Taking the Bank to the Youth

This is the first installment of our latest blog series, Understanding YouthSavers, which highlights the findings of CSD's recent report, Savings Patterns and Performance in Colombia, Ghana, Kenya and Nepal.

Low-income youth in developing countries will save their money in a formal account when given the right opportunity.

That is a key point in a study of more than 10,000 YouthSave account holders. The report entitled, "Savings Patterns and Performance in Colombia, Ghana, Kenya and Nepal” is the product of cross-country collaboration between CSD, our research partners, and YouthSave banks and project implementers. We recently shared the newly emerged insights at the YouthSave Learning and Exchange Event in Washington, D.C.

The account holders studied are a subset of the over 50,000 young people who have opened youth savings accounts to date. The subset includes girls and boys who come from a wide variety of backgrounds. Many are from low-income families; some are from households that previously were unbanked. In future posts, we’ll be digging deeper into the demographic characteristics of these young people.

Across our four countries, youth in the study saved $519,127 in PPP-adjusted terms over an average of six months. But given the short time span, at this stage the focus is more on the fact that the youth are opening accounts, rather than the amount they have already saved. The lesson learned is that the demand is there – if financial institutions can offer quality, affordable products and services that are both attractive and accessible to youth.

What does that mean? This first round of analysis indicates that a key component of financial inclusion particularly for young people may be “taking the bank to the youth”. In Ghana and Nepal, our project partners offer financial capability activities – which include financial education, account enrollment and depository services – at schools. The association of participation in these activities with account uptake is positive and significant.

In Kenya, Postbank applies product marketing efforts to also ensure there are opportunities for young people to open savings accounts at schools. Based in part on the success of such initiatives to reach youth where they are, Banco Caja Social in Colombia is now visiting schools with Save the Children to provide similar services.

We often talk about the importance of providing financial education to young people. However, what has frequently been left out of the equation is the opportunity to actively use the knowledge and skills of young people safely and productively through mainstream financial institutions. We believe that experience is its own vital form of financial education. Youth are getting that opportunity through the youth savings accounts, and they are responding to it.

Our recent conference in Washington, D.C. emphasized the fact that many questions remain about youth savings in developing countries. This data gives us some answers -- but the answers lead to more questions. Our team will continue to track savings activity and characteristics associated with savings performance over the final two years of the study. Using other research methods, such as case studies, the Ghana experiment, and other experiments in Colombia and Kenya, we expect to learn a lot more about who opens accounts, what product and service features promote savings, and the impact of savings on youth development.