Promoting Financial Literacy and Public Awareness in Japan · Promoting Financial Literacy and...

Promoting Financial Literacy and Public Awareness in Japan

June 20, 2013IADI EXCO International Conference

“Financial Inclusion: Challenges and Issues for the Deposit Insurer”

Hiroyuki ObataDeputy Governor

Deposit Insurance Corporation of Japan

1. Introduction: “Financial Inclusion” in a Japanese Context

2. Promoting Financial Literacy

3. Promoting Public Awareness onDeposit Insurance: DICJ’ s Efforts

4. Conclusions

Outline

2

1. Introduction“Financial Inclusion” in a Japanese Context

3

Broad access to financial services in Japan

Easy access to deposits at bank branches, ATMs, convenience stores, or on the Internet.

Opening a bank account at teller window or by post

Generally, No charge for opening and holding a deposit account No need to maintain a minimum deposit balance

4

Broad access to financial services in Japan

96% of all adults in Japan have a bank account at a formal financial institution because…

(Source: The World Bank, “Measuring Financial Inclusion,” April 2012)

Very high level of saving consciousness Bank settlement is the common way to pay. Financial institutions conduct active campaigns on:

・ Opening new bank accounts (citing safety, convenience,and relative profitability of bank deposits).

・ Internet banking, mobile banking

5

“Financial Inclusion” in a Japanese Context

In sum, “financial inclusion” issues are not so relevant in Japan, given the broad access to various financial services.

On the other hand, the broad and easy access to financial services could make it easier for unsophisticated consumers to purchase unsuitable products or to be caught up in financial scams. This makes promoting financial literacy more important.

6

2. Promoting Financial Literacy

7

Aging population Increasing high-risk financial products Shift from blanket guarantee to limited deposit protection

since 2002 (Up to ¥10 million)Every consumer must know and manage the risks

of the financial products he/she owns.

Who is engaged in promoting financial literacy?

Safety-net Players FSA BOJ DICJ JBA&

Industry Organizations

Why is it important to promote financial literacy?

8

Activities for promoting financial literacy: FSA, JBA

Financial Services Agency (FSA)

Japanese Bankers Association(JBA)

・ Alerts for consumer/ investor protection・ Lectures・ Distribution of brochures for adults

and students, textbooks for children・ Providing interactive games on website・Tie-ins with other governmental authorities,

other relevant organizations, NPOs

9

Activities for promoting financial literacy: BOJ The Central Council for Financial Services Information

(secretariat is located within the Bank of Japan)

1950sLectures to promote savings for capital accumulation1960-70sRegular TV programs for children1981-Internet portal site of the Central Council (1999)“Guide to Consumer Education for Financial Literacy”

(2002)Three main objectives since FY19831) To provide financial and economic information2) To encourage the drafting of life plans3) To disseminate financial education 10

Activities for promoting financial literacy: DICJ Tie-in PR activities with the government and other relevant

organizations Reciprocal website links with other relevant organizations Lectures: about 20 lectures per yearWho? Governor, deputy governors, and staff level, including directors

for public relations and information managementWhere? Universities, private companies, governmental institutions, etc.

Financial literacy is one of the most fundamental issues for promoting public awareness on deposit insurance.

Public awareness activities would not be effective without fostering financial literacy.

11

3. Promoting Public Awareness on Deposit Insurance: DICJ’s Efforts

12

As a safety-net player …

Core Principle 12 on public awareness states:

“In order for the deposit insurance system to be effective, it is essential that the public be informed on an ongoing basis about the benefits and limitations of the deposit insurance system.”

Why do we need to promote public awareness?

13

14

Public Awareness Tools by DICJ: Website

Basic information on DIS

Insured FIs

Quiz

15

Public Awareness Tools by DICJ: Smartphone-friendly website, SNS

Twitter Facebook

Brochures, Cartoons, Posters Brochures Cartoons Posters

The number of copies has been steadilyincreasing since 2006, in response to growing demands.

The number of copies for 2013:“Deposit Insurance Guidebook”: 925,000 copies“DIS in Cartoons”: 680,000 copies

Lectures at universities, etc.

