Financial Education as a Strategy to Promote Savings: New Lessons From ADOPEM

The extent to which financial education can actually motivate savings is a critical question for many parts of the financial inclusion field – from those working with youth to consumer protection advocates to policy makers. For YouthSave, it’s paramount because we are implementing some form of financial education, ranging from face-to-face workshops to themed radio dramas, in all of our project countries. So it was with much interest that we listened to the insights of former Women’s World Banking consultant Ricardo Leon at the recent Colombia YouthSave multi-stakeholder meeting. We felt strongly that his lessons on optimizing financial education for account uptake that were based on his experience working with the MFI ADOPEM in the Dominican Republic were applicable to our context and efforts.

As part of a program to foster savings among adolescent girls, ADOPEM partnered with Women’s World Banking to create a special savings account for girls and young women aged 7 to 24. The account was designed with different opening amounts according to the age of the account holder: USD 3 for girls aged 0 to 15 and USD 5 for girls aged 16 to 24. In both cases, the minimum balance was USD 2 and a monthly fee of USD 1 was charged after 6 months of dormancy.

To motivate account opening, the original plan was for ADOPEM’s sister NGO to provide a 3-session financial education workshop to potential clients through schools. After piloting this strategy for 6 months, however, product results were disappointing: although the target number of 700 accounts was reached, 85% were inactive after 3 months. Most frustratingly, only 100 accounts came from the 1,900 girls who participated in the financial education workshops.

Undeterred, the project team redefined their strategy by bringing the financial education in-house and training some 900 bank staff. With support from ADOPEM’s sister NGO, bank branches incorporated financial education to their regular activities. Some branches hosted financial education workshops, while others designed activities such as the “Savings Day” and decorated their offices with large posters of Al and Cancia, the two financial education characters designed for the MIA account.

In addition, financial education materials were also distributed through branches and reinforced through telemarketing to dormant account holders, who received a phone call to remind them about the importance of depositing and provide them with tips about savings. Various aspects of the product were also redefined, including establishing a uniform account opening amount of USD 3 for all age groups and designing an incentive plan where new account holders got a prize every time they made two consecutive deposits, in order to encourage the savings habit. The prizes were quite simple, consisting of branded pencils or stationery, but Leon mentioned these small gifts were a large motivation for children. In addition, ADOPEM decided to start offering the account to boys.

The results were dramatic. Over the following 12 months, over 4,400 new Mia accounts were opened, 500 of which were from the 2,800 youth who received financial education. Moreover, over half of these accounts registered transactions in the last three months, and the average balance exceeded the target by 32%. Leon reports that the Mia account is now considered the “star” among ADOPEM savings products.

What led to this turnaround? Ricardo Leon points three key aspects that were crucial in achieving the changes. First, he cites the importance of making financial education a part of daily life. “It´s important to take it out of the classroom context and link it to regular and daily activities, such as going to the bank.” Leon also stresses the importance of having the sales staff trained in financial education, so that they can speak to the youth and offer them savings tips and advice while opening accounts. In fact, he says that during the sales process, focusing on the client’s goal and how they could achieve it was much more important than explaining the exact product features. Finally, Leon states that the team work between the bank and its sister NGO was fundamental, as each provided ideas and expertise from their particular fields of work.

The case of ADOPEM shows that separating financial education from account sales and service might be wasting a valuable opportunity. Instead, offering financial education to young clients face to face, in a quick and simple way that is directly tied to and opportunity to practice the new knowledge, might produce more impact on youth saving behavior.

From a management perspective, ADOPEM’s experience also highlights the importance of focusing on the right strategies and being able to adapt and change at the right time. Identifying and correcting process flaws and adapting to ongoing situations helped ADOPEM turn what looked like a failing product into a star. As Leon points out, “It´s not a matter of large monetary resources, but of being able to use available resources in a creative and cost effective manner.”