovered by the Latin American societies. Everyone dreams

of a better future: decent housing, household appliances, healthcare, automobile, and

leisure. Now, with the growth of Latin American economies, dreams are coming true,

mostly thanks to stability and credit, which is already close to 30% of the Gross Do-

6 | I Latin American Financial Education Congress

mestic Product (GDP), considering seven countries in the region (Brazil, Mexico, Argen-

tina, Chile, Colombia, Peru, and Uruguay).

Santander’s expectations are that credit in the region will represent 41% of the GDP

in Latin America by 2015. In Brazil, credit already accounts for over 46% of the GDP

in 2010. The efforts of the institutions concerning financial education also focus on

increasing household savings. According to the Santander survey, savings are expected

to leap from the current 57% to 72% of the GDP by 2015.

Despite the rapid progress in the last two years, there is a long way to go, especially

in comparison to the United States, where credit exceeds 100% of the GDP. However,

global experience says that expanding credit and increasing the customer base is not

enough. It is important to make people aware of the correct use of financial products.

Lisboa stressed the importance of financial education for the new Brazilian consumers.

More than 30 million Brazilians have ascended to a new social class, and are eager to

consume. “Credit products are part of the routine of professionals working in financial

institutions. But to the vast majority coming to the job market, everything is new.”

According to Wilson Levorato, general director of FEBRABAN, women are the main

allies of the institutions in the financial education program. “The woman is the con-

science of the family. She is the one who controls the earnings and, in a way, controls

her husband and children. She is the one we should invest in.”

If the banks’ agenda is to raise consumers’ awareness on how to get the most of finan-

cial products, to regulatory agencies such as the Securities Exchange Commission of

Opening | 7

Brazil (CVM) the main task is to protect investors. According to Alex Broedel, director

of CVM the new economic reality has brought a large group of borrowers as well as

investors to the capital market.

“We already have a significant market, and we are going to have one of the largest in

the world”, said Broedel in his lecture at the Congress. For CVM, financial education is

the pillar to the regulation of the financial system. “The level of financial education of

the population impacts the type of system regulation. The more educated citizens are,

more information they will demand about companies and that alone will allow the

market to be less regulated”, he said.

Since the capital market in Brazil is just beginning, regulation is already being built

according to the most modern international standards. It is expected that Financial

education will progress at a fast pace so that market self-regulation becomes a trend.

In recent years, CVM has promoted several initiatives to protect investors and create an

even stronger market, from the requirement for certification of professionals working

in financial institutions to new rules for investment clubs, for example.

This was the first step for the exchange of experience among Latin countries. FELABAN

joins forces with the FEBRABAN to promote financial education. Next year, the Con-

gress will be held in Peru, which shared rich experiences with more than 300 partici-

pants attending the event.

“Our goal is to spread the best practices at the institutions and contribute to the sus-

tainable growth in the region,” concluded the current president of the Association of

Banks of Peru and new president of FELABAN, Oscar Rivera. Credit availability and capi-


tal increase are the main challenges for Latin American banks that face an optimistic

scenario after overcoming the financial crisis. We cannot lose this opportunity to grow

with sustainability, and financial education is a major supporter of this challenge.”

The committee for financial education was created during the Latin American Con-

gress. Its goal is to support programs developed in the region, including a virtual library

for the most successful experiments, according to Enrique Beltran Dávila, executive

director of the Training Institute of the Association of Banks of Peru (www.ifb.edu.pe).

As of 2011, there will be a portal with projects from more than ten Latin American

countries. “We all know the challenges of financial education and we can facilitate this

process through joint efforts. The idea of the committee is to leverage the result of

these projects”, he said, inviting all attendants to publish their projects on the portal

and exchange ideas to solve the problems in these countries. “I hope to see you at the

next congress in Lima.”

Opening | 9

We all know the challenges of financial

education and we can facilitate this process

through joint efforts”, said Enrique Beltran

Dávila, executive director of the Training

Institute of the Association of Banks of Peru

Moderator

Pam Flaherty, President & CEO, Citi Foundation, USA

NGo

Monique Cohen, President of Microfinance Opportunities, USA

private sector

Loreta García Muriel, Director of the Financial Education Program,

Banamex, “Saber Cuenta”, Mexico

public sector

Eduardo Sibaja, General Director, CENAT – Consejo Nacional de Rectores

de Costa Rica and former Ministry of Economy of Costa Rica

The importance of financialeducation and skills

panel

panel i The importance of financial education and skills | 11

The panel’s discussion was about the importance of financial education and skills as im-

portant tools for the future of Latin America. The focus of all speakers was the pros and

cons of an active promotion of financial education for the benefit of society in order to

support a healthy growth.

Financial education is a topic of relevance to all countries around the world. It was

before the international crisis in 2008 but the significant losses for governments, busi-

nesses, and families made education the number one priority for governments and

financial institutions. “The crisis has prompted us and we changed our language to

include financial capacity in our talking, not only financial education”, said Pam Fla-

herty, President & CEO of Citi Foundation, who moderated the first panel of the Latin

American Financial Education Congress, with the main topic of discussion being “Why

are financial education and skills important to the future of Latin America?”

The first one to share experiences was Loreta García Muriel, director of the Financial

Education Program of Banamex, the largest bank in Mexico, and coordinator of the

committee of the Association of Mexican Banks. “Our goal is to raise the awareness

in the companies about the benefits that financial education brings to employees and

the general population. We have already captured 21 commercial banks that have ac-

cepted our invitation”, the executive of Banamex says proudly.

“The experience of Mexican banks with financial education has already accumulated

significant returns”, says Ms. Muriel, with the remark that the institution is present in

the culture of the Mexican population for 150 years. Mexico is a country marked by

the diversity of its population, much like Brazil. Over 20 million people live in Mexico

City, the country’s capital. About 25% live in poverty and 20%, in extreme poverty.


“People from the north are different from people in the south. We have various social

realities”, she said.

To achieve the goal, diversity is the hallmark of the programs developed by Banamex.

“We have stories for children and business management courses for adults. “We have

developed computer games, board games, and theater, educational materials, and

content to be taught in fixed and mobile classes, as well as a free support service phone

line. We work with parents of children attending public schools and we train students

who are interested in being community promoters”, she said.

According to her, the government and many companies are convinced that Financial

Education contributes to the country’s growth. As people learn how to make correct

decisions, they start having better living conditions, and having a life project is a natu-

ral consequence of a maturing population. “Many financial products are complex and,

therefore, education has to go hand-in-hand with progress and technology. These are

the reasons why we have programs with different approaches”, she said.

Ms. Muriel says that, six years ago, the issue comprised financial education to the general

public. “Finance was a subject ignored by people. The challenge was to bring topics such

as household budget and the need for saving closer to the reality of people”, she stated.

It was then that the group decided to have a better understanding of what people

needed to learn about money. According to a survey conducted by t he University of

Mexico in 2008, about 14% of Mexicans have formal savings account, 80% prefer to

use cash rather than cards, two of every three Mexicans have financial records, and

69% have never used banking services.


NGOs, AN icON bEtwEEN bANks ANd citizENs

Monique Cohen, president of the Nongovernmental organization (NGO) Microfinance

Opportunities, based in the United States, shared her experience about the real role of

an NGO in a financial education program.

The challenge for NGOs is to work with the population that is part of the lower social

tiers. Great part of it is illiterate. To make people have a checking account at a bank,

the first thing to do is educate them to become aware consumers of financial products.

But even before that we need to have the right financial product and service that works

for this social class, culturally limited and often living in environments without proper

sanitary conditions, being exposed to various diseases.

“We deal with these two audiences. Our job is to help our partners design the right

products and to help people with the basic knowledge on how to manage their financial

lives properly and reap the benefits with their whole families”, she said. In Ms. Cohen’s

daily life, she realizes that the great challenge of the banking process lies in the fact that

people feel overwhelmed and have little trust in financial institutions.

“We have to build trust. The NGOs can make the interface between consumers and

institutions”, she said. The situation becomes even more complex as many branchless

banks begin to enter this segment. “Earning the trust of people in an institution that

has no open doors on the street is even more challenging.”

When the program began, with the content taught in classrooms, the first step was

to teach how to make a household budget. Learning how to organize income and ex-


penses, chances of people saving increases. She said that this method does not work at

the lowest tier of the social pyramid. A householder will hardly have time to go to class.

The rooms are just tools and, in some cases, costly. “Many institutions cannot afford

this cost”, she remarked.

One solution was to start using different media with wider scope, such as radios or

comic books, with huge penetration in lower-income classes, not to mention the fact

of being less expensive, given the sheer volume of people the program intends to

achieve. “Imagine the challenge of teaching an almost illiterate person, without any

knowledge on financial institutions.”

We must also invest in the technological education of these people. “If the clerk asks the

password, the person gives it. That can bring many problems”, states the executive of the

NGO. She says she has started to work with a credit card company in India. “Since it is

not present on the streets, with branches like the banks, the challenge is even bigger”.

The initiative that had the best result was the “word of mouth”, that trains volunteers

who pass on to the community what they have learned, and also includes financial edu-

cation in episodes, similar to the soap operas, which reach more than 12 million people.

In many of the programs they have developed around the world, the NGO Microfi-

nance Opportunities has developed three topics: budget, economy, and planning. But it

was necessary to adapt the original design for each region. In Latin America, the group

developed a program for women who work out of home and are breadwinners. “In

our research, we realized that financial reserve is viewed as an object of desire and we

wanted to help women build their savings”, she said.


Developing programs for young people aged 16 years or more has been another initia-

tive with a positive return. The program consists of teaching youths how to get a job

and how to manage money as they begin to build assets.

Women, according to the experience of the NGO, need to be prioritized by most

financial education programs. In this period working on the subject, the NGO per-

ceived five stress points that go from adolescence to adulthood. Women start their

professional life still in adolescent. Some get married young, but it does not last long

and then they have to fend for themselves as head of a household . “Many are aban-

doned and abused”, she declared.

Another niche of women in need of attention comprises those who migrate to other re-

gions or countries and need to manage the money in a scenario of religious or political

conflict. And finally, there is old-age. In many countries, there is no assistance for the

elderly. “We must adopt programs for those grandparents who usually manage families

and need to understand more about financial products and services”, said Ms. Cohen.