16

Other PR Activities

Questions in Survey on Japan’s Deposit Insurance System (FY2011)

Q1: Are you familiar with the deposit insurance system? If yes, do you know what it consists of?Q2: (for those who answered yes in Q1) How did you find out about the deposit insurance system?Q3: (for those who answered yes in Q1）Which topics do you know about?• The type of deposits that are fully protected• Coverage• Depositor’s name-based aggregation• Insured financial institutions• Non-insured financial institutions• Non-eligible deposits• Non-insured depositsQ4：How much do you have in deposits? (Over the maximum coverage limit of 10 million yen or not)Q5: Do you know the rate of the first reimbursement for the failed institution (Incubator Bank of Japan)?Q6: Did the the resolution of the failed institution (Incubator Bank of Japan) have any impact on your asset management?Q7: Are you familiar with the Deposit Insurance Corporation of Japan? If yes, how much do you know?Q8: (for those who answered yes in Q7) How did you find out about it?Q9: Have you seen the DICJ’s website?Q10: Do you think that the DICJ should enhance its PR activities?Q11: (for those who answered yes in Q10) How can the DICJ enhance its PR activities?

17

1-1 Public Awareness of Deposit Insurance System (Q1)

1-2 Channel of Awareness (Question for those who indicated familiarity in the FY2011 survey) (Q2)

Summary of Survey Results: Public Awareness of Deposit Insurance System FY2011

18

I know its contents 24.8 32.5 28.6 28.1 46.1 31.0 51.1I have only heard of it 53.9 51.5 54.3 48.0 41.5 47.9 41.0

FY2010FY2007 FY2008 FY2009Public Awareness of Deposit Insurance System

I know it 78.7 84.1 82.9 78.9

21.1

76.1

I know nothing about it 21.3 15.9 17.0 23.9

Depositorswho have over10 million Yen

deposits

87.6

12.4

92.1

7.9

FY2011 Depositorswho have over10 million Yen

deposits

Male Female 20s 30s 40s 50s 60s～

Over 10million

YenOther

Explanation of Financial Institutions 10.8 10.3 11.2 13.4 9.9 7.4 9.6 12.3 20.4 9.5

Flyers and Posters of Financial Institutions 13.3 13.2 13.4 12.3 11.9 10.8 12.2 15.3 18.1 12.7

Newspapers, Magazines 43.3 48.2 38.4 18.2 27 34.1 44.3 57.3 54.2 41.9

TV, Radio 63.9 63.1 64.7 45 57.3 66.5 67.3 67.8 59 64.5

Websites (except DICJ HP) 9.8 12.9 6.6 16.1 13.9 10.7 9.2 6.9 11.3 9.6

Family Members, Friends 10.1 5.5 14.7 17.3 11.9 7.5 8.5 9.5 10.3 10

Gender Age Amount of Deposits

How did you know Deposit Insurance System? Average

2-1 Public Awareness of the DICJ (Q7)

Summary of Survey Results: Public Awareness of the DICJ FY2011

I know it very well. 3.3 4.1 8.2 10.0 21.6 7.7 15.9I have heard of the name. 31.2 25.2 48.7 47.2 58.2 47.6 61.8

79.8

I know nothing about it. 65.5 70.7 43.1 42.8 44.7

Depositors

who have over

\10 million

deposits

FY2010Depositors

who have over

\10 million

deposits

I know it. 34.5 29.3 56.9 57.2 55.3 77.7

20.2 22.3

Public Awareness of the DICJ FY2007 FY2008 FY2009 FY2011

2-2 Channel of Awareness (Question for those who indicated familiarity in the FY2011 survey) (Q8)

19

Male Female 20s 30s 40s 50s 60s～

Over 10million

YenOther

Explanation of Financial Institutions 10.5 10.1 11 17 12.4 7.3 8.9 10.8 17.4 9.4

Flyers and Posters of Financial Institutions 14.7 14 15.5 17.3 14.7 11.4 13.8 15.7 18.9 14

