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

Are We Offering Youth Bicycles or Unicycles?

A unicycle is a very simple machine that lack breaks, gears, or chains. It looks fun to ride, but it actually takes great skill to keep balanced because it does almost nothing on its own.

When Seeking to Financially Include Youth, Parents Matter

Originally posted by New America on March 1, 2015.

Much ink has been spilled about the saving habits of adults, but what do we know about how and why children save money? It’s an important question, because one-third of the world’s population is under the age of 19. Statistics show that children who save money are more likely to set goals for their future and do better in school, and less likely to engage in risky behaviors.

Close Up on Young Rural People's Economic Empowerment

As part of the NEN Close Up series, the Near East, North Africa, Europe and Central Asia Division hosted a knowledge sharing event on rural youth and economic empowerment in the Near East and North Africa. Through a regional grant, IFAD is partnering with Making Cents International, a social enterprise based in Washington DC, and Silatech, a social initiative working to create opportunities for young people throughout the Arab world, to help increase the employment and self-employment opportunities of more than 18,000 young people of ages 15-35.

Financial Services for Young People: Prospects and Challenges

In recent years, there has been a growing recognition of the economic and social obstacles low-income young people face in making successful transitions to adulthood. The ability to manage money, build assets safely and plan for the future is a core component of a larger set of economic and social assets required to achieve more sustainable livelihoods. One of The MasterCard Foundation’s earliest efforts explored how best to serve the financial needs of young people living in poverty, particularly in Sub-Saharan Africa.

Resource Type: 
Paper

Youth Financial Inclusion in Kenya: Co-creating a Way Forward

This study was commissioned by the World Savings and Retail Banking Institute (WSBI) within in the framework of the WSBI program “Working with savings banks in order to double the number of savings accounts in the hands of the poor”. This specific study relates to sharing lessons under the program.

Resource Type: 
Report

The Impact of Financial Education for Youth in Ghana

We evaluate, using a randomized trial, two school-based financial literacy education programs in
government-run primary and junior high schools in Ghana. One program integrated financial and social
education, whereas the second program only offered financial education. Both programs included a
voluntary after-school savings club that provided students with a locked money box. After nine months,
both programs had significant impacts on savings behavior relative to the control group, mostly because
Resource Type: 
Paper