Consumer protection is a strong political ally of financial education programs, as they

bring balance to the responsibility of each party. According to Ms. Cohen, these pro-

grams are available in six languages and have already reached half million people in

direct training and 5 million by the mass media.

PubLic EducAtiON wiLL sEt thE rEGuLAtOry dOsE

Compulsory or voluntary, the participation of financial institutions in financial educa-

tion programs has grown around the world for simple reasons: whether for the bank to


have better profits by having clients who know how to make choices or to avoid exces-

sive regulation by regulatory bodies.

Eduardo Sibaja, general director of CENAT – Consejo Nacional de Rectores of Costa Rica,

shares the country’s experience. “Latin America did well in the crisis and it is helping increase

bancarization levels. These new customers are going to change regulators’ approach. If finan-

cial institutions do not act in a transparent, conscious manner with these new consumers, reg-

ulation will increase”, said Mr. Sibaja, who has been Minister in Costa Rica on two occasions.

He says the key question is how to change the behavior and culture of clients. Hav-

ing done well in the crisis, Latin America now lives a strong bancarization movement.

“Many people are leaving the poverty line and looking for new opportunities. This is a

great challenge for the banking system and governments. So we need to reassess the

financial education programs and see whether they are reaching people”, he warned.

For him, social media can be combined with financial institutions in this process of

education, especially for micro and small enterprises. In Costa Rica, all schools have

computers. “We use these computers to teach children and parents”, he said. But to

use the technology, people need affordable access to it.

Government participation is vital on several fronts in the development of financial edu-

cation. “If that does not occur, it will be very difficult for financial education programs

of private enterprises to have results”, said Mr. Sibaja. In Costa Rica, 8% of the GDP is

used in education. “We have a literacy rate of 95% and that makes a difference. It is a

long-term work. We have prioritized education for 50 years and that is why we have

achieved today’s standards”, he said.


The general director of CENAT said that Costa Rica developed programs specifically

designed for secondary schools and universities, aiming to create projects that really

attract society toward education. It does not help create a program that does not

reach its audience.

The strong commitment of the government of Costa Rica at this moment is to reduce

indebtedness. When the effects of the 2008 financial crisis hit Costa Rica, each citi-

zen had two debit cards and one credit card. According to him, education is a lifelong

process. It is not a matter of giving checking accounts, but giving conditions to man-

age accounts. Providing schools is not enough. “We need to teach young people to

become entrepreneurs”, he said, ending his presentation with the following sentence:

“I believe that Latin America has a great opportunity. We are starting to grow and we

can grow sustainably.”

iNvEstiNG is NOt ENOuGh. wE NEEd tO EvALuAtE rEsuLts

Investing large sums in programs is not enough. We need to evaluate if they work. This

phrase seemed to be a mantra in the Latin American Financial Education Congress.

Evaluation of programs was an issue addressed by just about all participants of the

event sponsored by FELABAN and FEBRABAN in October 2010.

According to Ms. Muriel from Banamex, evaluation is one of the most important steps

of financial education programs. “We have 50 strategic partners and 20 within the

banks that use us as an added value to the product. There are more than 92 programs

and we are always looking for ways to measure what we need to improve to really get

the benefits of duty.”


The first step to control the efficiency of the projects is the recording of programs. The

second is monitoring people who participate, both educators and learners. The third is

to do a survey to determine people’s satisfaction with the teaching received. The fourth

instrument used by Banamex to measure results is sending messages via bank or card

statements. “If we have answers, we know they are alert and aware of the communica-

tion.” Finally, Banamex makes an impact assessment to see if there really were practi-

cal and behavioral changes in the students’ lives.

Ms. Cohen said that, at the NGO, the strategy is to work with a step-by-step evalu-

ation. A research is conducted prior to the beginning of the courses and another 18

months after its conclusion. She said that, in Bolivia, the NGO has achieved spectacular

results. About 98% of the course participants were able to save and pay their loans. The

result was similar in Sri Lanka, where 54% of clients that kept the loan for six months,

even insolvent, managed to pay off their debts.

The course practice in some cases is not reflected in an expected result. In Bolivia, for

example, Ms. Cohen says that budget control courses have helped people save. The

reserves, however, did not go to the banks but to buy food. “The context of the popu-

lation is important and often it is through the evaluation research that we can detect

what needs to be improved.”

Another lesson learned by the evaluation method specialists is that the message must

be repeated more often than may be imagined. It is also necessary to do some research

to find out what makes sense to people. An interesting case is that of farmers in Mala-

wi, Africa. They receive money from the harvest once a year. “They spend everything as

soon as they get it and their wives hate it, as they go the rest of the year in difficulties”,


said Ms. Muriel. The solution was to create a course on the concept of savings, which

also helped improve the quality of family relationships.

Satisfaction surveys also allow organizers to detect errors. Using the wrong language

and having workshops in hotels or schools, without taking students to the banks, for

example, were some of the mistakes detected, and eliminating them made the pro-

grams more effective. “Nothing is safer for the consumer than being inside the house

of those who deals with them”, said Loreto.

In Cambodia, located in Southeast Asia, for example, the NGO where Ms. Cohen works

has been invited to work with young people who migrated from the countryside to the

cities. They were illiterate and took seriously everything that was written in magazines.

So, it was developed a program to magazines, and young women read it for the illiter-

ate majority.

Reducing the number of products, offering what really has value to the client and pro-

viding better training for employees who serve the public were other variables men-

tioned during the satisfaction surveys of the courses.


Nothing is safer for the consumer than being

inside the house of those who deals with

them”, said Loreta García Muriel, Director of

the Financial Education Program, Banamex,

“Saber Cuenta”, Mexico


thE ExPErts’ AdvicE fOr succEssfuL PrOjEcts

· Understand what you want to achieve with Financial

Education.

· Know the population you want to reach and create tailor-

made programs for each of them. Adults learn in a different

manner from children.

· Do market research to know what you target audience wants.

· Do not reinvent the wheel. There is plenty of ready-made

material that only needs to be adjusted to your needs.

· Work with different materials, from comic books to

merchandising on soap operas.

· Synergy, synergy, synergy. Information sometimes is enough,

but interacting with your audience to create situations of

reflection is important.

panelHow technology can help inFinancial Education

Moderator

Jonathan Wheatley, Correspondent, Financial Times, Brazil

acadeMy

Marisa Eboli, Professor, USP – University of São Paulo, Brazil

private sector

Silvia Singer Sochet, General Director, Interactive Museum of Economics,

Mexico

private sector

Sabrina Sciama Alonso, Corporate Affairs Manager, VISA Brazil

NGo

Timothy Flacke, Executive Director, Doorways to Dreams Fund, USA

panel 2 How technology can help in Financial Education | 23Abertura | A

How technology can contribute to the mission of Financial Education was the central

topic of this panel. Jonathan Wheatley, correspondent in Brazil for the Financial Times,

initiated the discussion of the second panel of the Latin American Financial Education

Congress with an example of a purchase by his maid. “She bought a cell phone which

cost R$169.00 in cash, paying ten installments of R$49.00 at Casas Bahia. This shows

that there is much work ahead to educate the population.”

Marisa Eboli, professor at the University of São Paulo (USP), highlighted a survey con-

ducted to identify key practices in Brazil and provide an overview on various aspects

of corporate education. 54 companies from various sectors were surveyed between

August and October 2009.

Financial institutions are the most innovative ones in training and education in the

area of social responsibility. Ms. Eboli emphasized the role of leaders. As in general

education, having a good school does not suffice. Leaders have to assume the role

of educators in day-to-day activities, passing on values to employees. “Regardless of

how much a company is willing to invest, we should encourage leaders and manag-

ers to use this role to effectively develop education and training of both internal and

external audience”, she said.

Ms. Eboli gave an interesting hint regarding the expenditures of companies with

formal classroom courses. According to her, about 60% of the companies’ educa-

tion budget is spent on hotel accommodation and tickets. “This resource could add

a lot to train people. I believe that this data is very important and companies should

take it into account.”


A musEum tO AttrAct AttENtiON

A very interesting case of using technology to teach people about finance and eco-

nomics is the Mide, the world’s first interactive museum of economics, opened in

Mexico City in 2006.

Silvia Singer Sochet, director of the museum, which is housed in a former 18th cen-

tury convent after 12 years of restoration, said that about 800,000 people have vis-

ited the museum. Children and adolescents learn in a playful way how the economy

works in practice.

The goal is to make people understand the purpose of things in their lives, such as

understanding that job generation generates income and this income is used to buy

goods, and to produce what people want to buy, companies need to invest in machines

and hire people. “Understanding the economic process, visitors will better understand

the financial education courses”, she concluded.

thE iNtErNEt hAs tAkEN visA’s PrOGrAm tO 20 cOuNtriEs

Sabrina Sciama Alonso, manager of corporate relations at Visa Brazil, said that Visa

has been investing in education for over 20 years, even before technology being so

advanced. “Before the Internet, Visa partnered with schools putting the content to

be given in class in leaflets. This practice has spread across the United States. But

it was thanks to advances in technology and the advent of the Internet that Visa

could make rapid progress in the financial education program, one of the group’s

key strategy pillars.

panel 2 How technology can help in Financial Education | 25

The Internet has enabled the creation of websites, providing a big boost to what had

already been done. Ms. Alonso says that, today, the main website has more than 1

million hits per month. Currently, the group invests in financial education programs

in over 20 countries.

In Latin America, Visa’s program began in 2005, focused on finance practices, mainly

in Mexico, Brazil, and Colombia, in partnership with NGOs. In each of the regions of

the different countries, the financial education group seeks to adapt the content of the

initiatives to the local needs identified in research.

In Brazil, for example, the primary need detected related to those initiating their finan-

cial life. Those who started their working life or were joining college went to different

websites to look for information. To facilitate and add value, Visa gathered the informa-

tion on one website and this gave rise to the Practical Money Skills for Life program,

with the support of several partners.

