H.M. Queen Máxima of the Netherlands: Building a Financially Inclusive World

Jennifer Tescher:
Welcome to Emerge Everywhere. I’m Jennifer Tescher, journalist turned financial health champion. As founder and CEO of the Financial Health Network, I’ve spent my career connecting forward-thinking leaders to the growing finhealth movement, now I’m sharing these conversations with you. Discover how these visionaries are challenging the status quo and improving financial health for their customers, employees, and communities.

My guest today, Her Majesty Queen Maxima of the Netherlands is passionate about financial inclusion and financial health. Having grown up in Argentina, she saw the impact of hyperinflation on families and knew then that she wanted to do something about it. As the United Nations Secretary General’s Special Advocate for Inclusive Finance for Development, Her Majesty is a global voice on advancing access to affordable and safe financial services, and she has made real inroads for financial health across the world through close collaboration with partners from both the public and private sectors. Your Majesty, welcome to Emerge Everywhere.

Her Majesty:
Thank you, thank you very much for having me.

Jennifer Tescher:
So as Princess and then as Queen of the Netherlands, you could have chosen numerous issues to champion, but you choose financial inclusion, tell us why.

Her Majesty:
Well, to begin with, at the age of 14 I decided I was going to study economics because in that time in Argentina things were not very well macroeconomically. I lived through hyperinflation and I could see how basically normal people were actually being… Yeah, their economic lives were destroyed by it. And so I had this idea that one day I’m going to become minister of finance and improve people’s lives. And of course, by the time I actually got my degree I ended up being in banking, and I said, “Well, this is something I still want to do, is help through investments, help through the household itself.” So this whole thing about micro really interested me.

So I started doing this whole microfinance, but of course, we’ve got a lot more than just microfinance, right? And that’s how I ended up in the financial inclusion because also I do think that the impact of it is actually enormous. We know already it’s not only pro-growth, so countries in itself will have a higher GDP once you have a fully financially included population. But we also know it’s pro-poor, which means that it reduces inequality, and that’s something that is always really interesting, and very, very much. This whole issue of actually giving people the same type of possibilities economically for their lives is something that I’m really passionate about, and that really, really annoys me when the possibilities are not there for people to grasp. And even I’ll think about also the very big issues that we have, right? So food security, if a farmer doesn’t have access to savings or access to insurance or access to credit, he cannot really increase the yields and actually produce all the food that we all need to this increase in population.

Think about energy or climate change. In Africa, we’re seeing projects of people, now with a mobile phone, they can actually buy every day with the same price, and actually had those little jars of carnosine, but with that same money they’re now paying off a solar panel that is giving electricity for the whole family. And after three months, that piece of solar panel is the biggest asset for that family. So climate change, I mean, we saw after the typhoon in the Philippines what these types of savings and insurance actually did for people, they could actually get out of this humongous shock much better. So these issues of actually decreasing inequality, smoothing consumption, and giving people opportunities to make the best of their lives is something that really interests me, that’s the reason why.

Jennifer Tescher:
Well, your passion comes through so clearly. And you might not have become the finance minister, but in 2009 you were named the UN Secretary General’s Special Advocate for Inclusive Finance for Development. Tell our listeners, what does this mean? What does that role entail?

Her Majesty:
Basically what I do is I try to advocate for financial inclusion. 10 years ago, I would say 12 years ago, nobody knew the word financial inclusion, I think by now everybody knows what it is. And actually even after COVID that was actually very, very interesting, is if there was any doubt that financial inclusion was important, COVID took that away, because a lot of countries realized that if they actually had to give some kind of subsidy grant or help small businesses or women during this whole pandemic, was they needed to have financial inclusion.

So the whole issue that we need financial inclusion is not really my job anymore, but what I do is twofold. First of all, I go to countries and I try, together with all my partners, because I don’t do this alone, we try to make it happen. And what do I mean by making it happen? We speak from a telecom regulatory, we speak to the central bank, we speak to the minister of finance, the president, and the whole issue is to get the job done on a regulatory perspective, but we also speak to the private sector there. And say, how can you actually improve the quality of your products, how you can actually work together, incorporate, for example, a band with a mobile network, and in that way actually get the job done.

