Creating fertile environments for youth savings at financial institutions in the developing world could certainly lower the threshold of profitability for financial institutions by creating a larger pool of clients or by lowering or subsidizing the cost to financial institutions of doing business with those clients, at least in the short-term.
Despite these potential benefits, facilitating access to youth-owned and –operated savings account at financial institutions can be costly and difficult. The Business Case for Youth Savings: A Framework from our consortium partner, CGAP, recently laid out a framework that financial institutions can use to evaluate whether providing youth savings products makes business sense for them. There is a strong relationship between the business case for youth savings and the policy surrounding youth savings in a given country context. Creating fertile environments for youth savings at financial institutions in the developing world could certainly lower the threshold of profitability for financial institutions by creating a larger pool of clients or by lowering or subsidizing the cost to financial institutions of doing business with those clients, at least in the short-term. The blog series Regulatory Environments for Youth Savings in the Developing World, named after New America’s recent policy brief on this issue, will address the former issue. How can policymakers and youth advocates create a supportive regulatory environment for youth savings at financial institutions in the developing world such that the pool of potential youth savers is expanded?
Our first blog will focus on the two principal policy barriers that youth encounter when attempting to save through a formal financial institution: the ability to provide adequate documentation to satisfy accountholder identity requirements and age-related prohibitions on youth account ownership and control. Our second blog will discuss how even in a context where regulation is restructured to allow for youth savings products to flourish in the marketplace, youth account uptake and use, particularly by certain groups of youth (low-income, those living in rural areas, and girls, for example) who may arguably benefit the most from economic development interventions, will still need a good deal of cross-sector cooperation and inter-generational strategies.