With the Practical Money Skills for Life program, Visa expects to reach 20 million peo-

ple worldwide by 2013. It is a bold target, but feasible to be realized. “We already got

to 9.5 million by June this year, with approximately one million in Latin America”, she

said. In 2010, the Practical Money Skills for Life program also started to interact with

social networks and opened a communication channel on Twitter.

Another Visa initiative highlighted by Ms. Alonso at the Latin American Financial

Education Congress was the Financial Football (Bate-Bola Financeiro), hosted at the

Financial Literacy website. With three difficulty levels, the game is targeted at chil-

dren and youths.


The questions asked after each play bring financial knowledge to the players without

them being aware of it. To move from one play to another, they must answer questions

on economics and finance. Building on the theme of the World Cup, Visa created the

Practical Money Skills Theatre in partnership with Banco do Brasil, which took children

from public schools to Centro Cultural Banco do Brasil in São Paulo. There are also

courses for teachers in NGOs, such as the Gol de Letra Foundation.

fiNANciAL ENtErtAiNmENt, A simPLE wAy tO EducAtE

The crisis showed us that fewer Americans are able to manage their financial life. This

led to various actions related to financial education, aiming to develop and test innova-

tive programs to improve the financial literature and economic security of Americans.

According to Timothy Flacke, executive director of Doorways to Dreams Fund, technol-

ogy has come to solve major problems such as lack of time or difficulty to take people

to the classrooms, as well as the cost of investments in educational programs.

“The big challenge now is to use technology to spread financial education to create

engaging, different content”, he said. At the NGO Doorways, the solution was to face

financial education as financial entertainment. The audience of the NGO is formed by

single mothers, who have two children, two jobs, and use public transportation. “We

can only teach these people with very interesting content that provides information

for their specific needs”, he affirmed.

One of the videos presented at the Congress shows real cases of financial chaos ex-

perienced by celebrities. It really draws attention to know that an American actor

panel 2 How technology can help in Financial Education | 27

has gone bankrupt for not managing his finances properly, or that one of the most

famous singers may lose everything for not dealing with her addiction to alcohol or

credit card purchases. With this motto to attract the attention of Internet surfers,

the NGO has developed a game where everyone has the chance to be the financial

manager of celebrities.

Much of the products developed by the NGO take into account that three quarters

of Americans play video games, especially those available on mobile phones. “Based

on that, we invest in financial games that teach, by repetition, the most common

form of learning.” According to the research carried out after the game, 58% of the

respondents said they were more confident to manage their own financial life after

20 minutes of play.

28 | Congresso Latinoamericano de Educação Financeira

Regardless of how much a company is willing

to invest, we should encourage leaders and

managers to use this role to effectively

develop education and training of both

internal and external audience”, said Marisa

Eboli said, professor, USP – University of São

Paulo, Brazil

painel 2 Como a tecnologia pode ajudar na Educação Financeira | 29

thE ExPErts’ AdvicE ON hOw it cAN hELP us iN thE PrOjEcts

· Assess the feasibility of meetings, courses and lectures

through teleconferences. Virtual meetings often free up

resources spent on transportation and hotels to expand the

scope of programs, hiring people, and even for developing

software that streamlines customer service.

· Use creativity to turn economics and personal finance

lessons into something interactive and playful, such as the

Mude museum, in Mexico City.

· Develop financial education websites with different appeals

to all strata of society, such as athletes, senior citizens,

children, women, and people who love traveling, cars, and

other hobbies, to reach different audiences.

panelFinancial education for children and youths

Moderator

Cassia D´Aquino, Financial Education Specialist and Corresponding

Member, IACSEE – International Association for Citizenship, Social, and

Economics Education, Brazil

private sector

Lic. Maria Elena Acevedo, Corporate Social Responsibility Director,

Banking Association of Panama

public sector

José Alexandre Vasco, Superintendent, CVM – Securities Exchange

Commission of Brazil

NGo

Julieta de Guarin, Manager of Finance for Exchange, Dividendo por

Colombia

NGo

Vanderson Berbat, National Project Coordinator, Unibanco Institute, Brazil

panel 3 Financial education for children and youths | 31

Financial Education for children and youths. The importance of promoting a respon-

sible culture of finance in the early years of development. What, when, and how to

develop it were some of the topics of this panel.

Financial education is not just an issue related to Mathematics and does not merely

depend on schools. It is connected to several family’s everyday situations and matters.

Therefore, the example of parents is essential in order to have financially aware adults.

That was the main conclusion of the discussions of the third panel of the Latin American

Financial Education Congress. The first to share her experience was Maria Elena Acev-

edo, Corporate Social Responsibility director of the Banking Association of Panama.

She spent 10 years in the Ministry of Education of Panama and now manages proj-

ects for banks with the aim of bringing better quality of life for students. According to

her, half the challenge is overcome by the awareness of parents willing to teach their

children that the more financial education they have, the more likely it is for them to

achieve their life projects. “Desire is the first step to achievement.”

However, simply teaching them how to manage resources and how important it is to

save is not enough. This, she said, demands a more profound awareness. “We need to

be aware that we use the money for food, housing, and leisure. But children also need

to know that not everything can be achieved with money”, she remarked.

Bringing this philosophy especially to young people from lower income classes is of vi-

tal importance to control spending on trends and goods that are far from their purchas-

ing power, but often generate debt or even crime. “We must acknowledge that money


is important and that without money we can do other things. It is a way to replace the

culture of poverty by the culture of prosperity”, said the educator.

She said that the government of Panama and the banks are aware of their roles in the

struggle to minimize the level of poverty and reduce the lack of adequate knowledge of

students. “This is reflected in business and in government and that is why we are invest-

ing to allow 4,200 young people to be able to pursue a career to have their own money

and invest it properly”, she told the interested professionals who filled the auditorium.

With this philosophy, the government of Panama created in March 2010 a financial

education program in partnership with banks to improve the youths’ quality of life.

Banks sponsor the program training volunteers who every month talk about different

subjects in courses at schools or lecturing in different locations, as well as the content

required for the lectures.

iN brAziL, thE PrOjEct Aims tO rEAch 900 schOOLs

A massive project began to be put in place in Brazil in 2010. “It is a proposed strat-

egy for financial education. It must be a State program, not a government one. There

are more than 50 million students in 240,000 public schools, and that cannot be ac-

complished overnight”, said José Alexandre Vasco, Superintendent of the Securities Ex-

change Commission of Brazil (CVM), the second speaker of the panel.

This is the Financial Education in Schools Program, a pilot project of the National Strat-

egy for Financial Education (ENEF), which, since August, has included the subject in

class for students in public schools. The aim is to encourage youths to be protagonists


of change in their social status and families. There are 900 schools and 22,000 students

in the first stage of the project, which will include financial education as a crosscutting

theme, discussed during the normal school hours or in complementary shifts.

In the ENEF’s project, teachers are trained as multipliers to pass what they learn to

other opinion makers. They are also trained as educators via the e-learning system.

The group has also developed a website (www.vidaedinheiro.com.br) to answer par-

ticipants’ questions.

According to Mr. Vasco, an entity will be responsible for monitoring the national finan-

cial education program and assessing its impacts on the lives of Brazilians, in spite of

the difficulty involved in assessing the effects of education on this type of initiative. He

mentioned, as an example, the Organisation for Economic Cooperation and Develop-

ment (OECD), which has financial education programs in 79 countries. Despite the ex-

perience, there is no formal statistical measurement acknowledged worldwide, about

the impact of financial education on students.

Vanderson Berbat, national project coordinator of the Unibanco Brazil Institute, which

has been investing in education schools and now participates in the ENEF, brought

data that shocked the audience. According to him, in the same period in which 181,000

Haitians were killed in the earthquake this year 100,000 young people in Brazil, from

15 to 24 years, died from external causes.

“We started thinking about the huge damage to a society that loses so much talent

due to lack of information and wrong decisions and, based on that, we thought about

the development of a program to contribute to human development of young people


in vulnerable situations”, he said. Among the causes of deaths are robberies to obtain

an object of desire, such as a pair of sneakers, which could be easily acquired if there

were any perspective of work, income, and credit. Other youths who choose to buy,

run into indebtedness just to buy a next-generation mobile phone. “Indebtedness

leaves many youths without the perspective of seeking knowledge in schools. They

believe that educational institutions will not solve the financial problems of their

families”, he emphasized.

According to Mr. Berbat, research shows that young Brazilians believe that school alone

does not solve family financial problems, and thus they prioritize money. “This audi-

ence does not see the need to have knowledge. They lose the opportunity to study to

seek a position in the market”, he explained. And even more worrisome: with the first

salary, the youth ends up running into debt to purchase a “fancy” mobile phone in ten

installments. “They lose the perspective of a future and live a ‘I-will-buy-it-now-and-

see-how-I-can-pay-later’ way of life”, he said.

For these reasons, educational programs that help young people be aware that they

can change their reality based on a financial planning are vital to sustain the growth of

an economy by encouraging citizenship. “Children are the adults of tomorrow, better

prepared to consume and save in an ethical manner.”

cOLOmbiA: EffOrts tO AvOid OvEr-iNdEbtEdNEss

The experience of other countries with similar projects has been positive. According to

Julieta de Guarin, manager of finance for exchange of the Colombian project “Finanzas

para el Cambio”, financial education helps to generate economic stability, since people


start to manage their finances more effectively, avoiding over-indebtedness and gener-

ating savings for future needs.

She said that, between 2005 and 2009, over 580 teachers and 344 parents were

trained, being responsible for passing knowledge of financial education to more than

60,000 children from 50 schools chosen by the organizers of the Colombian project.

“It is amazing to see how the program helps not only children but everyone involved,

since they also had no idea how to manage a budget, which is the first step to having

money to invest.” Ms. De Guarin’s experience shows that children can help change the

behavior of parents, and learn from their example. “That is why learning has to reach

everyone within a society.”

The program “Finanzas para el Cambio” is developed by the Foundation Dividendo por

Colombia, the Corona Foundation, and Citibank-Colombia, as well as public-private part-

nerships with the Ministries of Education of Bogotá, Cartagena, and Medellin, and organi-

zations such as Lei de Bolívar, Antioquia, and Mamonal Microempresa Foundation.