So I’m extremely proud. We already have more than 50 different national strategies, financial inclusion national strategies around the world. And we have seen more than 1.2 billion people that had had more access to financial services from 2011 to 2017, and I know it’s going to have been more because the figures are not going to be coming by the end of this year. But we still have 1.7 billion to go, so the work is still ongoing. I have to say that so much has been done, and I’m sure that after COVID we’re going to see huge increases as well.

The other thing that I also do is I also talk about the big issues around financial inclusion globally. So for example, the whole issue of data. When I started this work, I didn’t know how many people we needed to give financial inclusion to. I mean, was it 500 million? Was it three billion? So getting that data was a huge public good piece that I needed. And why is this important? Because with that, I can go to a country and say, “Yeah, listen, only 13% of the population is financially included, so there’s a work that you need to do.” “Oh my God, 13%. Oh, wow.” So many have started to do that work. If I don’t have that data, I can’t really convince really people that they have to do this work.

The other issues are all the standard-setting bodies. Before that they all looked at the financial stability of a financial sector, but the financial stability of a sector is very good, but it only includes 30% of the population. What does it work for? Right.

And, so all these discussions were actually extremely good in the beginning, why should we care about that? But then they realized that they did actually care and it was important for them. So now financial inclusion is a very intrinsic part of their work as well. And defining issues, the outcomes of financial health, what is that? What are the best policies? And if we’re talking about now the digital environment that is really helping us to do most of the financial inclusion right now.

Okay, what are the dangers? What are the risks? What are the opportunities? Define them. Develop the knowledge and try to disseminate that knowledge. I mean, for example, Central Bank digital currencies, is it good or is it bad for financial inclusion? All of these big discussions that I don’t think that any one governor of a central bank should be making by its own. We have to develop this body of knowledge globally, and that’s what I’m also trying to do. Got it.

Jennifer Tescher:
Well, I’m going to have you back to have a whole other conversation about Central Bank digital currency, because I’m also still trying to figure out whether I think it’s good or bad for inclusion, but for another day.

You have started talking about financial health recently. And in fact, you created a financial health working group as part of the UNSGSA and the mission of the group has been to build a new consensus and to drive action around financial health. So why the shift? Why the shift from financial inclusion to financial health?

Her Majesty:
Well, because financial health is always what I wanted, I needed to have the rails done first. So if I kind of get to people like today I was speaking to the Minister of Foreign Affairs of South Africa and she was saying to me, what we realized during the COVID is that we put so much money into the system to help businesses, et cetera, but we never, never reached the informal women.

So therefore it’s like they didn’t exist. So they actually faced of course the biggest brunt of the whole pandemic. So this whole issue of financial health is the outcome. I mean, financial inclusion is a means to an end, it is not an ending itself. I always wanted to actually go to the outcome, which is the development, which is that people have really good financial lives. And what does it mean? Because everybody had a different definition.

So what I thought was really important is to actually get a group of all the people already doing any work on financial health to actually come up with a definition. It was quite a tough job to do. And so it’s basically based on four issues. First of all, you have to have enough money to come up, or at least make enough to cover your day-to-day finances.

A second issue is you have to have resilience, or if there is an external shock that actually happens, you have to have savings or insurance that would actually help you through that moment you’re not going to have any income and even make you bounce back better. It has to be able to pursue or help you to pursue and achieve long-term goals. I mean, let’s talk about pension. Let’s talk about being able to pay for college for your kids.

The fourth one is actually important because actually, you have to feel secure and in control of your finances. And this is a very subjective issue, but I think it’s a very important one because the stress that actually financial unhealthy lives, basically the amount of stress that people through over-indebtedness or not being secure about being able to pay the college tuition of a child is just so big that I think is extremely important that we actually measure that as well.

And what is a very important issue is that this is not an issue only in developing countries. It’s a huge issue in developed countries, even in my country, the Netherlands, we have 70 million inhabitants and we have 650,000 households that are over-indebted that have problematic debts. That’s a huge number. These are people that are really extremely stressed, and we know what this financial stress does to people.

We have some research that says it can even curtail 13 points on your IQ, but that actually gives you a little bit of… It just paralyzes people. So that’s why I think the subjective and the mental health part needs to be a part of it as well. And it has a huge effect there for new productivity. So therefore new work, and on physical health.

And I have to say that a lot of companies have actually noticed that by actually addressing this issue, the productivity level of the employees have actually increased tremendously and the loyalty to of course the company.

