Promoting financial literacy is connected with promoting sustainable financial sector. Though the term 'financial literacy' indicates financial awareness plus financial knowledge and skills, generally 'financial awareness' and 'financial literacy' are used synonymously. There is no doubt that 'financial awareness' is at the heart of 'financial literacy'. It is recognised that financial literacy is an essential life-skill which is related to every human being's basic right. Deregulation of the financial services industry has increased the number and range of financial products, providing increased choice. To make informed choices, today's consumers require greater levels of financial capability and financial literacy than those of three decades ago.
Research on financial knowledge and behaviour indicates that individuals in both developed and developing countries around the world lack adequate knowledge to make informed financial decisions. Financial awareness, financial knowledge and skills empower people to take control of their future and enable them to make valuable contribution to the society. Conversely, lack of financial awareness and knowledge restrict people to get access to financial resources and limit their contribution to the economy. Financially literate individuals do better at budgeting, saving money, and controlling spending.
Surprisingly, while the need for financial literacy may be largely acknowledged, the importance of financial literacy of the children or youth is yet to get due attention. Children's financial awareness and education should receive special attention of the policymakers for creating a financially literate future generation. Financial education is also critical to financial inclusion. Working toward financial literacy and financial inclusion for children and youth will help them in their capacity to find employment or undertake entrepreneurship and to become productive and economically active members of society.
Coaching children on how to manage money is a vital part of a child's education. School is the best place to teach children about financial literacy. Financial education provides useful tools to people of all ages and such education at early age could bring better outcome. If kids are taught how to manage their money at early age, they would carry this knowledge throughout their life which would help them to make sound and efficient financial decisions. Children need to be able to make informed judgments and effective decisions regarding the efficient use and management of money. Whether it is a bank account, investments or loans, managing money needs to be learned. And the earlier, the better.
In recent years, several banks, both from developed and developing countries, have been supporting schools to educate children of all ages by working with the schools to provide students with the necessary knowledge, understanding and skills through a range of initiatives. To help children and young generation learn how to handle money responsibly, some banks commonly offer practical economic and financial information directly to schools. In addition to information about types of investments and retirement funds, these banks give children and young students a deeper insight into the global financial system and the efficient use of the financial resources. For example, in Australia and New Zealand, some banks have been offering school programmes as a commitment to promote financial literacy skills of the youth and children. These banks are among major sponsors of the Financial Basics Foundation, a registered charity of Australia whose aim is to help educate secondary students about responsible financial management. Some school programmes of banks recognise the importance of teaching financial literacy in New Zealand that target to create good savings habits at a young age. The banks are offering an easy way for pupils to save by regularly banking at school. Through these programmes, banks commonly aim to create a fun and convenient way for the pupils to bank at school along with keeping School Banking as simple as possible for both school and the pupils.
In Germany, Deutsche Bank employees volunteer as instructors in the Financial Literacy initiative through its wide branch networks throughout the Germany. 'Teach Children to Save South Africa' is a generic financial literacy programme of The Banking Association of South Africa.
Though at a slower pace, developing countries have started adopting the strategy of educating children on banking issues. The United Nations is also playing its part. The UN Capital Development Fund and the United Nations Children's Fund are working with some NGOs (non-governmental organisations) to promote child- and youth-friendly banking principles as well as school curricula that encourage financial competency.
Inadequate financial literacy is very common in many developing countries like Bangladesh. However, the people in Bangladesh, whether they have access or not to banking, generally have some idea about the activities of banks. But, product-specific familiarity varies widely. Information and awareness about technology-based banking services like Internet banking and mobile banking are much low. A school banking programme has recently been launched in Bangladesh for educating children on banking issues. The scheme not only plans to help students and parents with a sizeable amount of savings after a certain period, it also aims to instil the habit of savings into students from an early age. The scheme is expected to teach kids money management skills that may be useful for the rest of their lives. Through the programme, kids can bank at school, with a hands-on banking experience in a simple way.
. In a major decision in November 2010, BB asked all banks to open school banking branches. It said students need to be brought under banking services to help them contribute to economic activities through savings. EBL was the first bank that came up with school banking after the central bank issued the circular. The bank has introduced 'EBL Junior', a savings account for students, aiming to include the young population of society under the umbrella of banking. Currently over 35 banks have introduced school banking and others are on the process of introducing the scheme soon. Any student, aged between 11 and 17 years, can open an account with banks supporting the service. The account can also be opened at ease with three copies of photo of the account holder and a parent. This is basically a joint account between the student and the guardian. There are some advantages of opening this account, such as waivers of fees and charges, free Internet banking, a waiver of minimum balance requirement, debit card at lower costs, etc. Keeping the features more or less intact, banks have been offering school banking products in different names. For example, Mutual Trust Bank launched two products - MTB Junior and MTB Graduates - for students. Shariah-based banks also came up strongly with the service. Shahjalal Islami Bank has a deposit product named 'Mudaraba Shikhkha (education) Deposit' that can help parents build a base for their children's future education. Islami Bank Bangladesh Limited is contributing remarkably. As a whole, the response of all categories of banks is really inspiring. Bangladesh Bank is also recognising the contribution of banks in this connection. In the School Banking conferences, successful banks are awarded by the central bank.
'School Banking' is gradually getting popularity among the people, and is contributing in intimating the students with banking habit from an early age. Banks are not supposed to see school banking as a profit making business, rather many of these students would become their customers in future. The responses of banks are really praiseworthy in this connection. School banking for the students would hopefully ensure their future financial safety and would also boost the country's economy. This financial literacy programme for the young might prove to be a crucial positive force to give a big push to the financial inclusion initiatives in the country.
Dr. Shah Md. Ahsan Habib is Director (Training) of Bangladesh Institute of Bank Management (BIBM).
ahsan@bibm.org.bd
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