The program developed in Colombia is very careful to not tow any financial product

to education. Therefore, all primers used to teach the content material in schools are

offered free by the Colombian central bank. There are four course modules: money and

economy; where to save money; credit growth; and how to manage your money.


We must acknowledge that money is

important and that without money we can do

other things. It is a way to replace the culture

of poverty by the culture of prosperity”, said

Maria Elena Acevedo, Corporate Social

Responsibility Director, Banking Association

of Panama


thE ExPErts’ AdvicE tO fiNANciALLy EducAtE chiLdrEN ANd yOuths

· The first step is to involve parents. The challenge should be

easy if parents are examples to their children.

· Conduct research to identify the target audience and be

able to develop content that speaks the language of the

population to be reached.

· Develop content that makes children and youths aware of

values that show that not everything is gained with money,

but with an ethical attitude.

· Emphasize that it is possible to replace the culture of poverty

by the culture of prosperity.

· Prioritize content aiming at conquering children in such a

way that they are able to build the financial literacy in their

parents.

panelSocial inclusion, the key toeconomic growth

Moderator

Rubens Sandenberg, director of economic affairs of FEBRABAN, Brazil

private sector

Giovanna Prialé, responsible for the consumer product and services board

of the Superintendence of the Board of Insurance and Pension Fund

Administrators of Peru

public sector

Ana Maria Stuginski, head of the department of partnerships of the

Foundation for Development of Education in Brazi

NGo

Fernanda Aidar, coordinator of the project “Família no Azul”, Project

Arrastão, Brazil

panel 4 Social inclusion, the key to economic growth | 39

How to increase bancarization in Peru, a country with 40% of workers in the informal

market and much of the population using loan sharks to get access to credit at abu-

sive rates that reach 800% annually? That was the main challenge faced by Giovanna

Prialé, responsible for the consumer product and services board of the Superinten-

dence of the Board of Insurance and Pension Fund Administrators of Peru, when she

took office. According to her, regardless of socioeconomic level, the country’s bank-

ing index is low. Savings represent 28% of the GDP and the penetration of financial

products per capita reaches 30%.

According to Ms. Prialé, social inclusion is the key to the country’s sustainable growth.

For that to happen, the superintendence has three pillars: transparency, financial edu-

cation, and customer protection. “The private sector is vital to ensure inclusion and

economic growth”, she affirmed.

The first point, according to Ms. Prialé, is to make people understand financial products.

“Banks have to be aware of consumer rights.” After that is accomplished, the result

will be good format products that will generate less noise in the communication and

understanding of the banking sector.

The next step is to make people aware of what banks have to offer, “very transpar-

ently”, she emphasized. One suggestion is that the actual cost of the product is public

so that consumers know how much to pay before acquiring the service. Since 2002, the

entity has published bank fees for consumers to evaluate and compare costs. “Anyone

can access the website and see the concepts of products and their costs”, she said.

For her, this challenge requires public-private partnerships, known as PPP. “They are


essential in many areas.” The first involves Consumer Protection. In Peru, regulators set

regulatory frameworks. One of their provisions is that complaints must be addressed

by the banks within 30 days. If the consumer is not satisfied, there is a public agency,

with branches spread across the country and independent agents to assist in conflict

solving. With this mechanism, less than 1% of disputes reach the regulatory agency.

That is, the banks solve 99% of the problems.

Statistics show that consumers are receiving better information and banks are willing

to improve their processes. According to Ms. Prialé, out of 10 complaints against banks,

8 are solved in favor of the consumer. “This shows the attitude of banks to retain cus-

tomers in the long term.”

The other part of the Superintendence’s work in Peru is to encourage household sav-

ings through the PPP. There are three branches across the country to guide the public,

from how to build a budget to how to invest the money left at the end of the month.

All activities include the partnership with financial institutions.

The media, according to Ms. Prialé, is a strategic partner in the issue of transpar-

ency and guidance to the public. By publishing fees on the website, the agency and

the banks have generated a wealth of material for journalists to create articles on

this topic. “Nearly every day, we have a story in the newspapers covering personal

finance. Only this year, we computed 198 articles until July, without needing to go to

the journalists. They came to us”, she said.

Another activity where the PPP is successful is the financial training of educational

multipliers. This work is free and in coordination with private companies. The aim of the


courses and lectures is to increase savings, avoid debt, learn how to use cards properly,

and plan for retirement.

According to her, the main success of the program occurred in 2008 when the PPPs

managed to convince the Ministry of Education about the importance of Financial Edu-

cation. “There was a major barrier, with the claim that much of the population did not

believe in banks, saying the institutions just wanted to make money.”

As of 2009, students at secondary schools have received financial education classes,

with trained teachers and teaching materials produced by the PPPs. She said that these

courses reach 20% of the population every year. The innovation for 2011 will be to

take financial education to rural areas. In this sense, an agreement was signed with the

Ministry of Agriculture for distance learning.

A PrOjEct tO rEAch OvEr 2,000 PEOPLE

The Foundation for Development of Education seeks to contribute to the development

of the public schools of São Paulo, responding to the demands and guidelines of the SEE

– State Department of Education. The focus of the foundation’s work is to modernize

schools with new teaching technologies, and thus contribute to improve education and

quality of life of the population. Their actions are centered on planning, implementa-

tion, and production development of teaching materials, construction, renovation and

expansion of schools, and purchase of educational equipment and materials.

The projects Empresa Educadora, Escola em Parceria and Escola da Família seek to

bring financial education to the public in actions usually performed in communities on


the weekends, focusing on four areas: work, culture, sport, and health, according to Ana

Maria Stuginski, head of the partnership department of the Foundation for Develop-

ment and Education.

“Now we also include the environment, showing that if the river is dirty, people are

going to have health problems and costs related to it”, she said. The program, started

in 2003, targets at children and youths and has already been implemented in 630 mu-

nicipalities of São Paulo in 2,350 state and 322 municipal schools.

Among the partners of the Foundation, Ana Maria mentioned Serasa Experian and Citi,

which have implemented various activities to enable trainers to teach basic concepts

to children and youths through theatre, classrooms, and textbooks.

The partnership with Serasa Experian, for example, gave rise to the project Sonhos

Reais in 2008. About 22 volunteers disseminate the concepts of financial education in

six schools. In 2009, the instructors trained 86 people on weekends. In 2010, the ac-

tion continued in other five schools. According to a survey conducted to measure the

results, those who received financial education classes were able to get out of the red.

fAmíLiA NO AzuL

The project Família no Azul, which aims to reach 2,000 people, was developed by

the NGO Arrastão, founded in 1968 by a group of mothers in the district of Campo

Limpo, in São Paulo. The goal is to give financial education and activities for children

aged 6 to 14. Most of the project focuses on training young people for life, according

to Fernanda Aidar, coordinator of the project. They address issues of microfinance,


budgeting, debt management, and savings. “Developing projects that drive people to

consciously manage their money is also a way of ensuring the sustainability of our

business”, said the executive.

She explained that Família no Azul was launched in March 2010 thanks to a partner-

ship between the Citi Foundation, the NGO Arrastão and Programa Escola da Família

(PEF) of the Foundation for the Development of Education. The expectation is to train

60 volunteers from universities and 12 educators from the project Arrastão, who will

work with people living close to the project and the PEF schools, addressing youths +16

years and adults. The multiplication process comprises the formation of groups of 36

persons, in which a pair of certified volunteers will provide 12 hours of workshop. 2,592

people are expected to attend the courses.

44 | Congresso Latinoamericano de Educação Financeira

Developing projects that drive people to

consciously manage their money is also a way

of ensuring the sustainability of our business”,

said Fernanda Aidar, coordinator of the project

“Família no Azul”, Project Arrastão, Brazil


thE ExPErts’ tiPs fOr sOciAL iNcLusiON

· The partnership between companies and governments is

essential for social inclusion to be a process led by financial

institutions.

· The PPPs allow us to go farther, faster.

· The first step is to have financial products that respect

consumers with clear and fair rules.

· Invest in the dissemination of general data about the industry

and the competitors so that clients will be able to compare

costs and benefits. In addition to providing transparency, it

intensifies competition among the players, helping to create

more innovative products and services.

· Have the media as a partner in the dissemination of personal

finance and guidance to the public.

panelBancarization to increasefinancial inclusion

Moderator

Sérgio Mindlin, Chairman of the Board of Ethos Institute

public sector

Ana Evelyn Jacir de Lovo, Director, Department of Special Legal Programs

Secretariat

private setor

Jerônimo Ramos, Microcredit Superintendent, Banco Santander

private setor

Enrique Beltran Dávila, Executive Director, Training Institute of the

Association of Banks of Peru

NGo

Regina Célia Monteiro Krogh, Chairperson of the Board, CEAPE-MA – Small

Entrepreneurs Support Center of the State of Maranhão

panel 5 Bancarization to increase financial inclusion | 47

In this panel, experts discussed how education can increase financial inclusion and im-

prove credit access opportunities to the non-bancarized, promoting resource manage-

ment, savings generation, and risk management.

The first speaker was Enrique Beltran Dávila, executive director of the Training Institute

of the Association of Banks of Peru. Financial education has been a priority issue in

Peru for a few years, but took on greater importance with the dramatic growth of the

GDP over the past two years. He explained that the institute was created to increase

financial education in the country, with initiatives ranging from primary education to

specialized courses targeted at those seeking to attend graduate school.

The Training Institute of the Association of Banks of Peru works with various govern-

mental and private institutions, as well as the media, in an effort to improve financial

education in a country marked by high levels of money laundering. One of the ac-

tions of the Institute involves the judiciary, with whom it has been working since 2005.

Judges should understand the financial market to make quality and fast decisions. “The

trials that used to last four years, now take four months”, he said.

But the fight is not over yet. “We continue working hard so that all files are scanned and

completed in four weeks. This action helped to raise the legal security of the country,

which now has a better classification.

Another target audience of the institute is journalists. “The more specialized they are,

the better the quality of the debate”, he emphasized. Radio is a highly prized medium in

the country. The institute also trains trainers to bring financial education to public and

private schools. 8,000 teachers were trained by the banking system, says the newly


elected president of the financial education commission of FELABAN.

iN mArANhãO, cLiENts wANt mOrE

Regina Celia Monteiro Krogh, president of the Center for Support to Small Entrepreneurs

in the State of Maranhão (CEAPE-MA), shared with the audience her experience in the

development of microcredit in the state, characterized by strong social inequality.