I’m happy that we had this working loop because we defined a definition. We also came out with a couple of indicators, which we have been collecting, and also a set of what should the public sector do? And also what should the private sector do?

Jennifer Tescher:
Got it? So we were really honored to be able to participate in the working groups. And so there were, correct me if I’m wrong, there were three workstreams, right? A public sector workstream, a private sector workstream, and then a workstream around measurement. And you just described what each of those groups were doing.

You’ve talked a lot about the need for the government and the private sector to work together in order to make inclusion and now financial health a real possibility. And you’ve used your platform to convene CEOs, including the CEO Partnership for Economic Inclusion, and to really call on CEOs to get them involved. In fact, I think the way you and I first met several years ago was through Dan Schulman when you held a small meeting at PayPal on the west coast of the United States. Talk a little bit about how companies and business leaders can be partnering with governments and NGOs to really move the needle here. What’s the role that they should be playing?

Her Majesty:
Well. I think that the private sector – two roles. The private sector can do – First of all, they have their own employees and customers, and certainly, the companies are on the financial sector, they have also even more important role to play it’s not only the employees but the customers with their products, they can actually move the needle on having a family, being financially healthy or not.

So I think that we would like to differentiate, one is your own employees and the other one from your own customers. When it’s your own employees, you’ve mentioned Dan Schulman and their work in PayPal, but also MasterCard did a wonderful job. First of all, is survey. What is the financial stress of my employees? So what Dan actually tried to use as disposable net income, and also tried to see who was actually having financial stress. And we have not yet decided what type of KPI is actually private sector should be doing, but we’re trying to get that information together, see what the best practices are. But I think you have to start to first start with measuring. Measuring if your people actually have debts or not, and then you have to start the conversation.

And definitely, the HR department is a wonderful place to start and see what are the policies that you as an employer can do to actually make face to whatever it is. Is it because they already are indebted? Could they actually have a coach that can actually help them rebalance or rebudget their lives, et cetera.

On the side of the customer side is a little bit more complicated because I think that’s where policymakers and the public and the private sector should actually be working a lot more together. Because then there is a cross between what regulators actually have mind when they approve of certain products by a certain financial sector, and what I would love to have is in the future, but there is a conversation constantly about does this project really need to better finance your lives. And if, if for example, the public sector said, “listen, I would like the public to increase their savings by a good 20%” is to sit together with private sector. Okay, how do we create default options that leads to bigger saving behavior? If we talk about certain insurance, the same story; I think there’s a lot to be done to be working together in that respect.

Jennifer Tescher:
Yeah. I couldn’t agree more about the possibility of regulators, really supervising institutions on the basis of what’s the outcome of the product and service that you’re offering.

You know, the other thing we have started to do work in, though, is to think about what other sectors have a role to play in the financial health of their customers. So, for one would be healthcare, their patients. And you spoke about the significant intersection between financial, physical and mental health; and so we’re now doing some work in the healthcare sector, not just about their employees, but about their patients. I think the other arena where we’ve some work would be in higher ed with their students, another place. So I have a little bit of a dream that someday most, maybe not all, but most sectors will see their way towards understanding the sort of role and responsibility that they have around the broader financial health of the whole ecosystem.

Her Majesty:
Well, I will tell you a story. So I’m doing this work here in the Netherlands as well. So one of the things that about five years ago, I started this debt lab, which is now trying to help people reduce the over-indebtedness in the Netherlands, and helping them to expand around all the municipalities. Anyway, of course, the Dutch system is not the same as a US system; but one of the things that we realized is that we have to look at the early warnings when people start sort of developing the vicious circle of financial and healthy lives. And the first early warning is when people stop paying the premium for the health insurance here in the Netherlands. Because they know they really become sick, the doctor would always pick up the phone. It doesn’t matter if they’re having a debt with the insurance company, but they will not stop paying the electricity bill because the next day they will cut it. Right? But they will not cut your health system.

And that’s why we also need the health insurance companies with us to start us giving the early warning. So the moment a family starts sort of delaying their payments, we should be immediately there and ask them, “What’s going wrong? Can we help you? How your finances are doing?” maybe then we realize that the wife is sick, so she hasn’t been able, so there’s one income less, or whatever it is. But early warnings are extremely important. And the reason why all these health insurance companies were extremely interested in participating is because they realize that the families and their physical health start going down with stress because they start getting less healthy lives and all that that entails.

