Addressing the Challenge of Account Dormancy in Youth Savings Initiatives

Larger-scale efforts to connect youth
with savings accounts as a means to promote a range of social policy outcomes
has drawn increasing attention among policymakers and in a variety of settings
in recent years. In order to implement these initiatives, much of the attention
has been focused on enrollment and account opening. Once accounts are opened
many lay dormant for prolonged periods of time, creating uncertainty about the
extent to which the experience of account ownership can lead to positive
outcomes. In some cases, account dormancy indicates a “no effect” relationship
between the intervention and desired outcomes. But in other cases, account
dormancy reflects a “delayed” or “undetected” effect. Failure to understand the
dynamics of engagement among accountholders generally, and youth more
specifically, may needlessly weaken support for valuable savings and financial
inclusion initiatives whose potential and positive effects may unfold over an
extended time horizon.

 New America’s paper, Addressing the Challenge of Account Dormancy in Youth Savings Initiatives, considers how to understand the challenge of
dormancy in large-scale account-based initiatives and policy efforts. It
describes the range of issues related to account engagement from the
perspective of financial institutions, policymakers, and account holders and
notes experiences from the field to help shed light on how the dormancy problem
has been expressed in diverse settings.
This issue brief concludes with an assessment of specific issues that
warrant further exploration.