Beyond the Buzz
The Allure and Challenge of Using Mobile Phones to Increase Youth Financial Inclusion
Policy Paper
Sept. 12, 2013
Although low-income youth in the developing world tend to lead relatively complex financial lives, many do so without access to the financial tools and knowledge that might benefit them. Increasing their financial inclusion—or the access and capabilities necessary to use appropriate, typically formal, financial products and services—could help low-income youth better navigate the financial landscape and ultimately contribute to their economic empowerment.
The recent application of mobile phones for financial inclusion among adults and the rising use of mobile phones among youth suggest that mobiles can catalyze financial inclusion for youth in developing countries. Mobile financial solutions such as mobile information services, mobile wallets, and mobile banking are especially helpful for those with limited mobility, limited time, and limited funds, all of which typify the low-income youth demographic. In addition, mobiles can enhance youth financial capability by ensuring that youth have not only access to financial services but also influencing the knowledge, skills, attitudes and behaviors necessary to maximize their benefit from those services.
However, financial inclusion advocates must overcome many barriers before they can realize the full benefits of mobiles in the field. Issues with infrastructure, cost and usage of mobiles, and government regulations—such as minimum age for SIM ownership or identification requirements—still linger. Although their effect varies greatly by region, they limit the overall ability of financial service providers, nongovernmental organizations, donors, or governments to offer mobile-based services to the youth demographic. Moreover, even if these barriers were overcome, in-depth data on how youth in developing countries use mobile phones and how they manage their money are lacking and, where they exist, are generally not publicly available.
This paper explore the various opportunities for and challenges to leveraging mobile phones to achieve youth financial inclusion and capability and recommends tapping available policy levers—by enabling regulatory environments, incentives to innovate, strategic alliances, advanced data collection, and experimentation with “nudges”—that would allow proponents of youth financial access to circumvent the various barriers to youth-centered mobile financial solutions and therefore speed up the pace of exploration and innovation.
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