The CEAPE-MA is a nonprofit civil organization of public interest whose central objec-

tive is the promotion, strengthening, and socioeconomic development of owners of

microenterprises and families located in poor urban areas of the state of Maranhão.

“Our mission, as a Social Organization of Public Interest (OCIP) is to reduce inequality by

giving credit to the low- and very low-income populations. She said that the provision of

microcredit was created 25 years ago. Initially, the program was focused only on women.

Later, it changed its name to include small entrepreneurs males, seeking to contribute

to the growth of micro and small business aiming at social and economic development.

CEAPE agents give credit and intensive training to the clients. The trained group makes

visits to see if the client is using the money in the business and to provide financial

advice and tips, such as products display on the shelf. “We talked about things such as

not placing cleaning products close to food or the use of jackets, to contribute to the

formation of a more professional image to consumers”, he says.

In a partnership with Citi Foundation, the CEAPE has trained nearly 3,700 clients in ba-

sic financial literacy. There are five training modules: How to Save, Debt Management,


Handle with Care, Financial Market, Know the Options, and Financial Negotiations.

According to her, most micro-entrepreneurs of Maranhão are informal and illiterate.

They are business owners and do everything at the same time with the help of their

families. Hardly the team can take them to the classroom. “For that to happen, they

have to close the shop, causing loss of sales and profit”, she said. Thus, education has

to be performed differently from the classroom model.

The CEAPE’s most widely used course is budgeting. By putting on paper the costs and

revenues and most sold products, micro-entrepreneurs are able to understand what

they should buy and what products are not worth investing in. When the microcredit

client has children, CEAPE provides financial guidelines so that they, being more open

to learning, may help their parents. An interesting point in the course is to train micro-

entrepreneurs on being “sensitive” to negotiate their clients’ late payments.

With these actions, CEAPE intends to strengthen its relationship with its consumers

and reduce default through a higher-quality active credit portfolio, raising the level

of bancarization and encouraging savings. According to Regina, there are over 22,000

customers. A survey conducted in the first half of 2010 showed that 28% of respon-

dents had savings before the financial education courses. After the classes, this rate

rose seven percentage points, reaching 35%.

CEAPE expects to transform the OCIP – Social Organization of Public Interest in a mi-

crofinance bank to be able to offer new financial products such as cards and insurance.

“We reached a point where customers want more”, she said.


NEithEr misErs NOr LOAN shArks

Neither misers, nor loan sharks. Social development requires balance between these two

ends. Without investment, there is no job generation and, therefore, no income. “If we

want to develop with fairness, we need to produce a virtuous circle so that the economy

will increase people and the country’s wealth”, said Ana Evelyn Jacir de Lovo, Director of

the Department of Special Legal Programs Secretariat, from the United States.

The sociologist and economist, who has chaired the consumer advocacy and served as

consultant to the World Bank, said that the core of financial education programs is to

have well-designed products that respect the consumer and give information to the

population. “Just look at the reasons and consequences of the global crisis and there

will be no doubt that this is a fundamental issue to help improve people’s lives”, she

emphasized, criticizing the excess of offerings, even for those who have never asked, as

in the credit card sector.

Like the other financial education experts, the sociologist cites the fact that a large por-

tion of the society has consumption patterns that are out of the economic standards.

“This consumption pattern leads to indebtedness that breaks the virtuous circle”, she

said. With a population with such a drift in consumption behavior, it is very important to

invest in financial education. “There is a big trend to bancarization in Latin America, but

it cannot be achieved without providing information to the consumer”, she emphasized.

She says that a study was carried out in El Salvador to see the profile of consumers of

financial products. The first reason for using banks is to deposit the salary. She shared a

personal experience of lack of information about the simple use of a checking account.


“Nobody says that fees will be charged even for barely using the account and when you

want to close the account, you just cannot”, she said. In her opinion, the relationship

between banks and clients can no longer be in the “negative surprises” style and must

change to a win-win style.

She noted the importance of education in schools but also the importance of course

sponsors having a neutral position. “The focus is teaching and not selling products”,

she emphasized, adding the importance of monitoring whether the resources invested

were used in the projects.

micrOcrEdit, A sOciAL issuE. PrOfit is A cONsEquENcE

“Microcredit is a transforming cause, which redeems the dignity of the needy popula-

tion”, said Jerônimo Ramos, Microcredit Superintendent of Santander, who has been

working with the lower-income people since 1985, with a focus on entrepreneurs. With

such a long history, he now devotes himself to the collection of social indicators in

microcredit in an attempt to make this topic broader in the day-to-day life of countries.

Working with the low-income population requires a cultural change in financial in-

stitutions. In microfinance, agents have to see the dreams of entrepreneurs, while

traditional banks see guarantees offered by companies. In a company, the lender is

concerned with planning. In microfinance, the analysis starts much earlier: what is

the dream to be accomplished?

To make this dream come true, financial agents should understand how they buy and

sell such products and services to identify the gain margin and the correct calculation


of the dose of credit. “In the right dose, credit is a remedy. In excess, it is poison. “

Mr. Ramos highlighted the importance of the institution to look around the micro-en-

trepreneur’s surroundings. Generally, almost 90% of income generated in the commu-

nity comes from people who live there. The investment is worthless if there is no sani-

tation to provide health, safety or conditions to take their children to school. “Within

this value chain, we are responsible for contributing to prevent the dream from turning

into a nightmare”, he said.

The expert says that institutions interested in working with microcredit must understand

the real needs of the clients, not profit, which is a consequence of the immense responsi-

bility of distributing the credit line on the right time. When the entrepreneur is successful,

and most have been, it generates the self-employment. The challenge of microcredit is to

turn the company into a value generator company in order to be sustainable.

A survey conducted by Santander shows that micro-entrepreneurs can generate up to

12 jobs within the community. He mentioned a client who, in the first cycle of relation-

ship with the bank, took a loan of R$300. She is now investing R$30,000 to purchase

a property and will hire 12 employees for the supermarket in the community. Even

better, he generated income to keep his children in school, building a better future. A

better reality for the children than the one she lived.

“If the customer becomes insolvent that means we have failed”, said Mr. Ramos. There-

fore, he says, it is important to understand what made the client miss the way and

bring him/her back to the virtuous circle. Microcredit is the way out of poverty and the

entrance to a world where we can all be happier.


thE ExPErts’ tiPs tO iNcrEAsE bANcArizAtiON

· Bring financial education to strategic publics, such as judges,

journalists, and consumer protection agencies. By better

understanding the way institutions work, they will have more

balanced opinions.

· Develop content and means of dissemination that respect

the daily reality of the population to be bancarized.

· Detect the needs of the population as well as the

opportunities to publish financial education within the

context of each community.

· Develop a relationship and a credit program in which

the entrepreneurs’ dreams are more important than the

guarantees offered.

Microcredit is a transforming cause, which redeems the dignity of the needy population”, said Jerônimo Ramos, Microcredit Superintendent of Santander

panelFinancial Education for the bancarized population

Moderator

Mara Luquet, Journalist, Brazil

acadeMy

Ricardo Rocha, Professor of Finance, Insper – Institute of Education and

Research, Brazil

private sector

Uriel Galicia Negrete, Director of the Financial Education Program, BBVA

Bancomer, “Adelante con tu futuro”, Mexico

private sector

Fábio Moraes, Financial Education Director of FEBRABAN, Brazil

panel 6 Financial Education for the bancarized population | 55

EducAtiON fOr LONG-tErm PLANNiNG

In this panel, speakers discussed how financial education helps to identify the best

products and services according to social classes (A, B, C, and D). The skills and tools

necessary to develop wise consumption were also discussed.

Are consumers prepared for the sophistication of the financial system? With this ques-

tion, Ricardo Rocha, a finance professor at the Institute of Education and Research (In-

sper), began his lecture at the Latin American Financial Education Congress. For all

that has been said in the five panels of the event, it is clear that the consumers need

guidance and information since they are leaving inflationary economic conditions to

join a cycle of stability. That is, they need to stop living in the short term and need to

start living in the long term.

In this transition process, the financial system has been developing complex products,

while increasing capillarity to reach all social classes. Therefore, financial education of

the population is a must. The big question, according to Rocha, is: who will prepare

individuals? The individual themselves, their family, or school?

According to the professor, financial education cannot be responsibility only of the

banks. One of the first challenges is to embed budget control in people’s lives. “The les-

son that people can only spend what they have in order to be able to start saving for the

future is a basic one”, he said. Although it seems an outdated issue, Mr. Rocha argues

that the society has very little access to information and training to use the data for its

growth. “The challenge is to transform information into knowledge.”


This challenge will help people to get out of the red and even guide them on how

to invest in stocks. The possibility of long-term planning is a prerogative of countries

reaching stability and offers citizens the right to organize their lives. The point is to act

now and not to allow families to run into more debt than they can handle, which will

create a problem for everyone involved in the value chain.

Mr. Rocha worries about credit growth in Brazil in an environment where financial

illiteracy is a reality. “Consumer credit exceeds business credit. There are nearly 30

million people with loans”, he said. According to the professor at Insper, institutions

can take advantage of some phenomena in Brazil, such as the boom of telephone

sales. “Mobile phones should be used as tools for the dissemination of knowledge, so

that people can make appropriate decisions.”

Mr. Rocha stresses the importance of informing people about what capital market

means. “It is not a matter of saying “buy and get rich or do not buy”. The question is:

Learn to manage, save, and participate in the growth of companies and the country.

Education is a project for all.”

trAiNiNG EmPLOyEEs ANd AvOid thE sAyiNG “thE shOEmAkEr’s sON ALwAys GOEs bArEfOOt”

Within this context of economic growth, BBVA Bancomer, a leading financial institu-

tion in Mexico, shared the institution’s philosophy with the experts. Financial education

is part of social responsibility.

