The Focus Note “Emerging Perspectives on Youth Savings” examines the role of finance in the lives of low-income youth in developing countries. As the first CGAP publication on the topic of youth savings, the paper presents the latest perspectives on the importance of savings for the youth market segment.
The paper focuses on the opportunities and challenges of offering savings services to youth from the perspectives of policy makers and financial service providers. The premise behind the policy case for offering savings accounts to youth is straightforward: youth savings can promote asset-building, instill good financial habits and improve a country’s overall gross savings rate. The business case for financial service providers is gaining loyal, long-term customers who will use a range of products over their lifecycle.
With relatively few existing documented cases on providing youth savings services in a profitable manner through the private sector, the paper brings together many disparate areas of research from a number of different countries.
The paper provides several practical considerations for policy makers and providers when targeting the youth market. While more data on the social impact of youth savings is needed, policy makers can take a test-and-learn approach to reducing barriers for the private sector to deliver youth savings; coordination among government ministries is important in this regard, ideally within a comprehensive youth policy. On the financial service provider-side, there also exists a similar need for innovation and experimentation around understanding the youth market – and whether this customer segment is profitable in the long run.
Experience will tell if policymakers and providers will reap dividends in the future by investing in youth now.