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

BLOG: Analyzing the Business Case for Youth Savings

This blog was originally posted on CGAP.org on July 21, 2014.

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.

Youth Think Tank Report: Engaging Young People

Increasingly, non-governmental, multilateral and bilateral organizations, and the private sector are seeking more meaningful ways to engage young people in dialogue about decision-making, program design, evaluation and policy-making.

Resource Type: 
Report

Youth Financial Inclusion & Economic Opportunities - Lessons Learned and Actionable Guidance

This technical brief provides guidance to Youth Financial Inclusion (YFI) implementers deciding whether to offer appropriate financial products and services to youth, how to use technology to deliver them to youth, and methods to extend financial inclusion to youth in hard-to-reach rural areas. The brief provides practical tips and examples of innovative programs that promote youth financial capability (YFC) and access to youth-friendly financial capability.

Resource Type: 
Report