“At BBVA, we work in order to people build a better future. Financial services are a


vehicle that contributes to financial inclusion for those seeking to purchase goods

for their own benefit. “Under this priority, the institution works based on four pil-

lars: financial inclusion, financial education, social responsibility, and commitment

to society.

The bank uses the data from a research to build its communication with society. Among

the population without a checking account, three out of ten people have washing ma-

chine. Yet, among the bancarized population, seven out of ten have the equipment.

This shows the great purchasing power that consumer credit can generate. “We want

to provide information for people to manage their own lives and we believe this will

generate a large mass of savers who will use the bank in their own benefit.”

One way is to teach financial education in the language of each audience, without

making a general program for everyone. All materials are produced respecting diversity.

“Adults learn by selection. Children learn by repetition. Each one within their model, we

will help them crossing the path toward knowledge.”

BBVA Bancomer also uses the media to disseminate the bank’s financial education

program. There are five types of content, from savings to credit, created in a simple

language different from that used by institutions. In addition to the portal www.adel-

antecontufuruo.com.mx, the bank gives classes in major cities across the country and

offers mobile classes to people who cannot commute to the classes.

BBVA has already trained 32,000 employees in financial education. “We want to

avoid the saying “the shoemaker’s son always goes barefoot”. According to him,

251,000 people have participated in the training offered by the bank. “Besides the


reputation and prestige to the bank’s image, we detected improvements in the

financial indicators, showing that financial education is reflected into better deci-

sions and increase in equity.”

cAtchiNG uP with yOur budGEt, A fEbrAbAN PrOjEct

This is a great opportunity for Brazil, a country where household indebtedness is al-

ready a concern. “The risk of default is not due to the increase in credit but to the lack

of financial education, which is still embryonic in Brazil,” said Fabio Moraes, director of

Financial Education of FEBRABAN.

How to get credit, clear one’s name, and make a budget to go out of the red are the main

concerns of more than 1 million Internet users who have already accessed the financial

education portal of FEBRABAN (www.meubolsoemdia.com.br), launched in April 2010.

“The order of the questions seems to be inverted, but most people actually look for finan-

cial education only when they are unable to pay their debts”, said Fabio Moraes.

The result of this circle is default. Taking it into account, FEBRABAN invested in the

portal, whose main objective is to help people learn how to make a personal and family

budget. Although it seems simple, few do it.

The lack of the habit of making a household budget and lack of knowledge of bank-

ing products disrupt people’s lives and create problems, including for those who live

with the default person. “When things get worse, they turn to their social networking,

whether it’s a neighbor or an elderly, creating a social problem that creates debt to

other people”, said Mr. Moraes.


The next step is to help people save, a subject still not much addressed by the de-

mand of the portal. Initiatives range from cultural contests for people to report how

they managed to achieve their goals by using their savings to tips on how to save a

little every month.

“There are also people who do not want credit in any way, which is beyond the

normal range. After all, thriving on one’s one is complicated”, he stated. The intent

of FEBRABAN is also to show that people can afford investment and use credit to

leverage equity.

In addition to the portal, FEBRABAN has schools for bank training, leadership training,

and specialized courses for strategic audiences, such as lawyers, journalists, and oth-

ers. On November 28, FEBRABAN will be holding a financial education fair, the “Cara-

vana Meu Bolso em Dia” (Catching up with My Budget). The goal is to guide people on

various issues of financial life, such as investing, saving, borrowing, and clearing one’s

name, among others. Mr. Moraes reinforces that all services are free.


The risk of default is not due to the increase in

credit but to the lack of financial education,

which is still embryonic in Brazil,” said Fabio

Moraes, director of Financial Education of

FEBRABAN


thE ExPErts’ tiPs tO hAvE succEssfuL fiNANciAL EducAtiON PrOGrAms

· Emphasize the importance of thinking in the long term,

pointing out the benefits of financial planning.

· Prioritize programs that turn information into knowledge

and commitment toward society.

· Financial education cannot be the exclusive responsibility

of banks. It must include several agents to really implement

economy in people’s daily lives.

· Invest in programs that help people go out of debt and bet in

the concept of credit as a stimulus to growth.

panelLearning to save andinvest to prosper

Moderator

Heródoto Barbeiro, Anchor for CBN and Journalist for TV Cultura, Brazil

acadeMy

Antonio Burbano, Professor, Universidad de los Andes, Colombia

private sector

Boris Buvinic Guerovich, General Manager, Itaú Chile

public sector

Sérgio Odilon dos Anjos, Head of the Department of Standards of the

Financial System, Central Bank of Brazil

private sector

Patrícia Quadros, Manager of Popularization Programs, BMF&Bovespa,

Brazil

panel 7 Learning to save and invest to prosper | 63

In this panel, panelists examined household budget and resources management from

the standpoint of the tools necessary for families to develop healthy finances, allowing

family stability and prosperity, taking into account socioeconomic aspects and demo-

graphic interactions.

“Only by respecting the particularities of each stage of the life of an individual we will

be able to help people succeed with an individual or family budget”, said Antonio Bur-

bano, a professor at Universidad de los Andes, Colombia. He leaned over consumer

surveys and social and behavioral indicators to develop personal finance courses that

were really consistent with the daily lives of the families. After doing that, he developed

personal finance courses with strategic partners, focusing on what people want in the

future. “It was a big challenge”, he said.

According to him, the major expenses of Colombian consumers up to 25 years of age

are on clothing, culture, entertainment, and leisure. Over 26 years, housing and food

have a greater weight. Taking into account the data of the survey, the professor believes

he has reached a financial spreadsheet formula that has led people to take control of

monthly expenses. “However, this academic work is meaningless without the support

of financial institutions”, he said.

LAck Of rEGuLAtiON mAkEs iNdEbtEdNEss GrOw iN chiLE

If it depends on the support of institutions, academic papers will be very successful.

Itaú Chile, for example, has invested heavily in financial education, according to Boris

Buvinic Guerovich, general manager of Banco Itaú Chile. In his speech shortly after Mr.

Burbano’s, Mr. Guerovich said that, to achieve developed country’s levels, bancariza-


tion and financial education are complementary. “In Chile, we have an interesting ban-

carization level. In families, we have a bancarization level of 50%, well above the 36%

average in Latin America.”

According to him, the high level of bancarization means that Chile has the highest pen-

etration rate of personal loans among the countries in the region and a low default

rate, of only 1.4%, considering arrears over 90 days. “We have a strong, capitalized

financial market, with a not very volatile result, even with 80% of the banking business

coming from loans.”

Unlike Brazil, the card market in Chile is divided between banks and shops, which have

developed their own administration systems. As a result, the Itaú executive sees prob-

lems in the Chilean card market, since both shops and banks release consumer credit.

“In Brazil, issuers and banks are partners, which allows controlling the risk of indebted-

ness. In Chile, it is not possible to warn clients about overwhelming debt as there is no

way to know how much debt they have in shop cards, which ends up creating default

problems, especially among youths.” A survey showed that people between 15 and 29

years of age were indebted. Of these, 57% were considered insolvent.

Due to this scenario, Itaú Chile has decided to invest in guiding and teaching the popu-

lation. Theatre was one of the tools that best fit the proposed financial education for

children between 11 and 14 years of age, with plays performed in public and private

schools. The core values are the commitment to responsibility, ethics, trust, and hon-

esty. “In the future, we intent to broaden the scope of the program and the educational

content for teachers and also to involve the parents”, he said.


thE cENtrAL bANk Of brAziL PriOritizEd thE EducAtiON Of fi-NANciAL iNstitutiONs

In Brazil, the Central Bank seeks to crosscheck data from the financial system to enable

banks to manage the risk of over-indebtedness, said Sérgio Odilon dos Anjos, head of

the Department of Standards of the Financial System of the Central Bank of Brazil.

Financial education is something for all levels of society.

“This is a mission in which the government has invested starkly in recent years, mainly

to take credit from the short and medium term to the long term”, said Angel. According

to him, self-regulation, the requirement of ombudsmen, professional certification ex-

ams, and participation of regulators in the Committee for Regulation and Supervision

of Financial, Capital, Insurance, Pension, and Capitalization Markets (COREMEC) are

some of the initiatives that have helped Brazil grow with financial stability. “There is no

way but to educate financial institutions”, he said. Another initiative was to publish the

fees charged by the banks on the Central Bank’s website, helping consumers to know

the cost of operations and seek the most competitive banks.

AftEr sAviNG, LEArN tO iNvEst

“People have to be willing to fix their budgets. It is not an easy task, mainly because one

is required to spend less. We need to value our dreams”, said Patrícia Quadros, manager

of the Popularization Programs, BMF&Bovespa. Facing the effort to make the popula-

tion control their budgets and save, BMF&Bovespa invests in people who have reached

the level of investors so that they know how to place their bets in order to make the

accumulated resources profitable.


The Financial Education Program of the Stock Exchange started in 2002. That year, the

number of investors in the stock market was around 85,000. In July 2010, that number

was 598,352 investors. Most of them were concentrated in the age group between 26

and 35 years. The Program is such a consistent initiative that it has already been pre-

sented as a success story by the World Federation of Exchanges (WFE).

There are various actions, such as Turma da Bolsa (The Stock Exchange Gang), a portal

aimed at children, where over 5,000 children have signed up since its launching. There

is also a program in partnership with TV Cultura called Educação Financeira (Finan-

cial Education), which is divided into two seasons, with a total of 62 episodes based

on everyday examples in Brazil, such as family budget, indebtedness, retirement, chil-

dren education, purchase of a house, and types of investments (savings, CBD, Direct

Treasury, and shares). The average household audience of the TV show, according to

Nielsen, was 58,800 homes, until July 2010.

Women, who are increasingly outstanding in the finance world, gained a portal. Re-

launched in 2009 in a more encompassing version with more content and activities

directed exclusively to women, the portal Mulheres em Ação (Women in Action) al-

ready totals 140,000 hits. The website offers tips and articles on behavior, personal

budgeting, investment, and future.

Another initiative is BMF&Bovespa Vai até Você (BMF&Bovesta Goes to You), where

lectures are delivered to companies, schools, associations, and unions, among others,

with the purpose of demystifying the stock and futures markets and the Direct Treasury

Direct to participants. More than 583,000 people were served since 2002.


thE ExPErts’ tiPs tO stimuLAtE thE wisE usE Of crEdit ANd wisdOm tO iNvEst

· A personal budget is the first step for saving.