So it is extremely important that we look just beyond the financial service providers. To be honest with you here in the Netherlands, when we get to these families and they have big debts, they have 14 different creditors in which only one of is financial service institution. So, definitely, we have to look much broader, but let’s start by focusing because the work is so big right now. So, and also, we know because the financial sector providers are just so important and suddenly they would actually increase their financial health or families like increasing your insurance, increasing your savings, managing your cash, helping with a nav to actually come up with early warnings. Be careful. If you’re paying too much, still have your fixed costs and so there’s so much that we could be doing on that front. I hope they’re to have a lot of these types of companies engaged in the future.

Jennifer Tescher:
Yeah. And I couldn’t agree more. Not only do they have a special responsibility, but also in a way as the plumbing, they’re a little bit the glue amongst all of these other sectors. They’re the one sector that works with all the other sectors. So ultimately, I think that they will be an interesting pathway into those other sectors.

Let’s talk about women for a second. I know it’s a subject you’re also quite passionate about. You’ve been a champion of the rights and wellbeing of women around the world. In the United States, we see a distinct disparity. So our own Pulse Financial Health Trends Report found that only 26% of women are considered financially healthy compared to 43% of men. This is a stark reality for us, but the fact is many countries around the world have an even wider gender gap. So what are you seeing that really works to improve the financial health outcomes for women?

Her Majesty:
Well, to start with, I mean, I always say you start with education.

Jennifer Tescher:
Yeah.

Her Majesty:
So there’s a very big element that financial literacy, we see that it’s lower among women in general. It’s different for countries, it’s a very big generalization, but this is an issue that we need to focus a lot more on. The financial literacy of women and girls needs to be strengthened overall, also for men, but definitely for women. Number two, it is of course part the economic dependency of women. So, not a lot of women are economically independent, so, therefore, they’re going to have much stricter financial lives.

And third, they’re less well served by the financial sector sometimes. They bond differently. They ask for credits differently. I mean, we realized, for example, in the Netherlands that only one-third of the SME credits actually go to women. So there’s a huge pent-up demand. A lot of women do not get the credit they need because they see business in a different light than men do. So having sort of more women vision, I wouldn’t say friendly, but where the perspective of women is extremely important. But I think those three issues are the biggest issues. It’s not only financial inclusion that will do the job.

Jennifer Tescher:
Yeah, I agree. So there is no shortage of challenges facing society today. We’ve talked a lot about COVID, we’ve even mentioned climate change, there’s political and economic uncertainty around the world and more.

Given the moment that we’re living in now, why should policymakers, business leaders, and innovators be putting financial health at the top of their agendas? Make your best argument, Your Majesty.

Her Majesty:
Well, because financial inclusion is one of the infrastructure pieces that you need to achieve or address all of these challenges. If we’re speaking about inequality, I already explained. If we’re speaking about climate change, of course, we need to do humongous investments for adaptation and education, but also what about the households? How are they going to be protected against shocks in climate change? Again, when the typhoon comes, I mean, the biggest issue is going to be the human cost. How do we help these people to actually have less economic cost? And that will be through financial inclusion.

And that we know already that if you have less inequality and you have better financial healthy lives, you have more stability in general, not only macroeconomically but also socially. And that’s, I think something that’s a reason why I’m doing this work.

Jennifer Tescher:
Are you hopeful in this moment, given what’s going on around the world, do you feel like it’s been a wake-up call or does it just feel like the problem is bigger than ever?

Her Majesty:
Well, I think that certainly, the pandemic has left us, all the little ruptures we had in society just made it bigger. So I think there is more urgency now to do the work that we need to do. And what makes me hopeful is I do hear a lot of phone calls saying, “oh, you’ve been talking about this issue, now we really have to get it done”, and it’s not a complicated something. It’s not that complicated. We have to just get our act together and cooperate within the public sector and also the private sector.

So yes, I’m hopeful because I see a lot of people that are wanting to make change and because they realize that we have to get together and we have to make change.

Jennifer Tescher:
Your majesty, thank you so much for joining me on EMERGE Everywhere.

Her Majesty:
Thank you very much for having me.

Jennifer Tescher:
This has been EMERGE Everywhere. A Financial Health Network production. If you like the show, please help spread the financial health message by leaving a review. And if you have ideas for future guests or thoughts on the show, please click on the link in the show notes to connect with us. See you next time.