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> Posted by Sonja Kelly, Fellow, CFI

Since the release of our paper, Aging and Financial Inclusion: An Opportunity, I have been considering the challenge of market segmentation using the life course. This is not unexplored terrain at the Center for Financial Inclusion. Beth Rhyne articulated a life course approach during our Looking Through the Demographic Window project, which we have captured in the infographic embedded at right. I have been hearing from microfinance institutions that some efforts are underway to segment clients by their life stage, though this remains a relatively untouched area in the industry. For a great example of segmentation, however, I only had to look to the spam filter on my email.

Most of the emails that get caught in my spam filter are about body image. I receive messages advertising dieting pills, on the one quick fix to reduce belly fat (you won’t believe which celebrities use it!), and how to get toned abs within a week. This makes sense—I work out regularly, and I (try to) watch what I eat. The emails are tailored to me.

In chatting with my colleagues, I find that they also receive targeted emails. Some women in our office who are older than me receive emails for walk-in tubs. Singles get emails that point them to dating websites. Some of the younger men in our office get emails that refer to “satisfying” their girlfriends. And the spam filters of older men in our office collect emails about (ahem) performance-enhancing pills.

These are, of course, gross generalizations—the life course cannot possibly be reduced to dieting, walk-in tubs, and bedroom performance. But why is it that the email caught in my spam filter is more skilled at customer segmentation using the life course than my financial institution’s product line? Even more than being successful at segmenting a potential client base, spam marketers are successful at moving this potential client base to action, according to MailChimp. They have a simple message and a call to action. Their “click rates,” or the rate at which people click on links, are higher than average.

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> Posted by Center Staff

This edition of top picks features posts highlighting initiatives to optimize smallholder finance data collection and usage, efforts to improve youth financial capability, and insights on how mobile money services can effectively reach women.

To better provide financing for the 450 million smallholder farmers around the world, there’s a big opportunity in developing shared knowledge bases and coordinated learning agendas for this topic area. A new post on the CGAP blog shares the work of Dalberg Global Development Advisors and the Initiative for Smallholder Finance to ascertain the state of the smallholder financing knowledge base and put in place a number of complementary tools so that those addressing this financing gap can work together, repurpose what others have already learned, and build off of the field’s scarce resources to drive it forward. The post highlights a smallholder impact literature wiki, an interactive map of smallholder finance tools, a framework for data collection that includes a shared learning agenda, and new briefings offering supply and demand side insights as well as indications of where data is lacking.

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> Posted by Eric Zuehlke, Web and Communications Director, CFI

Students in a technical education program

With 1.2 billion people, youth between the ages of 15-24 represent approximately 18 percent of the global population, and 87 percent of youth live in developing countries. Yet only 44 percent of 15-to-24-year-olds have an account at a formal financial institution globally compared to 55 percent of adults.

Last week, I had the privilege of moderating a panel discussion on youth financial inclusion, hosted by Credit Suisse and organized by the Microfinance Club of New York. The presenters shared important examples of what has worked in providing financial education and services to youth. Joining me were:

  • Barbara Magnoni, President of EA Consultants and co-author of CGAP’s “Analyzing the Business Case for Youth Savings
  • Maria Perdomo, YouthStart, Programme Manager, UNCDF
  • Scott MacMillan, Communications Manager, BRAC USA
  • Simon Bailey, Head of Learning, Research, and Network, Aflatoun
  • Nathan Byrd, Head of Education Finance, Opportunity International

Recently, our Financial Inclusion 2020 team worked with Making Cents International to look at the barriers to and drivers of youth financial inclusion. We found that the primary reasons that youth cite for not having an account at a formal institution are a perceived lack of money, the high costs of services, and challenges in having proper identification. In addition, youth often feel that their financial assets or businesses are too small to work with a bank, especially in situations in which the costs of getting to a bank are high.

Despite these challenges, there are a few areas of opportunity. One is the business case. Since financial needs of young people grow in volume and sophistication over time there is a business case for serving them even as their financial needs are initially limited. Serving youth can help build a longer-term and loyal clientele if products are appropriate and financial capability is fostered. Another important area is financial education/capability. Establishing financial literacy early in life will help foster positive financial habits and lead to longer-term asset accumulation and higher credit scores. This needs to take place in a regulatory environment that supports financial inclusion and coordination among various players.