· Develop personal finance courses that actually are in line

with the families’ daily lives.

· Develop systems that show the consumer’s general

indebtedness to prevent them from having a high credit

dose, the so-called over-indebtedness.

· Create innovative methods to teach people to invest their

resources wisely and have financial returns that stimulate

reinvestment.

panelResponsible finance,profitable banks

Moderator

Carlos Alberto Sardenberg, Journalist, Rádio CBN, O Estado de S. Paulo, TV

Globo, Brazil

private sector

Leonel Dias de Andrade Neto, President, Credicard, Brazil

public setcor

Adriana Burger, Public Defender and Executive Coordinator of PROCON

Rio Grande do Sul

NGo

Antonino Serra Cambaceres, Consultant, Consumers International

Santiago, Chile

private secto

Marcelo Linardi, Ombudsman Superintendent, Santander Group, Brazil

panel 8 Responsible finance, profitable banks | 69

In this panel, the goal was to promote a discussion on the Financial Culture, Consumer

Rights, and Consumer Awareness in Latin America. The following themes were

focused: “Responsible Finance: transparent and timely communications” and “How

to offer consumers the right product with the right price, while maintaining profitable

financial institutions”.

When it comes to offering consumers the right product at the right price, while main-

taining profitable financial institutions, the credit card sector surfaces. Leonel Dias de

Andrade Neto, president of Credicard, Brazil’s fourth largest manager among private

issuers came to talk about the subject.

In his opinion, there is a change in the indebtedness profile of Brazilians. Vehicles are

the ones expected to grow more due to expensive fees, as well as real estate credit.

“There is much to improve in loans, but it is already much better than it was”, he said.

Loan Bureaus are disappearing. We used to have over 1,000 stores and now there are

150. “It is a change in the consumption type, caused by market development”, said

Mr. Andrade Neto.

He said the trend is that people understand that the credit card revolving balance is not

a good option. This is only recommended for emergency loans due to high interest rates,

unlike other countries where credit card revolving balance is commonplace. In Brazil,

banks advise their customers to seek cheaper credit options than revolving balance.

According to the president of Credicard, Brazil is already close to the limit of healthy

indebtedness. “Income is already committed. The challenge is to move forward with

sustainability. Therefore, it is vital to move on with this process of credit stabiliza-

tion and stretching.


Within this scenario, the card industry is going through changes, with increased com-

petition, which benefits come gradually to consumers. With new players, a wider range

of products is reaching the market, making rates cheaper for both merchants and users

of plastic money.

Cards are the main bancarization instrument and, therefore, undergo profound chang-

es. But there is still a long way to go to stop them from being the leaders in complaints.

At Credicard, employees have no financial incentive policies to sell more. Incentives

relate to credit quality. The incentive is not to sell more, but to sell better.”

iN 2011, thE cONsumEr cOdE fOr LAtiN AmEricA

Antonino Serra Cambaceres, consultant for Consumers International Santiago, said

that the crisis prompted the launching of financial education projects in Latin Ameri-

ca. There are data from the region showing that 25% of workers owe more than nine

months and a half of gross income and use 50% of it to pay off debts. That creates, he

said, a need for regulation to control insolvency.

“We tried to collect data to get an overview of Latin America, but many institutions

did not send the contracts”, he said, criticizing the lack of transparency and failure to

respect the rights of consumers, who should receive a copy of the financial products

and services contracts.

The data requested will compose a draft code to regulate the sector in Latin America

and the Caribbean, which text is expected to be released in March 2011, when we cel-

ebrate the World Consumer Rights Day.


Intimidated by being in Brazil, Mr. Cambaceres cautiously stressed that the country’s finan-

cial services sector is the second largest in consumer complaints. He also cited another poor

indicator. Almost 40% of complaints were not solved during the study period, in 2009.

He also cited Argentina, where card use grew 1,330% between 2003 and 2010. The

use, however, is not for explosive consumption of goods, but to finance basic consump-

tion, such as a medicine and grocery stores.

sAy A cLEAr “NO” tO thOsE iN dEbt

Adriana Burger, Public Defender and Executive Coordinator of PROCON Rio Grande do Sul,

found it a good idea to have a Consumer Code in the region. “I wonder if the institutions are

prepared to meet consumers who are aware and participate in financial education courses.”

According to her, the big concern is with those over-indebted, living the tragedy of con-

sumption as a way to feel accepted by the society. For her, institutions are responsible

for putting a brake on this consumption desire, a belief that has generated a controver-

sial discussion among the panelists.

A survey conducted in the South region of Brazil to profile over-indebted consumers

showed that over 70% of respondents were passive, i.e. they did not spend more than

they could, but faced an unexpected problem such as illness, death, or unemployment.

Only 20% were active, i.e. they spent more than they could.

Given this, Adriana suggested that banks should not only control their clients’ indebt-

edness, but teach them how to use financial products. “Banks should say “no” to clients


and explain why they are denying credit. That is, instead of charging abusive fees to

dissuade them, say it clear: “you are in debt and, therefore, I will not grant you more

resources. This will raise the client’s awareness. The European Directive that deals with

over-indebtedness shows that this is not a problem only in Brazil, but in the world.”

Marcelo Linardi, Ombudsman Superintendent of Santander Brazil, expert in financial

education, believes that there is no absolute truth. “The same education will produce

different effects on each person. Proof of this is my day to day with my two children.

They have the same education. The boy spends all his money and the girl thinks twice

before spending her allowance.”

One of Mr. Linardi’s concerns when thinking of financial education is to align a set of

social and cultural processes: “Why buy, what to buy, how to buy, who to buy from,

how to use, and how to dispose acquired goods. We must help raise consumers’ aware-

ness on each of these processes so that they can understand the social impact that the

acquisition will generate”, he stated.

Dealing with consumers is the big challenge of Santander. “Consumers need to be more

aware. They want to go to the gym and then eat a box of chocolates. They do not want

credit. They want to buy a car. We need to understand this social and economic dynam-

ics and provide education to all participants in this process: the state, consumers, and

financial agents. Perhaps together, we can actually solve these dilemmas.”

According to Fábio Barbosa, President of Febraban and Santander Brazil, “we must

leave a better world to our children and better children to our world.” This shows the

importance we give to financial education.


thE ExPErts’ tiPs fOr A sustAiNAbLE fiNANciAL EducAtiON

· Offer clients the right product for the right price.

· Train the sales team, which often does not know basic

notions of financial education.

· Make employees of financial institutions aware that

profitability lies in retaining healthy clients in the long term.

· Create sales programs that prioritize portfolio results, not

the volume sold.

· Make everyone aware of the damage caused, including to the

planet, of excessive consumption.

closureLatin American Financial Education Congress

participaNt

Alvir Hoffmann, President, ASBA – Association of Supervisors of

Banks of the Americas, Brazil

Closure | 75

Alvir Alberto Hoffmann, Supervision Director at the Central Bank and President of the

Association of Supervisors of Banks of the Americas (ASBA), said he has the percep-

tion that consumers and investors have improved their understanding on economic

and financial concepts. “We have witnessed throughout the world a strong growth of

product and financial service options. It is prudent to avoid over-indebtedness of in-

dividuals, which might lead to losses for the entire country”, he stressed during the

closure of the Latin American Financial Education Congress, sponsored by FELABAN

and FEBRABAN in São Paulo.

According to him, it is exactly along this line of raising consumers’ awareness that the

association has been developing projects. ASBA’s challenge is also to assist supervi-

sors in developing a regulatory framework that promotes self-regulation as a means to

protect consumers.

The partnership between the regulatory agencies of the 37 countries in the Americas

and the Caribbean is already in practice, exchanging researches and experiences that

allow supervisors to access information and improve their regulatory frameworks. “In

Brazil, we have an environment where interest rates are high from the nominal point

of view, leading to further damage from misuse of credit, which increases default

and, therefore, spread.”

He said that, in this context, the objective is to reduce the risk of indebtedness and im-

prove knowledge of financial products and awareness of what product is best for each

stage of the consumers’ lives. “The role of the supervisor is to ensure that institutions

act in an ethical manner and promote sustainable practices, seeking a fair relationship

with consumers. Financial education is a complementary action to ethics.”


cONcLusiON

The Latin American Financial Education Congress, with a diversity of issues and interna-

tional panelists, has contributed to a wider discussion on the topic in the region. After

two days of extensive debate, the message left was that a great step has been taken:

the acknowledgment that financial illiteracy in the region is huge.

The urgent need to train individuals, families, and micro and small businesses to en-

sure an economically healthier future through better financial decisions, seemed like a

mantra among all experts.

The talks have made it clear that the main factors that lead people to a long-term

indebtedness are, on one hand, little or no ability to make financial decisions or take

credit, coupled with a strong demand for consumption. On the other hand, the institu-

tions lack preparedness to grant credit, coupled with the lack of transparency of bank-

ing products and services. Financial education expects also struggle to obtain good

results due to the lack of supply from managers regarding the right product at each

economic moment of the life of the person interested in taking credit.

The financial crisis of 2008, which ruined the public, private, and family budgets, had

a good side. By showing that institutions have given more credit than they should and

that customers have taken more money than they could afford, a global initiative be-

gan to be drawn.

Realizing the detrimental effect of this combination, governments and financial institu-

tions have found that investment in education is urgent to combat financial illiteracy,

Closure | 77

whether to ensure more socially healthy individuals - financial difficulty is the biggest

enemy in family conflict and leads to millions of marginalized youths – or as a key com-

ponent of economic and financial stability.

The issue becomes even more relevant in the context of Latin America, where financial

markets are quickly evolving, both in credit, and savings and capital markets.

With this approach, governments are committed to avoid a crisis like the one in the

United States and Europe. To do this, they have the support of financial institutions, key

players in this new concept of sustainable economic growth and national development.

It also became clear that education is a challenge that involves everyone: government,

schools, financial institutions, and families. The current scenario is a chaos that is be-

ginning to be organized. Long periods of inflation and little respect for consumers have

created a population that hardly thinks of the future and financial institutions that pri-

oritize profit without respecting the rights of consumers and with no commitment to

the social and economic development of the region.

