Financial Services

Overview

Financial services programs work with regulators, financial institutions, and supporting NGOs and CBOs, to design and deliver financial services and education that respond to the savings, borrowing, and risk mitigation needs of young clients. Inclusive finance can play a critical role in enabling youth to invest in employment or educational opportunities, but is often limited by legal hurdles, lack of collateral, and lack of business experience and financial know-how.

Where are we now?

The youth-inclusive financial services (YFS) sector is working to engage policymakers, donors, financial service providers, NGOs, and youth at the macro and micro levels to experiment with new or adapted financial services that meet the needs of youth, while creating business opportunities for the private sector. At the macro level, efforts are focusing on regulators and policymakers to advocate for youth-friendly banking policies that would allow youth more independent access to a range of financial services, and to develop appropriate youth-inclusive client protection principles. At the micro level, financial institutions are researching the youth market to better understand their financial behaviors and needs; and to pilot financial products and services that promise to meet a young person’s specific financial goals as well as present a future business opportunity for financial service providers (FSPs).

Trends and Best Practices

  • Regulatory constraints to serving younger clients require an FSP to think creatively, i.e. finding alternatives to formal identification and minimum age requirements.
  • To appropriately serve young people, practitioners must first use youth-friendly market research techniques to better understand their financial habits and preferences.
  • Youth financial service needs grow and change as they do. Adolescents only need access to savings services, whereas young adults can use a full range of services. Their needs also differ based on geography, education, marital status and employment. FSPs should consider which market segment they can best serve given their experience and assessment of institutional partnerships.
  • Youth financial products may only differ slightly from those offered to adults, including low or no minimum balance savings accounts and alternative guarantees for credit.
  • The major product differences lie in marketing (i.e. attractive color schemes/special logos and tailored messages for young people) and delivery mechanisms (i.e. thinking outside the branch) and in the accompanying non-financial services (i.e. financial education and entrepreneurship) critical for building a young person’s capacity to save, manage their money, and generate income.
  • YFS are often best delivered in partnership, enabling the FSP to focus on the financial product while partner NGOs or government agencies address the financial education and entrepreneurship needs of young people.

 

Financial Services: Blogs

Designing to Engage Youth for Financial Health

Originally published by Center for Financial Services Innovation.

This story is part of CFSI’s online series Designing for Financial HealthLearn more about the series here.

Uneven Landscape of Financial Education

Originally published by the MasterCard Center for Inclusive Growth

Lack of financial literacy remains a huge barrier to financial inclusion, especially for women and youth. As more evidence points to the correlation between financial literacy and financial inclusion, several initiatives are using media and technology to reach underserved communities

Mixed Livelihoods: A Reality for Youth in Africa

Originally published by The Young Africa Works Summit

Africa has 600 million young people under the age of 25. These youth have aspirations and dreams of who they want to be, how they will contribute to their communities and the work they would like to do.

Knowledge Management Platform to Increase the Scale & Sustainability of Youth Economic Opportunity Programs: 2015 Results & 2016 Summit Sponsorship Information

Meeting the needs of the global youth population requires evidence-based, scalable, and sustainable initiatives. In response, Making Cents International offers a demand-driven Knowledge Management (KM) platform that builds the capacity of youth development stakeholders to design, implement, and evaluate high-impact youth economic opportunity programs, policies, and partnerships. The platform components are:

Resource Type: 
Report

A Framework to Analyze the Business Case for Youth Savings

Not many financial institutions in developing countries target youth specifically, and for those that do, the youth market usually represents a small part of their overall operations. Other authors have argued the social value of extending savings services to youth, but the business case is less certain. As financial institutions have entered the youth market, the question has been whether they can offer youth savings products sustainably. In other words, is there a business case for offering youth savings products?

Resource Type: 
Report