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

Why Measuring Child-Level Impacts Can Achieve Lasting Economic Change

More than 600 million children in developing countries live on less than US$1 a day. Children are deeply affected by poverty, and some effects of poverty, particularly in early childhood, have life-long consequences. The fight for long-term poverty alleviation must account for children’s wellbeing in order to sustainably reduce individuals’ and communities’ vulnerability to the persistent effects of poverty.

Help a Child Learn Financial Literacy

OVERVIEW

Infographic: International Financial Inclusion Funding

In 2012, at least $29 billion was committed by international funders to advance more inclusive financial systems in developing countries.

Employment Generation in Rural Africa: Mid-term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda

Can cash transfers promote employment and reduce rural poverty in Africa? Will lower youth unemployment and poverty reduce the risk of social instability? We experimentally evaluate one of Uganda’s largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start-up costs. Mid-term results after two years suggest four main findings.

Resource Type: 
Report

Closing the gap – how non-financial support is increasing access to capital for young entrepreneurs

Building on YBI’s policy recommendations to date, this report compiles a series of case studies that each illustrate how the finance gap can be closed for young and other underserved entrepreneurs through providing non-financial support, such as training and mentoring. This integrated approach reduces the risk of lending to youth and other underserved demographics, and the value of the non-financial support substitutes for collateral and other types of guarantee.

Resource Type: 
Report

PWC's Earn Your Future: Empowering Future Leaders With Financial Literacy

Through the five year Earn Your Future commitment, PWC is investing $160 million — $60 million in cash donations and one million PwC volunteer service hours — to address youth education with a focus on financial literacy. This report presents "Why It Matters," the program's one-year impact, and the different "Earn Your Future" programs offered.

Resource Type: 
Report