Harassment by the media, encouraging unbridled consumption and nonstop credit of-

fer, exacerbated by strong competition among financial institutions (confirmed by the

constant increase of sales targets for products and services imposed on bank branch-

es), have resulted in irresponsible indebtedness, with serious consequences for growth.

Something had to be changed and the development of Latin economies in recent years

has forced everyone to revisit their strategies.

Today, there is strong demand for banking inclusion, with first-time users, who now


have access to financial products that are often complicated even for those who are in the

business. Therefore, the education program provided by financial institutions is a sure path.

Financial institutions are beginning to understand that the more their products and

services comply with the principles of ethics and good faith, more clients they will have

in the long term. The more they train their employees to respect clients and understand

their needs, the greater the financial gain will be thanks to a portfolio of products bet-

ter tailored to each situation and, consequently, healthier. The greater the respect and

consistency in the relationship with consumers, the less regulated financial markets

will be, and vice-versa.

An important step has been to eliminate the sales bonus given to employees. “At Credi-

card, bonus is based on the quality of customer service”, said Leonel Dias de Andrade Neto,

President of Credicard. Another case mentioned in the event that deserves attention is the

renegotiation of the client’s debt through a type of credit with lower interest rates.

That is an initiative that should be reproduced, mainly because the credit card industry

is the gateway to the low-income population in the financial market. It is also one of

the top sources of complaints on the lists of consumer protection agencies in virtually

all Latin American countries.

Despite the efforts of card administrators to change conflicting procedures, much still

has to be done. One example is that even with the ban on sending unsolicited cards, this

practice is still common, according to several speakers. This shows that we still need a

greater awareness among managers of financial institutions and a strong commitment

to education if they intend to build more lasting relationships with their clients.

Closure | 79

Some institutions have already emphasized that they have progressed in the relation-

ship with consumers, installing state-of-the-art programs to cross data and limit credit

to citizens who are already in debt.

A good example of the importance of this measure is the situation that exists in Chile,

a country where retail chains manage their cards in competition with banks. This way

of working does not allow for a database of people in debt. Along with the competition

between the two sectors, the result is an over-indebted population due to credit card.

Such examples underscore the importance of developing educational programs. Public-

private partnerships are vital to achieve this goal. This is an expensive investment, with

immeasurable returns in the short term. Therefore, the more experiences are shared,

the more time and resources will be optimized.

However, we must go further to help a population that is beginning to have access to

consumption and is eager to have everything they dreamed of for years. It is crucial

to invest in education, teaching individuals that spending the necessary and saving a

portion of their income to achieve a future project will be healthier for them and their

families. Being more conscious, individuals will seek to use financial products and time

to their advantage in building assets, generating a virtuous circle of growth not only for

themselves, but also for companies, financial institutions, and the country.

Many projects with investments in programs focused on teaching children, youths,

adults, and even senior citizens are worthy of being copied to spread financial literacy.

We have the case of Banamex, the leading Mexican bank, mentioned on Panel 1, which

shows the benefit of creating sustainable products and training employees to serve as


advisers and not merely as salespersons in search of targets to get bonuses.

All speakers emphasized the importance of financial education targeting the middle

class and the most vulnerable consumers, such as those who, unlike those more aware

of their rights, end up suffering the consequences of making wrong decisions.

On this subject, much has been said about the importance of deeply knowing the tar-

get audience. There is no point in investing resources and time in a program that will

not give results, whether by speaking a language that people do not understand or by

using a format that does not fit the reality of the community to be reached.

Many householders, for example, cannot leave work to attend lectures. Monique

Cohen, President of the nongovernmental organization (NGO) Microfinance Oppor-

tunities, mentioned, during Panel 1, a number of choices to reach consumers within

their reality and limitations.

The whole range of resources and media available should be considered to disseminate

financial education and promote the basic concepts of banking products and services,

when the purpose is to teach people to use credit as an instrument of growth. Tech-

nology plays an important role. However, the constant technological changes require

periodic review and adaptation of these projects.

In Brazil, where not even illiteracy has been beaten, access to technological resources is

almost impossible for lower income classes. Personal computers and broadband access

are still very expensive for most people.

Closure | 81

The promises of the Brazilian government aimed at digital inclusion have failed to over-

come the narrow boundaries of political discourse, being practically limited to the estab-

lishment of some popular centers for Internet access and the provision of a few comput-

ers for some public schools. All else comes down to individual actions promoted by some

NGOs and the private sector, insufficient to achieve the expected inclusion.

Considering the experiences mentioned in the two days of discussions, there are many

interesting initiatives, such as the one by Banamex. Due to the diversity of the popula-

tion, the bank has developed several ways to reach its audience, from special inserts

on investment that go in major newspapers to comics for children. In Brazil, we have

the National Strategy for Financial Education (ENEF), a partnership between several

organizations and government. Both show that a public education policy can be writ-

ten by many hands.

Febraban presented the entity’s educational structure, collaborating with the banks

in employees’ training. The entity has shown interesting initiatives being undertaken,

such as the portal Meubolsoemdia with 1 million hits in nine months, Caravana Meu-

bolsoemdia, which will bring on-site financial education to the population, and the fi-

nancial control software, Jimbo.

Febraban also showed a controversial video that highlighted the importance of get-

ting out of the red, as well as saving. It shows a couple who saved nearly 90% of their

monthly income to accomplish a dream. Certainly, to manage to save this percent-

age there must have had someone else paying the bill for the family’s basic expenses.

That is, although the video had the objective of reinforcing the importance of saving,

we have to give more realistic examples to convince people eager for immediate


consumption to give up a percentage of up to 20% of their income to make future

dreams come true.

As important as defining the means and forms to be used to achieve the goal of educat-

ing the financial consumers, is the previous definition of the concepts to be measured,

as part of the research project. The event also highlighted the importance of closely

monitoring program outcomes, so as to optimize time and resources and achieve more

efficient patterns of understanding over time.

At Banamex, the project efficiency control begins with recording the programs, fol-

lowed by monitoring participants, students’ satisfaction surveys, use of interface tools

for clients’ responses to measure the results and, finally, an evaluation of changes in

the students’ lives produced by learning.

At the NGO Microfinance Opportunities, one of the strategies for assessing outcomes

is to compare the results from a research conducted prior to the training with the one

conducted 18 months after its completion.

Financial education is not only teaching consumers to take credit, but also to have true

notions of citizenship. It covers planning a project for the future to ensure better living con-

ditions, control of the household budget as a means of ensuring the family’s financial sta-

bility, encouraging savings as a means of achieving dreams of consumption, and learning

financial investment in the market capital to earn profit and ensure a stronger economy.

Microcredit was another topic addressed and it still needs to be deeply studied in Latin

countries, where most of the population lives at the poverty level. It is a particularly

Closure | 83

important issue because it represents plenty of risk and vulnerability for both borrow-

ers and lenders, but it also means, in most cases, the need to implement entrepreneur-

ship in a region.

Because it covers a huge portion of the population, it is vital to invest in research to

better understand these consumers and establish programs to teach them to use the

credit to generate new wealth and change not only their own reality, but also their

social environment, contributing for the region’s economic development.

In this sense, the lesson is that it is not sufficient to grant credit. We must create spe-

cific products that are suitable for every situation, publish them with transparency and

ethics, educate borrowers so that they know the products available, learn to choose

what best fits the specific moment of their life, use credit that is responsibly taken and

to become more aware of the need to plan/manage their budget and save in order to

promote financial stability and consequent economic growth. With that, we will mini-

mize the risks of default and asset portfolios of the institutions will have higher quality.

Panel 8 generated an interesting discussion regarding the need for regulation to con-

trol bankruptcy and the creation of a Consumer Code for Latin America, with release

scheduled for March 2011.

Considering that Brazil already has a relatively new and fairly comprehensive Code of

Consumer Protection (Act 8078 of September 11, 1990), which brings a set of rules

intended to protect consumers and regulate their relationship with service and product

suppliers, the doubt that remains is the usefulness and effectiveness of a similar legisla-

tion, but with continental scope.


Remember that, until 2006, when a decision by the Supreme Federal Court finally for-

malized the matter, subjecting financial institutions to the dictates of that law, banks

refused be subjected to the Code of Consumer Protection. The fact is that consumer

protection laws, including consumers of credit products and banking services, already

exists. We must, instead, ensure they are met.

For many years the lack of transparency, subpar customer services, lack of suitable

products, unconscionable contract terms, lack of concern regarding clients and the pre-

cepts of ethics and good faith, and other unsavory practices, drew a negative picture

of credit institutions. The current framework, before the Judiciary and other protection

agencies, always presents clients as victims and banks as villains. In Peru, for example,

in every 10 cases, eight are decided in favor of the clients.

It was shown that, in Brazil, the financial service sector ranks second in consumer com-

plaints, totaling about 40% of unsolved complaints in 2009, the year of the survey.

A material fact, however, is the union of the countries in the development of financial

literacy researches and a common regulatory policy, so that they can incorporate best

practices. The panels highlighted the importance of coherent actions by both parties

to build a healthier system, focused on financial education and improvement of the

relationship between the parties, which, consequently, relieves legal proceedings.

In Peru, for example, the creation of a Regulatory Agency and the requirement that

banks must solve issues within 30 days caused less than 1% of the disputes to be

brought to the regulator. That is, banks resolved 99% of issues and used that experience

to change processes, resulting in a more solid financial system with healthy growth.

Closure | 85

The conclusion is that there is a strong commitment from the Government and private

companies in developing a national strategy that aims to increase the level of finan-

cial education of the population. Government officials and financial institutions have

identified financial education as a necessary condition for financial market efficiency,

as well as a very positive factor for macroeconomic stability.

The main stimulus is that they all agree that “together” they might advance on the sub-

ject and have “guaranteed success” in the long term, at least with regard to having a new

generation that is aware that their actions will build the future they determine today.

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OFFICIAL DOCUMENT 2010 - Citigroup€¦ · has changed. Latin America has changed. Brazil has changed. We have a country grow-ing through both economic stability and credit. The big