Innovations In Financial Literacy and Consumer Empowerment – A Malaysian

Experience

Nirmala Supramaniam

AKPK

2

Contents

• Introduction

• AKPK

• Challenges

• Innovation

• Conclusion

Contents

Private consumption

has strengthened

Increase in level of

household indebtedness

Household indebtedness

remains within prudent level

Household sector NPL

Despite prudent lending and borrowing, there are cases where consumers are unable to meet financial obligations

3

Background

4

Consumer Challenges

5

Financial Literacy

Establishment of AKPK

Credit Counselling and Debt Management Agency

(popularly known as AKPK) was set up by Central

Bank of Malaysia in April 2006 part of the

Framework for Consumer Protection in the Financial

Sector Master plan to provide credit counselling

and financial education as well as debt management

services to individuals

6

AKPK’s Objectives

7

• Provide an avenue for individual borrowers and

potential borrowers to seek advice and assistance in

managing their credit through financial education,

counselling and specific advice services

• Promote a sound and robust banking system by

facilitating debt repayment efforts and minimising

incidences of non-payment arising from bad debt

management

8

Debt

Management

Program

(DMP)

Financial

Counselling

Scope of Services

- One-to-one counseling & advice

- Assistance in analyzing financial situation & identifying options available

- A personalized programme

- Review fin. condition & tailor solutions

- Ongoing counseling and education

9

Description %

Poor financial planning 22.6

Failure/slowdown in Business 16.5

High medical expenses 15.1

Lost control on usage of credit cards 11.1

Lost job/retrenched 9.9

High cost of living 6.5

Others 6.0

Unexpected financial commitment 5.6

Not stated 4.8

Death and/loss of breadwinner 1.1

Failed investment 0.9

TOTAL 100

Financial Literacy

Financial Education Programme

- Public Briefings

- Infusions

- Online Learning Portal

21,376

2011

117,943

2012

231,175

243,661

1,936,994

2013

2014

93,419

2015 Jan - April

677,110 Financial Awareness

Programme

- Website

- Facebook,Twitter, E-

newsletter

- Press,TV,Radio

- Theatres

11

Financial Education Programmes

Personal Financial Management

- Why Everyone Needs Financial Planning - Borrowing Basics

- Power From Your Money - Living Your Life

- Financial Products and Services - Getting Out of Financial Trouble

- Building Your Wealth

- Planning for Uncertainties

POWER! Managing Debts Effectively

- Cash Flow Management - Managing Debts

- Borrowing Basics

- Wise Usage of Credit Card

- Buying A Car

- Buying a House

Delivery Method were

mainly classroom

facilitated methods –

trainings were on

request basis

12

Challenges

Issues Actions

Engaging

Consumers

• How to best engage consumers in

Financial Education

• What type of information is needed

• Delivery method

• Study consumers need

• Develop programmes to suit target

group

• Multiple channels of delivery

Huge Target How to reach more people quickly

and effectively

• Involve private, public sectors and

NGOs through collaborations

• Awareness of Financial Education

through media

• Train of trainers

Entrenched

attitude and

behavior

How to make people practise &

internalise what they have learnt?

• Form focus group to continue

monitoring

• Develop attitude changing

programs

Assessment How to measure achievement? • Pre and post studies

• Impact Studies

13

Engaging Consumers – Major Concerns

Students ( 18-25 years)

Adults ( 20-45)

Entering workforce, Starting

and Raising a Family

Lack of awareness

issues

Education Debt

Rising trend of young

adults getting into financial

difficulty as result of

lifestyle pressure & lack of

financial management

skills

• 7.9 mil (household <

RM4,000) under BR1M

• Malaysia’s household

debt increasing @

86.8% of GDP - driven

by property & motor

vehicle loans

• MDI - Bankruptcy Statistic (2012)

Those declared bankrupt are getting

younger

‒ Age 25 – 44 = 56.9%

‒ Age 45-54 = 29.1%

• AKPK DMP Statistic (May 2014)

‒ Age 20 - 30 = 17.1% (n=17,096)

‒ Age 30 - 40 = 39.8% (n=39,811)

‒ Age > 40 = 43.1% (n=43,048)

14

Retirees > 40

HSBC Survey (2012)

• 43% of respondents inadequately prepared

• 10% not prepared at all for retirement

• Biggest fears were financial hardship (68%)

and poor health (59%)

• Biggest obstacle to save

- Cost of living (50%)

- Buying house (48%)

- Children’s education (33%)

