Robert Schuman Centre for Advanced Studies - European University Institute

Commissioner McGuiness Keynote Speech for the FBF Annual Lecture

Commissioner Mairead McGuinness spoke at the Florence School of Banking and Finance's Annual Lecture on the topic of "how to make finance work for citizens', and marked the launch of the programme's new 'Women in Finance' initiative.

27/04/2021 | News

On 20 April 2021, the Florence School of Banking and Finance (FBF) invited Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union to give the FBF Annual Lecture on how to boost financial literacy and “make finance work for citizens.” The event also marked the launch of the FBF’s new ‘Women in Finance’ initiative, chaired by Elena Carletti, Bocconi University and FBF Founding Director. This initiative will feature successful women in the finance profession and promote discussions and conversation on professional advancement and inclusion for women in the sector.

“At many times during the day, we use financial services without giving a second thought. In fact, it would be difficult to see how you might get through a normal day without using financial services.” said Commissioner McGuiness to open her lecture. “In the little things and the big moments, the milestones of life such as a first job, buying a house, retiring, etc., financial services are front and centre.” Nevertheless, McGuiness claimed that enormous gap between citizens and their financial institutions is alarming. She explained that the 2018 European Commission consumer market scoreboard revealed that financial services is one of the least trusted markets from a consumer perspective. At the same time, 71% of consumers have not changed their financial services providers in the last 5 years, a strong barometer how complex the system is for people to operate.

“As Commissioner, I want to help bridge the gap between citizens and the financial institutions that serve them and ensure that financial services deliver for citizens…They say that money makes the world go around, and indeed those who don’t have access to money know how difficult it is.” According to McGuiness, the European Union can take four steps to helping consumers find trust in financial institutions, and create a fully functional single-market. These solutions include: improving and expanding financial literacy to include more vulnerable groups in educational programs. Regulating and ensuring that tech innovations to digitalise financial services are safe and accessible to all citizens. Reforming the financial system so that it serves individuals. Finally, developing frameworks for sustainable investment and climate neutrality such as the European Green Deal that can help change the future for younger generations. “We are continuing to develop an EU taxonomy for green economic activities to provide a common definition of sustainable activities, giving clarity to companies and investors about what they need to do in concrete terms to meet the EU’s green targets… This is no small task. But I am determined to make progress.”

Governments must help educate individuals and make them more financially literate. “Individuals who are financially literate are able to make more effective decisions about their personal finances, such as buying a house, saving for retirement and investing in markets. They are also better prepared for retirement, less inclined to borrow excessively and better able to avoid fraud or scams,” said McGuiness. Unfortunately, financial literacy levels in the EU are low, especially amongst low-income groups and women. McGuiness suggests a potential fix is working with the Organisation for Economic Co-operation and Development (OECD) to develop “joint financial competence frameworks” that develop a common understanding of what financial literacy means. From then on, national or regional governments can use that framework to develop educational strategies and campaigns within their communities.

However, “Financial literacy is not a silver bullet.” Having access to a bank account and being able to pay and use cash are particularly important for vulnerable groups in society, and governments must ensure that tech innovations that make banking and investing more comfortable do not leave groups of people behind. McGuiness revealed that the Commission along with the European Central Bank (ECB) is monitoring developments, is ensuring that everyone legally resident in the EU (including people with no address and asylum seekers) has the right to a bank account and is protecting the availability of cash. McGuiness also acknowledged that it is important to ensure safe, fast and reliable electronic payment services to European citizens and business. “Online transactions in the EU now represent about 1/3rd of overall transaction volumes, compared with 1/5th at the beginning of last year… We need to keep up with technology and put the right regulation in place to make sure people can benefit from the latest innovations – safely.”

Commissioner McGuiness concluded the lecture by stressing the potentially enormous role women can play in the future of financial services. “If the future is digital, then we need more women to get involved in shaping that future.” In the most recent ECB public consultation on the digital euro, only 11% of the over 8,000 respondents were women, while a survey by the Canadian digital investment platform Wealthsimple revealed that women overall invest 40% less money than men. McGuiness believes that this discrepancy “represents a real loss because the economy needs more investment. By not investing, women are losing out financially. Investing even small amounts of money is a good way to plan ahead and improve financial well-being.”

Watch a full recording of the event and following Q+A is available on the FBF YouTube channel. You can also access a full transcript of Commissioner McGuiness’s keynote speech on the European Commission website.

FBF Annual Lecture & Women in Finance series 'Making finance work for citizens'

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