Youth Savings Accounts: Understanding Demand is Key to Increasing Supply

Today, there are 515 million youth living on less than two dollars per day. Mindful of the world’s most vulnerable population growing in numbers,Making Cents International (MCI) gathered NGOs, financial institutions, and researchers from around the world at the Global Youth Enterprise and Livelihoods Development Conference to discuss potential solutions for their development; among them, youth savings accounts (YSAs).

While practitioners and researchers in the field critically question how financial institutions can supply and scale cost-effective YSAs to the millions of unbanked youth globally, understanding the demand for YSAs is often overshadowed. But what is the point of spearheading the design and delivery of YSAs if young people don’t use or even acquire the product? As conference panelist and Global Assets Project’s very own, Jamie Zimmerman maintained, we know that young people can and will save in an account especially when given the right tools and motivation, such as financing their education, supporting their family’s household expenses, or investing in a microenterprise. Therefore, as the YSA field advances its efforts, there is a critical need to design products that satisfy the economic wants and needs of youth, while marketing the right information so that they are compelled to take action. Then the question remains, how do we know what youth want or need in a savings product?

At the Conference last week, Ben Shell of Women’s World Banking discussed how WWB addressed these challenges when creating XacBank’s YSA marketing for young girls in Mongolia. With a bright pink account book and commercials animating a cute young girl aspiring upward into the clouds, XacBank made YSAs appealing to its target demographic. While outcomes from WWB’s market research is encouraging, marketing and designing YSAs is no simple feat particularly when there is a dearth of evidence on the economic behavior of young people across varied demographics. For example, the financial needs and wants of a 12-year school girl living in urban Mumbai will certainly differ from those of a 17-year old micro-entrepreneur in rural India. 

The unique and varied ways in which diverse populations of low-income youth receive and process the information that can incentivize obtaining an account – and regularly saving in it – underscores the critical need to explore demand side questions with YSAs.  During the MCI Conference, Gina Chowa and Lissa Johnson from the Center for Social Development, highlighted some of those important questions, alluding to the research the YouthSave Consortium will be undertaking. Comprised of Save the Children, the Center for Social Development, the New America Foundation, CGAP, and supported by MasterCard Foundation, the YouthSave Consortium, is keenly engaged in understanding savings demand of low-income youth. Before designing and delivering YSAs with partnering financial institutions in Ghana, Kenya, Nepal, and Colombia, the Consortium and its research partners must ask several questions to uncover the economic mysteries of the target group aged 12-18 years old.  Some of these questions include, but are not limited to, the following:

• How do the economic needs of youth vary by demographics (age, gender, urban vs. rural)?
• At what points in time do young people have difficulties managing their finances (and when would they need to draw on their savings most)?
• How and where do youth best receive information that influences behavior change and can impact their impetus to save (school, T.V., radio, parents, etc)?
• What are young people’s perceptions of financial institutions (positive, negative)?
• How close (in proximity) are young people to a financial institution?

Rigorous market research should allow financial institutions to more effectively target their YSA marketing strategy in conjunction with its design and delivery to youth across varied age groups, gender, and geographic location.