Institutionalizing Youth Financial Services to Achieve Scale
With over 1.8 billion young people in the world today, youth represent one of the fastest-growing segments of the global population. According to the United Nations Department of Economic and Social Affairs Population Division, youth in 2010 comprised 17.6 percent of the world’s population and 20.2 percent of the population in least developed countries.1 Most young people, especially in developing countries, do not have access to the financial services and education that could help them move out of poverty and become productive citizens in their communities. Although numbers vary, it is evident that the demand for financial services by young people far exceeds their availability, with some sources estimating that less than 10 percent of the world’s youth are currently being reached by financial services.
The period of youth is an excellent time to learn responsible financial habits and attitudes toward saving, borrowing, and spending. Research has supported the hypothesis that appropriate financial and non financial services (such as education and training), tailored to the unique needs and capabilities of youth, can help young people better manage their finances to support themselves and their families over both the short and long term.
Scaling up youth financial services is one way to address the enormous gap between demand and availability. However, scaling up is not a simple process; many organizations find that they need to consider certain unique factors when scaling up youth financial services. Often, youth products are developed as part of a financial institution’s corporate social mission; as a result, they are not always fully incorporated into the organization’s business plan, structure, and processes. This may be acceptable in the short term, but, as the organization begins to scale up youth initiatives, integration of these services becomes more important. The institutionalization of youth financial products into an organization’s operations is a key component of deliberate, responsible scaling up, ensuring that the products have the required support and resources to grow and expand. By gaining organizational buy-in through all major stages of the life cycle of a youth product, institutions can scale up more effectively, systematically, and sustainably.
In this technical note, FINCA Uganda and Hatton National Bank Sri Lanka (HNB) explore key components and issues around the institutionalization of youth financial services, based on their individual experiences. Topics that are explored include key considerations, steps, and challenges of institutionalization. While some universal aspects of institutionalization are covered, this document primarily examines differences in institutionalizing youth financial products as opposed to financial products targeted to non-youth.