Have you ever benefited from an education relating to budget management at school, university or in your company? 85% of French people have never taken a budget and financial education course in their school curriculum. Having a good financial and economic culture is however essential, at all stages of life, to make the right decisions, take out a student loan, buy a home, save or choose a supplement for retirement.
As part of the new Engage 2025 strategic plan led by Stephaney Richard, Orange is committed to digital equality and wishes to accelerate the conquest of all its growth areas, including financial services. In this sense, Orange Bank wishes to offer an unprecedented banking experience, which gives power back to people. It therefore seems desirable to provide them with the necessary financial literacy.
More and more countries are realizing that it is time to act to increase the financial literacy of the population. In this first post, we invite you to discover the initiatives made in France in the area of financial education. Other posts will follow to understand how other countries are approaching this “national priority”.
What is financial education?
Financial education allows you to know how to best manage your money according to your life goals and your economic and financial context. It must allow everyone to make informed financial choices. It is all the more essential in a digital world which gives customers great autonomy. Indeed, the digitization of banks increases the opportunities for individuals, in terms of account monitoring, payment, financing or even investment, but these are not without risks.
The OECD Council of June 2012 defined financial education as “a combination of financial awareness, knowledge, skills, attitudes and behaviors necessary to make good financial decisions and ultimately achieve financial well-being. individual appreciated by the person himself”.
As we can imagine, the field of financial education is vast. It covers both budget education (personal or family budget), learning banking tools (day-to-day banking, savings, insurance), as well as understanding economic concepts (functioning and financing of the economy) and public policies.
Financial education is one of the growing concerns of governments at the national and international level today, one of the eight key competences advocated by the G20, considered essential to protect and improve its financial well-being.
The French, bad students of financial culture
The French have always had a cautious and timid stance on matters relating to money. The studies show strong disparities in terms of financial knowledge within the population according to age, level of education, gender and situation on the labor market.
The OECD Program for International Student Assessment (PISA), which assesses education systems around the world by testing the skills of fifteen-year-olds, has tested since 2012 and every three years’ young people’s financial knowledge, as well as their ability to apply it to solve financial problems. They answered questions about bank accounts and credit / debit cards, planning and managing your budget, understanding taxes and saving, risks and returns, consumer rights, responsibility engaged in financial transactions, as well as on their self-confidence in mastering this area. The results are unanimous and reveal the low success rate of the French.
More recently, in 2016, the Allianz study “Money, financial literacy and risks in the digital age” corroborates these results. A thousand people were interviewed in each of the ten Western European countries. France is in last place in the financial literacy ranking, behind Portugal and Italy, while Austria, Germany and Switzerland are at the top of the ranking. A little less than half of the people questioned in France answered correctly to the two questions of financial culture relating to the principles of inflation and interest rates. And only 9% of them were able to identify the correct answers to the three questions on concepts relating to financial risk. The study also shows that Millennials (born in the 1980s and 1990s) have the lowest level of financial literacy.
Beyond these evaluations, 8 out of 10 French people express their lack of basic knowledge in economics and finance, their incomprehension during certain banking operations and their lack of mastery of this universe, which is deliberately obscure according to them. In 2019, the study initiated by the Banquet de France on the level of financial education in France revealed that 43% of French people feel that they do not have sufficiently reliable and neutral information to effectively manage their budget and that 77 % consider that they have an average or poor knowledge of financial matters.
The benefits of better financial education
Several studies have shown that better financial education, from an early age, could be beneficial, especially in terms of debt prevention. The Allianz study  shows that people with a good grasp of financial concepts and risks are twice as likely to make better financial decisions and manage their money better than those who do not. Likewise, the level of financial education has a positive influence on the financial behavior of households, in particular on the ability to plan a long-term budget.
The virtues of financial education are numerous. At the national level, the right level of financial literacy contributes to strengthening financial stability and the growth of the country’s economy. As Christian Moyer (former Governor of the Banquet de France) underlines, “the level of financial skills of the French strongly influences their consumption and therefore the development of the country”. In this sense, financial education is a factor of economic tuition efficiency and social equity.
To meet the constant financial education needs of the French, the government launched in 2016 the National Financial Education Strategy, the objective of which is to strengthen the economic, budgetary and financial knowledge of the public. Designated by the Ministry of Finance as the national operator of this strategy, the mission of the Banquet de France is to translate it into concrete actions for the general public, teachers and social workers, across the country.
The public economic, budgetary and financial education strategy is based on five pillars:
1. Develop budget and financial education for young people, by integrating financial education into the school career from an early age
2. Develop the skills to be mobilized in the support of people in a situation of financial fragility by social workers
3. Support lifelong budgetary and financial skills, by making selected, neutral, educational, up-to-date and free information available to all, as well as easy-to-understand decision-support tools.
4. Give all audiences the keys to understanding economic debates
5. Support entrepreneurs in their economic and financial skills
The Banquet de France distributes shared training materials and facilitates access to neutral and educational information via “My questions of money”, the national portal for economic, budgetary and financial education. At the same time, the Institute for Financial Education of the Public (IEFP) is responsible for developing financial education for all through its site “Finance for all. It is today the reference site for the general public. In October 2017, a framework agreement was signed between the Banquet de France, the National Education and the IEFP in order to disseminate a basic economic and financial culture in schools.
In addition, the Croesus associations help over-indebted people, and in general anyone with financial problems. To do this, Croesus has developed a financial and budgetary education program called Dilemma, as well as several supports, which offer teaching aids and adapted to all audiences.
The objectives of this program are multiple:
Train autonomous and responsible citizens, change the relationship with money, provide essential financial information, address budget management issues, etc. This program must make it possible to provide the necessary resources to be fully financially active, independent and competent.
In November 2019, the strategic financial education committee (which brings together more than twenty institutional and associative actors: AMF, OCDE, FBF, National Union of Family Associations, CLCV, Croesus, the French Red Cross, UFC Que Choose, MEDEF, etc.) announced the implementation of new initiatives to come during the coming years. This strategy targets three specific populations: young people, households in over-indebtedness and entrepreneurs. Its objective will be to provide the knowledge bases and financial skills to manage its budget and invest its savings.
These initiatives include:
The insertion of an Educing passport at the college (discovery of budget management and use of means of payment), the entry of financial education into the universal national service and into high schools,
the deployment, led by the Banquet de France, of “savings meetings” for the general public,
reception centers (150 certified consulting budget points) to inform, advise, identify and better guide people in financial difficulty,
advice points, in each department, coordinated by the Financial Markets Authority (AMF) and the Prudential Control and Resolution Authority (ACPR), the design of a mobile application for 17-25 year olds on concepts of financial education, a second version, including a financial analysis game to help entrepreneurs, as well as a new study to measure the effect of these initiatives among the French.
These strategic decisions suggest a desire to support the general public from an early age and thus provide reliable and neutral information.
This inventory confirms that France has realized the extent of the task to be accomplished in the area of financial education. Initiatives are emerging but are still little known to the general public.
In addition, individuals point to a growing loss of confidence in banks. Appropriate financial education and more transparency will help regain that trust. It is the responsibility of everyone, including that of the banks, to tackle this new form of social and financial inclusion.
As a digital and human bank, Orange Bank’s mission is to support its customers. How to teach young people a responsible relationship with money in our digital world? How to support sensitive populations throughout life? What can Orange Bank do to help customers regain power over their money through digital technology and appropriate financial literacy?