These three areas – the business case, financial capability, and the policy perspective – were the focus of much of the discussion at the event. I noticed that a few themes cut across the presentations:

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> Posted by Eric Zuehlke, Web and Communications Director, CFI

It’s a big couple of weeks for Africa here in Washington, D.C. On Monday, President Obama hosted a town hall meeting to welcome this year’s class of the Young African Leaders Initiative (YALI). Launched in 2010 by Obama, YALI supports young African leaders as they spur economic growth and prosperity, strengthen democratic governance, and enhance peace and security across Africa. These Fellows spend six weeks at one of 20 U.S. universities and colleges undergoing leadership training and mentoring in business and entrepreneurship, civic engagement, and public administration. Next week, the State Department will host the U.S.-Africa Leaders Summit with heads of state from 50 African countries to advance the U.S. Administration’s focus on trade and investment in Africa and discuss security and democratic development.

Nearly one-third of all Africans are between the ages of 10 and 24, and approximately 60 percent are below 35. YALI is tapping into the drive and energy of Africa’s youth to effect change. Many Fellows in the YALI network are focused on improving access to financial services, whether it’s encouraging a savings culture in Zimbabwe, establishing microfinance programs for women and youth in Kenya, or creating a microfinance program to help start medical supply stores in Kinshasa, Democratic Republic of Congo.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Financial capability is cornerstone to financial inclusion. After all, without the knowledge, skills, and attitudes to make good financial decisions, the utility of accessible financial services is greatly compromised. However, financial capability levels need addressing, even in countries that have relatively high services penetration such as the United States. Thankfully, the urgency is increasingly recognized, for example, through efforts such as Financial Literacy Month in the U.S. About a decade ago, April was designated as a month to call attention to financial literacy, and in 2012 the shift was made to include attitude and behavior change: President Obama proclaimed Financial Capability Month. To celebrate, here’s a rundown of where the United States stands with financial capability, and a few public and private efforts aimed at improving this financial inclusion area.

According to the National Foundation for Credit Counseling, about 40 percent of American adults report keeping close track of their spending and about 35 percent have a budget. In terms of effective money management, consumer debt in the U.S. totals more than $2 trillion. In perhaps the most alarming statistic of all, half of Americans indicate that they have less in savings than they would need to live for one month in an emergency and a quarter have less than they need for two weeks. Roughly 65 percent of American adults have not ordered a copy of their credit report in the past year and about 30 percent don’t know their credit score. When asked to grade their level of financial proficiency, 40 percent of Americans give themselves either a C, D, or F.

But Americans do recognize the importance of financial capability. Eighty percent of adults indicate that they would benefit from advice and answers from professionals on basic finance questions. Many would like to speak with financial education service providers, such as credit counselors, followed by banks, and then financial planners.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

8439582304_65373d394f_zAs you’re here on the CFI Blog, you’re likely familiar with microfinance. But was this the case back when you were in school? It’s April, which means we’re amidst the Month of Microfinance (MoMF), a student-led movement spotlighting microfinance and bridging the gap between students and the sector. This year’s MoMF spans activities engaging students, MFIs, and key industry players, including Kiva, the SEEP Network, and Truelift, supporting access to quality financial services for all and engaging the next generation of microfinance professionals.

Microfinance is increasingly taught in schools, but not everyone has access to a course. The Month of Microfinance offers students a platform to learn about the industry and in turn easily spread the word through their networks. For students looking to organize activities on campus, the MoMF team provides the resources to screen a movie, set-up informative displays, organize fundraisers, and spearhead guest speaker events. A number of MoMF contests conducive to online media conversation are underway. Kiva U, Citi Microfinance, and AboutMicrofinance are hosting a student video competition and an essay competition prompting participants to explore the topics of poverty alleviation, profit management, technology innovation, and gender equality.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Jeroo Billimoria of Global Money Week, a worldwide child and youth financial empowerment movement, recently said, “Want to ensure poor children mature into poor adults? Make sure they spend all their leftover cash.” To me, that simple statement captures the obvious case for advancing financial inclusion for children and youth. Youth save at dismal rates and lack adequate access to formal financial services. Global Money Week, expected to span 112 countries, 485 organizations, and 2 million children, aims to combat this reality.

The weeklong movement, now in its third year, is led by Child & Youth Finance International (CYFI), a global network working towards the financial inclusion and economic empowerment of children and youth. Global Money Week’s participants range from central banks, to government ministers, schools, NGOs, the media, and children. Its activities include bank visits, educational events, expert discussions, online engagements, and the launching of new research and initiatives.

