Trends in consumer financial education in South Africs

Financial institutions have been implementing consumer financial education (CFE) programmes to improve the financial literacy levels of consumers in South Africa for more than a decade. These programmes aim to support consumers in making more informed decisions about their finances. To date, limited information has been made available on the CFE landscape and the effectiveness and impact of these programmes. DNA Economics undertook an analysis using publicly available information of 14 financial institutions in the banking and insurance sectors and identified 3 trends:

1. The target audience of CFE programmes has not significantly changed since 2016, with most targeting the general public

Collectively, the 14 institutions reviewed offered 35 CFE programmes. Most of the programmes are generic in nature and are aimed broadly at the GN 500 target of most CFE programmes¹.There is also a focus on the youth, with 26% of the programmes targeting this audience. There has been little change in the targeting of CFE programme, when compared to a similar study in 2016 carried out by the International Labour Office. This is inconsistent with best practice², which provides that CFE programmes should be tailored to the needs of the target audience.

2. Most programmes are delivered using traditional and interactive delivery modes, with increasing use of digital platforms

3. There is a need for stronger monitoring and evaluation across institutions

There is growing recognition of the need for financial institutions to understand and report on the outcomes and impact of their programmes. 

Increased demand for monitoring and evaluation services suggests institutions are beginning to develop the systems that enable them to design, deliver and report on their programmes. Most of the financial institutions only disclose data related to programme reach and very limited performance and impact data. This is likely an indication of a lack of outcome monitoring and evaluation of CFE programmes. Notably, the institutions did not report disaggregated data on reach, demonstrate that any targets were set or that they collect and report on key indicators.

The lack of reporting on performance and impact limit our understanding of how effective CFE programmes are in South Africa. More significantly, the lack of impact data means there is no evidence regarding what programmes, delivery modes or methodologies have the greatest benefit.

4. COVID-19 has accelerated the drive to novel and digital approaches to CFE

Despite the tendency to adopt traditional CFE programmes, more innovative approaches are increasingly being explored. Examples of different approaches are described below.

• A programme which creates employment opportunities through its Train-the-trainer approach by recruiting and training ‘peer trainers’ in communities to deliver financial education.
• Programmes which include additional skills training to financial education and , such as design thinking and entrepreneurial skills. By doing so, these programmes increase opportunities for the practical application of course content – a key component in CFE as the development of financial skills is found to be directly linked to practical application.
• Programmes delivered through digital platforms, such as gamified educational apps that enable learning of financial concepts in small, digestible units while appealing to their competitive nature or budgeting apps that help with budgeting and financial planning and provide expenditure and investment tracking.

Conclusion

It is encouraging to see the progress financial institutions have made in designing and delivering CFE programmes. CFE initiatives and innovations have been primarily industry-driven, with institutions defining what advice consumers need, and how to deliver such support. However, in the absence of performance monitoring and evaluation, the sector and institutions are unable to demonstrate effectiveness and impact. The need to do so will intensify as regulatory discussions regarding CFE principles and standards develop to explicitly include CFE effectiveness and impact.

Are you measuring what matters? Can your institution demonstrate the impact that your CFE programme is having?

Financial service providers should continue to refine their CFE programming, defining their target audiences clearly, understanding their needs and using monitoring and evaluation systems and processes to obtain continuous feedback.

DNA Economics’ Financial Market and Digital Innovation and Monitoring and Evaluation practices have assisted several financial institutions and associations to review, assess and redesign CFE projects and programmes. For assistance with your CFE programme or more information contact: Fatima.Mathivha@dnaeconomics.com
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