Last week, the YouthSave consortium held a timely event to discuss new research exploring the financial lives of youth. Currently, a third of the world’s population is under the age of 19, and young people are three times more likely to be unemployed than adults. The panelists attempted to shed light on how financial institutions could alleviate the pressures of this youth bulge and help create meaningful financial products and economic opportunities. In the event’s closing remarks, Alexia Latortue, Deputy CEO of CGAP, offered a realistic and on-point breakdown of the opportunities and challenges at hand.
On the policymaking side, Alexia argued that the asset building theory’s effect on both the material and behavioral lives of youth should not be ignored. In particular, the potential of youth savings to create sound financial habits over the course of an individual’s life and, at the national level, help countries meet savings rate objectives were promising. However, in order to more effectively realize the benefit of these efforts, she identified a need for regulators to further relax and create tiered KYC regulations (opening requirements that are used to identify customers) and better collaborate at the municipal, agency and national level.
Dissecting the financial institution perspective, Alexia outlined how the youth segment was increasingly being seen as an opportunity for financial institutions to:
Build a loyal, lifetime customer base;
Bridge into youth networks including family and friends;
Tap into a new, often overlooked market segment; and
Grow their brand as a social financer.
Despite this, when it comes to youth savings, there is still a demand to “crack the profitability nut” and to better understand the social impact of these products in the short and long term.
In looking forward, it is clear that the complex financial lives of youth require products with the same complexity. Across Colombia, Ghana, Kenya, and Nepal, the experimentation of product offerings by the YouthSave consortium is an important step in the right direction, but continued innovation around youth focused product development is needed.
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