One of the new reports launched in coincidence with Global Money Week is Banking a New Generation: Developing Responsible Retail Banking Products for Children and Youth, a joint-publication from MasterCard and Child & Youth Finance International. The publication is designed to support financial institutions, NGOs, and governments in collaboratively developing financial products and services appropriate for children and youth. Among the publication’s content are guiding principles for appropriate child and youth products, the case for financial institutions investing in this client segment, and considerations for the product development process.

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> Posted by Rani Deshpande, YouthSave Project Director, Save the Children

Two big financial inclusion gatherings in Europe a few weeks ago turned up the volume on bringing more people into the formal financial system — safely, meaningfully, and fast. With big trends poised to change the financial inclusion landscape, how can we harness them to expand savings opportunities for young people?

In London, the FI2020 convening brought together a who’s-who of leaders from the worlds of politics, banking, and microfinance as a culmination of the 18-month “roadmap to financial inclusion” process led by CFI. Discussions here centered largely on the biggest disruptive trends ensuring that, to paraphrase one speaker, financial inclusion will change more in the next 7 years than it has in the last 30. The comment reflects the general tone of the conversation, which was one of impatience or perhaps anticipation at this “inflection moment” created by the convergence of technological development and market dynamics.

According to CFI’s “Mapping the Invisible Market” study, the income of the bottom 40 percent of the world’s low- and middle-income economies will grow from $3 trillion to $5.8 trillion from 2010 to 2020. At the same time, other panelists pointed out that access to information (through mobile phones), the use of big data, and customer-centricity are creating game-changing new ways to reach and serve poor customers. In order to take advantage of this opportunity, one panelist urged the audience to “stop ‘innovating’ and start listening to clients” or to keep innovation “brain-dead” simple so that it can easily scale (critical given generally thin margins for BoP services). Usage, as opposed to access, was also highlighted as the new frontier of inclusion, with almost 50 percent of adults possessing accounts but only 7 percent in the developing world using them actively (> 2 transactions per month).

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> Posted by Center Staff

The FI2020 Global Forum in London gets underway this Sunday with a pre-Forum side meeting on financial inclusion for persons with disabilities (PWDs). This client-centric start feels like a fitting precursor for an event to expand financial inclusion.

Financial inclusion requires that financial services meet the unique needs of all clients, especially the needs of the most underserved and vulnerable client groups. Sessions throughout the Forum reflect this key tenet. In addition, there are side meetings on the Financial Capability Roadmap and the Consumer Protection Roadmap, focused on moving these roadmap principles and recommendations to action. These and the other three financial inclusion roadmaps were developed through a consultative process that collected and incorporated the perspectives of specific client groups.

Among Forum participants are representatives of various client segments – such as PWDs, women, the elderly, youth, rural populations, and migrants – to help raise awareness of their unique needs and assets. Here’s a collection of pertinent statistics for financial inclusion on these client segments:

Youth:

  • 1.8 billion of the world’s population is between the ages of 10 and 24
  • 87 percent of youth are concentrated in the developing world
  • About half the world’s youth report being economically active
  • 38 percent of young adults have an account compared to over 54 percent of older adults

The Elderly:

  • In 1950, globally, 1 in 20 people were elderly. By 2050, it will be 1 in 5.
  • In 2000, only 6 percent of people in less developed countries were over 65 years old. By 2050, that number will grow to 20 percent.

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> Posted by Jeffrey Riecke, Communications Assistant, CFI

For many of us in the U.S., it’s largely happenstance that we cross paths with the topics of microfinance and financial inclusion in a meaningful way. Personally, I remember first hearing about microfinance from friends during college, but it was always in passing, never to the extent or specificity needed for it to make a lasting impression on me. I wish this wasn’t the case! I wish my college self, and all students for that matter, had more exposure to these areas.

To help students and the U.S. academic community engage with microfinance and financial inclusion, Citi Microfinance and Kiva have teamed up to launch Kiva U. The mission of Kiva U, built around three core initiatives, is to create a community for our future inclusion leaders and to support the expansion of full financial inclusion. There’s a big opportunity in the combination of modern communications technology and academia’s inherently social environment, though few interactive financial inclusion platforms for students and educators exist. Kiva U aims to gain popularity as such a platform.

The three core initiatives of Kiva U are expand campus-based microfinance clubs, develop classroom-based microfinance and financial inclusion curriculum for all learning levels, and foster leadership among students interested in social enterprise, international development, and financial inclusion.

There are currently Kiva clubs at 67 colleges and 60 high schools in the United States. Providing online and offline engagement tools, Kiva U plans to leverage this foundation and connect with additional students and educators throughout the country’s academic community.

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.
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