Retirement issues

• Malaysians expected to live 20 more years after

retirement

• May not provide sufficient retirement funds and

ability to sustain through retirement

• Retirement age increased to 60 - help to have

enough savings (not earning enough )

• 54.8% of 45-59 age group are self employed -

presumed without pension or EPF

Engaging Consumers – Major Concerns

Life

Stage

School Tertiary

Education

Entering

Workforce

Starting a

family

Raising a

family

Retirement

Exa

mp

le o

f L

ife

Eve

nts

• Opening an

account

• Getting a part-

time job

• Taking study

loan

• Acquiring

credit card

• Buying a car

• Pursue Hobby

• Providing

guarantee

• Planning for

marriage

• Honeymoon

• Buying a

house

• Getting baby

• Insurance

• Children’s

education

• Planning for

Retirement

• Family Holiday

• Change job

• Managing

retirement

fund

• Estate

planning

Common Elements: Essential financial skills and knowledge

Budgeting Saving

Spending Managing

debt

Investing Managing

risk

Rights &

Responsibilities

Products &

services

Unexpected Life Events includes losing job, untimely demise and receiving a windfall

18 – 25

years

20 -30

years

25 – 45

years 25- 45

years

> 40 years

Consumers Need

16

Topics

Cash Flow

Management

Borrowing

Basics

Managing

Debts

Managing

Risk

Investment

Retirement

E-Payment

Credit

Card

Buying Car

Buying

House

Huge Target – Delivery Mechanism

17

When?

Who & How?

> 10% < >>>>> 70% <<<<< >> 20% << Tertiary Education

18 - 25

Entering

Workforce

20 - 30

Starting & Raising

Family

25 – 45

Retirement

> 40

Delivery

Method

Facilitator Assisted

Learning (FAL)

• Briefing/talks (by

AKPK & outsource

speaker)

• Training of Trainers

(ToT)

• Booklet

FE embedded in HEI

learning curriculum

• As part of soft skills

modules

Facilitator Assisted Learning (FAL)

• Briefing/talks at workplace, seminars, road show, etc. (by AKPK &

outsource speaker)

• Training of Trainers (ToT)

Self-Directed Learning (SDL)

• Media – Newspaper, Magazine, TV & Radio, Webinar, Video clip promo,

Social media (Facebook, Twiter) & YouTube

• Website – OLP (E-learning & Mobile Apps)

• Publications – Books, Pamphlets

Collaboration with stakeholders

• Collaborate with industry players on specialised modules

• Develop product to use by third party to deliver and assess the outcome

“Help to Cope Approach” (For customer who wants to learn certain

subject urgently)

• Dedicated FED specialists within Call Center Unit to provide real-time

consultation or coaching on specific topic

18

Entrenched Attitude and Behavior –

Focus Group

Identify a group of 5 to 10 members

Financial Assessment (Pre)

Financial Education

Monitoring over a period of 3 – 6 months

Financial Assessment (Post)

OBJECTIVE : To assess the

change in financial behavior

of the selected focus group in

managing their cash flow and

increased savings

19

Case Study – Amanah Ikthiar Malaysia

- Provide Financial

Education for the

AIM members and

students,

monitoring the

progress of

behavioral change

AKPK

educated 25

members of

AIM on

Financial

Education

AKPK

educated 86

students of

Taylor’s

University

The students

used the

guidance and

guided the

AIM members

Members

learned on

improving

their

saving

and

increased

their

income

Students –

learned

hardship and

the value of

money- hands

on experience

20

Case Study – Tamil Foundation Tamil Foundation

provides a 10

module to assist

parents on assisting

their children’s

development

AKPK’s Financial

Education Module was

one of the 10 modules for

the parents

A group of 10 parents

were taken in as focus

group and their cash flow

were monitored over a

period of three months

Parents

guided

their

children

The children’s academic

results improved

Parents were able to

concentrate more on their

children as financial issues

were better managed

• Focus groups

– specific target group

– behaviour change

• Online surveys

– Pre and post questionnaire

• Supervisory visits

– Effectiveness of module and

trainers

• General survey

• AKPK’s clientele

21

Assessment

Conclusions

2017

2016

Implementation of Life Events Module

Focus Group Studies

Mobile Application Learning

Increase of online learning

methods

Financial Literacy –

Household Name

Certification of module

and trainers

E-Learning via mobile

applications

Focus group – behavior

change via mobile

applications

Authority

of Financial

Wellness

2015

AKPK aspires to make

prudent financial a way of

life for all Malaysians

“Make Prudent

Financial Management

A Way of Life”

THANK YOU

www.akpk.org.my

POWER! AKPK Info line:

1 800 88 2575