Newspapers, Magazines 48.8 53.3 43.6 21.2 29.8 38.4 49.9 60.2 56.2 47.6

TV, Radio 59.1 59 59.2 35.6 50.2 60.8 60.4 63.5 55.3 59.7

Websites (except DICJ HP) 9.8 12.2 7.1 16.6 14.7 11.8 8.9 7.5 12.4 9.4

Lectures, Seminars, Events 2.2 2.5 1.9 7.5 3.3 2.2 1.3 1.6 2.6 2.2

Family Members, Friends 6.6 3.2 10.6 13.3 6.1 4.2 5.2 7.1 5.9 6.7

How did you know Deposit Insurance System? Average

Amount of DepositsGender Age

Summary of Survey Results: PR Activitiesof the DICJ FY2011

3. PR Activities of the DICJ (Q10)

Male Female 20s 30s 40s 50s 60s～Over

\10 millionOther

FY2010 47.8 43.2 52 46 46.5 46.3 49.3 49.1 57.2 46.6FY2011 46.4 41.5 51 41.8 44.2 45.7 48.6 48.5 53.8 45.6FY2010 42.8 44.9 40.8 43 41.8 43.2 41.8 43.6 37 43.5FY2011 44.5 47 42.2 48.5 45 43.6 42.7 44 39.5 45FY2010 9.4 11.9 7.1 11 11.7 10.5 8.9 7.4 5.8 9.9FY2011 9.1 11.5 6.8 9.7 10.8 10.6 8.7 7.5 6.8 9.3

Age Amount of Deposit

What do you think about PRactivities of the DICJ?

Further enhancement

Maintenance ofthe status quo

Further reduction

Question Answer FY Average

Gender

4. How can the DICJ enhance its PR activities? (Q11)

Male Female 20s 30s 40s 50s 60s～Over

\10 millionOther

Distribute more flyers and brochures 43.3 44.2 42.6 49.2 45 39.6 44.8 41.6 46.6 42.8

Make the brochures more easily understood 32.6 31.8 33.2 30.2 26.5 28.1 32.8 37.6 37.4 32

Newspapers, TV, Websites 80.4 80.2 80.5 78.2 78.4 81.7 80.8 81.1 78 80.7

Make the DICJ HP more easily understood 23.7 26.5 21.7 25.3 24.7 22.6 24.5 23 28.3 23.1

Increase lectures and seminars 8.2 9.2 7.5 10.2 8.5 7.9 7.9 7.8 12.1 7.7

Other 1.4 1.3 1.4 1 1.1 1.5 1.3 1.6 1.4 1.4

Specific enhancement measures Average

Gender Age Amount of Deposit

20

1) Continuous PR activities in peace time

2) Proactive PR initiatives or campaigns in the period of transition from full coverage to limited coverage

3) Massive media coverage during the banking crisis (in late 1990s to early 2000s) and on the first resolution case under the limited coverage (in 2010)・ Good communication with media・ Well-timed press conferences

The best strategy to ensure a correctunderstanding of DISNo bank run

Why and how does the DICJ maintain the high level of awareness of DIS/DICJ?

21

Number of inquiries to the DICJ(April 2000 to March 2012)

mar/024,288

apr/021,662

mar/051,919

apr/05748

sep/106,963

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,00000/4 8 12

01/4 8 12

02/4 8 12

03/4 8 12

04/4 8 12

05/4 8 12

06/4 8 12

07/4 8 12

08/4 8 12

09/4 8 12

10/4 8 12

11/4 8 12

Full implementation  of limited  coverage

Startingthe transition to limited coverage 

from full coverage 

Lehman collapse

The failure of the Incubator Bank of Japan,

Limited

22

Challenge 1: Generation and Gender Gap

0

10

20

30

40

50

60

70

80

90

100

20s 30s 40s 50s 60s- 20s 30s 40s 50s 60s-

I know how the Deposit Insurace System worksI heve only heard of the Deposit Insurance System

Male Female

Our Target

23

Challenge 2: Quality of Public Awareness

0

10

20

30

40

50

60

The Type ofDeposits to beFully Protected

Coverage Insured FinancialInstitutions

Non‐InsuredFinancial

Institutions

Non‐EligibleDeposits

Non‐InsuredDeposits

FY2007 FY2008 FY2009

FY2010 FY2011

Percentage of people who know what the DIS consists of

24

４. Conclusions1) Financial LiteracyDICJ will continue to contribute to promoting financial literacy with other safety-net players through various channels.

2) Public Awareness on DIS: Deposit insurers should have effective tools to improve public understanding, especially in

peace time. adopt a new method of public awareness applicable to younger

generations and a new social landscape. work with other safely-net players and banking sectors. deliver accurate information in an ongoing and timely manner.

25 25

Thank you for your attention

26

Deposit Insurance Corporation of Japan