With the rapid change of the banking sector brought about by digitization, financial literacy has become an important skill for all people to have. The Head of Consumer and High Networth clients at Stanbic Bank Tanzania, Omari Mtiga, talks about how Financial institutions can support boosting financial literacy in Tanzania.
The Tanzanian banking sector is changing rapidly with visible transformation brought about by digitization, fintech, increasing regulatory reforms such as; financial consumer protection regulations and Foreign exchange directives that were issued by the Bank of Tanzania in 2020, and fierce competition from new market entrants.
These developments have made banks innovative while offering new and old financial products and services to meet their dynamic customers’ demands. This diversity of financial products and services has increased the need for financial education.
I would like to pose a challenge to the readers. Imagine that the interest rate on your savings account is 1% a year and inflation is 2% a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today? Simple question right! However, It’s likely that most of us will not get the correct answer.
This test solidifies the fact that there is a lot to learn about financials. Financial education provides customers with the knowledge and skills needed to make sound financial decisions, create and secure their financial wealth.
Banks can also benefit from financial education in several ways. For example, at a time when there is high competition in retail banking, tailored client-centric financial education programs can open new roads into untapped populations, like, rural farmers, small-scale businesses, and informal saving groups and associations.
It goes without saying that banks and other financial institutions play a crucial role in promoting financial literacy. According to the Bank of Tanzania, as of September 2020, the country had a total of 49 different banks, with numerous branches spread across making them best placed to roll out financial education campaigns.
Stanbic Bank Tanzania is trailblazing the banking sector in this regard. In 2020, the Bank initiated a free zoom financial education webinar under the theme A journey towards financial wealth, aimed at equipping society with skills needed to generate and expand their income.
There is no better way to demonstrate commitment than through understanding the customer and working together to create programs geared towards life-long learning, partnership, and financial growth. The impact of financial literacy is far-reaching and can support individuals and companies to grow thereby having a positive impact on Tanzania’s economy.
In fact, according to the National Financial Education Framework (N-FEF) 2016-2020, financial education has the potential to contribute towards the broader goals of the Financial Inclusion Framework by improving the levels of financial capability of the Tanzania population.
Financial Sector Deepening Tanzania (FSDT) highlights that almost six in 10 adults (56%) in Tanzania are financially included, which makes access to financial education an effective tool in promoting financial inclusion.
But the big question is, what more can the banking sector do to improve financial literacy? Stanbic Bank Tanzania believes that the solution is to increase awareness and develop financial education programs, tailored for different demographics, developing public skills in terms of financial capacity, and promote cooperation among financial institutions in providing financial education.
In 2021, Stanbic Bank is deepening its work on financial education, particularly in the area of creating financial wealth. It will examine in more detail the important role of financial education in increasing consumer awareness and understanding of financial issues, including how they can best benefit from the products and services provided by banks and other financial institutions.
Stanbic Bank Tanzania is part of the Standard Bank Group, Africa’s largest bank by assets. Stanbic Bank Tanzania provides the full spectrum of financial services.
Stanbic Bank Tanzania’s Personal and Business Banking unit (PBB) offers banking and other financial services to individuals and small-to-medium enterprises. PBB serves the increasing need among Africa’s small business and individual customers for banking products that can meet their shifting expectations and growing wealth.
For further information, go to www.stanbicbank.co.tz