Aaron Grunwald: Money Week focusses on younger children, but I imagine that teens and many adults have a need for financial education too. Am I right?
Catherine Bourin: Yes, you’re right, because technology in banking systems is getting more and more complex nowadays. And this increasing complexity makes it more and more difficult for consumers to understand the financial world, be it new data, new ways to connect with your bank and financial products, the risk associated with financial products, cryptocurrencies and so on. This growing complexity makes it more and more urgent for citizens to develop a better understanding of finance.
But I would like to come back to children before going on with adults, because understanding money begins when you are kid. I would like to say that it’s a shame that children are leaving school without basic financial skills. They know about literature, mathematics, physics, and they have a head full of things which are really useful for a job, but not for daily life. They are unable to manage their money when they become independent.
At the ABBL, we believe that financial literacy should be incorporated in all school curriculums. We would like the government to understand that it is very important to give all children an educational background on money management, so that they become more responsible adults.
Money Week, if I’m remembering correctly, is for year four students, so 10 and 11-year-olds?
Yes, but it’s only on a voluntary basis. Not all schools do it. It’s only the classes that subscribe to the programme. It really depends on the teacher.
And how much time are the sessions?
It’s only one hour and a half.
It’s a good initiative and we have more and more people volunteering to teach, who are among our members, which are bankers. And they are really willing to go schools and explain what is money to the children. But it doesn’t reach every child. If we want really all kids to have these skills, it should be incorporated in the official curriculum of the schools.
What specifically would you like to see?
It could be done in a progressive way. For really little children, you could explain how to manage their pocket money. [For older students,] it would be useful to know what is a financial product; what is cryptocurrency. Because children ‘know’ everything, or they think they know everything, but they do not understand the risk linked to this.
We are currently developing a game for children which will be available as an app on smartphones, which is progressive and which allows everybody to know how to manage money better. It will be available later this year.
And coming back to adults?
There are two different topics which are really critical. One is digitalisation of banks and education for seniors, to better understand how to use digital tools. And the second topic is sustainable finance, because it’s becoming more and more important.
On the first side, improving confidence in digital tools, senior citizens are living in a period of continuous evolution of technologies, and this makes it quite difficult for them to adapt and feel at ease with online tools. So, through our foundation, the Fondation ABBL pour l’éducation financière, our association has actively participated in the development of e-banking training for seniors, together with the ministries of digitalisation and consumer protection and in collaboration with the CSSF. The course was set up last year by the Erwuessebildung association....
The aim of this initiative, which we call Ech kann dat och (I can do it too), is to improve their skills, so they can autonomously use the e-banking platform of their bank. Obviously the bankers are always there to help senior citizens, to show them how to deal with the platform, but they have to know how to use their computer, mouse and everything before.
More generally speaking, a lot of people are experiencing cyber security scams. We know that online scams and fraud are becoming more and more sophisticated. And online payments may be particularly at risk if you are not aware of the risk of dealing with one platform or another when you pay for something on the internet. So there is a real need to inform consumers in order to raise awareness, to be able to recognise fraud before it is too late.
This isn’t just for seniors. Doesn’t this really impact everyone?
Everyone, not only seniors.
Do you really think the problem is getting worse? I mean, we’ve had these scams for a few years now. Aren’t people getting a little smarter about this?
We do not have an analysis, but we know that fraud is becoming more and more complex. So it may be more and more difficult for people to recognise. A few years ago, there were typos in the emails. Now the fraudsters are smarter about the way they behave in order to defraud everybody. That’s making it more and more dangerous.
Are your members seeing a lot of problems with cryptocurrency, with people not really understanding how it works and losing money?
It’s difficult to say because we currently do not have an analysis on this, but we are going to work on it. What I think is that a lot of people want to do something with cryptocurrencies. Most young people have maybe already bought cryptocurrencies, but they do not understand the risks. They maybe find it is fun, it is an easy way to earn money, but the volatility of these cryptocurrencies is so high that it makes the level of risk very, very high. And I am sure that not everybody’s really conscious of these risks.
I think that very few citizens know what ESG stands for, and what responsible investing or responsibility products involve. They even may confuse responsible investing with investing cautiously. Sustainable finance is a topic where everything moves very fast, where new pieces of legislation are continuously issued by the European legislator and this evolving environment makes it really difficult for citizens to understand all the issues and especially what is sustainable finance and what really a sustainable finance product is.
Will that start to change in August, when new EU rules come into force?
Indeed, banks will have to ask their clients for their appetite concerning sustainable finance... more and more data will be available in the application of the legislative framework. Many banks have already developed an offer with products. Because they have to ask the client and they have to offer products with ESG principles. So, they will have to make an effort in raising awareness and raising the skills of some of the clients, to explain to them what is ESG, what are the products which are available, and it will definitely evolve quite quickly in the near future concerning all these products, because everyone has to make the move towards more sustainable finance products.
[Right] now it is quite difficult because we do not know, according to the taxonomy, what is really a green product and we have to make people aware of greenwashing. So we have to educate them they have labels, such as Luxflag. With the labels they will have a ‘stamp of approval’ that the product is a good one because it has been carefully reviewed and that ESG principles are quite strongly respected by the products.
The ABBL has educational resources on sustainable finance on its website.
A version of this interview appeared in Delano magazine’s April 2022 print edition
UPDATED: Clarified Catherine Bourin’s job title; corrected to indicate that the ABBL is the sole organiser of Money Week