YouthSave 2010-2015: Findings from a Global Financial Inclusion Partnership
Young people everywhere need support to transition successfully to a financially secure adulthood. We believe that one key to that transition is to develop sound financial habits starting at a young age. When that happens, the effects go beyond young people themselves— entire societies benefit when more citizens possess healthy financial habits.
Today there are an estimated 1.8 billion people in the world between the ages of 15 and 24, and most of them live in developing countries. In addition to education, skills, and economic opportunities, these young people will need financial services. The quality and availability of those services will have an impact on the choices these young people make as they transition to adulthood. YouthSave, one of the first initiatives of its kind and the largest in the developing world, could not be more relevant or timely.
Donors, policymakers, financial services providers, and researchers have become increasingly interested in recent years in the potential of youth-focused financial services to improve the life chances for young people. Created in partnership with The MasterCard Foundation, YouthSave investigated the potential of savings accounts as a tool for youth development and financial inclusion in developing countries. YouthSave did this by co-designing tailored, sustainable savings products with local financial institutions and assessing their performance and development outcomes with local researchers. The project was an initiative of the YouthSave Consortium, led by Save the Children in partnership with the Center for Social Development at Washington University in St. Louis, New America, and the Consultative Group to Assist the Poor (CGAP).
Between 2010 and 2015, over 130,000 young people (mainly 12-18 years old) opened project-sponsored savings accounts at local partner banks in Colombia, Ghana, Kenya, and Nepal. In addition, over 44,000 youth were reached with face-to-face financial education and over 600,000 individuals through other channels including mass media, community events, and SMS. Through partnerships with local researchers in each country, YouthSave collected demographic and transactional data on almost 70,000 young account holders in order to understand which types of youth were accessing and using accounts, and how. In Ghana, YouthSave also implemented a longitudinal experimental study with 6,000 youth to assess the impact on various dimensions of their well-being.
YouthSave 2010-2015: Findings from a Global Financial Inclusion Partnership presents the Consortium’s key findings. It concludes that product features, financial institution outreach, parental support, proper incentives (both for young customers and for bank staff), savings reminders, and physical proximity all were important factors in increasing young people’s savings frequency and balances. Specific factors included: whether the signature of a parent was required for a young person to open an account or whether that of another “trusted adult” would suffice; whether official government-issued identity documents were required; and whether the young person was reachable via in-school marketing. Special effort will be required to reach out-of-school youth.
The YouthSave project’s “Ghana Experiment,” one of the largest and most rigorous youthfocused studies of its kind, found modest short-term nonfinancial impacts, with suggestive patterns regarding positive outcomes in terms of education, health, and future orientation, though sometimes falling short of statistical significance. Project findings also suggest that financial education can be effective in improving selected aspects of financial knowledge, attitudes, and behaviors.
YouthSave identified two potential paths to scale for youth savings accounts: commercial replication and policy promotion. The strength of the business case for youth savings accounts varies greatly across financial service providers, depending on factors related to market conditions, institutional capacity, the particularities of the (sub)segment selected, and specific product-level cost and revenue drivers. Supportive policy frameworks will be critical to create an environment conducive to scale. Especially important will be policies determining who may open an account, or access new technology-enabled delivery channels, and how easily.
Read the full report here.