July 28, 2015
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.