Future Stock: Banks Need to Think About YouthAlissa Saoutina |
Banks need to think about the future. And that future must include strategies to address Youth as an important, but struggling, contributor to the global economy.
Twenty-five percent of the global population is younger than 30 years old and, according to Deloitte’s projection, this group will account for 75 percent of the global workforce by 2025. However, the under-30 population struggles with economic opportunities or the lack of them around the globe. The Center for Strategic and International Studies’ Youth Index average score among the 30 countries surveyed is lowest in the economic opportunity box—globally youth is confronted with unemployment, illiteracy and extreme poverty.
Apart from the much needed policy changes and incentives that countries have to implement to create opportunities and promote education, access to financial services and money management education are critical to ensuring youth’s success. The Youth Index score for economic opportunity looked at factors such as the employment rate, outlook on future wealth and access to lending from financial institutions across 30 global markets. The researchers concluded that a high economic opportunity score in a given country can have a strong impact on the stability and optimism of youth.
Access to financial instruments, according to the study, provides a way to manage effectively youth’s existing money streams. They also provide a boost to life status and entrepreneurial ambitions as well as affecting other indicators like economic outlook and competitiveness.
Case in point: Countries like US, Japan and Australia, which score high in the overall economic opportunity index, have also shown that youth in those countries feel insecure about their future prospects. The credit crunch has deeply affected the global youth’s ability to get a better education, participate in the entrepreneurial activities and place trust in financial institutions and government to support their growth. Other studies underscore the point. An April 2014 report from the FDIC showed that unbanked households in the US tend to be younger than the U.S. population on average. Almost two out of five unbanked households are under age 35, the largest percentage of any demographic group surveyed.
But the “children are the future” phrase tastes especially sour when 85 percent of the global youth population lives below the overall Youth Wellbeing Index average. That means that youth’s ability to lead, build strong ties and communities, and innovate for the future are hampered in the majority of the world. Nigeria, which has recently been touted as the largest economy on the African continent, has a youth population share of 31 percent and the lowest score in the Youth Index. Economic opportunity is characterized too often by lack of access to lending, education or training. And despite these seemingly insurmountable barriers, youth in Nigeria have scored above average on entrepreneurial activity demonstrating youth’s resilience and ingenuity.
Financial inclusion is a noble cause that has been advocated by many countries and organizations. I would argue though that the focus of those initiatives should be on the future business owners, community leaders, and innovators—with a focus on teaching financial management and promoting the youth’s access to savings and lending. Other measures highlighted in the FDIC study include leveraging technology to advance inclusion: the study identifies mobile financial services (MFS) as a key to including more of the youth population in the system. The findings show that early adoption is already happening: 24-and-under population has the highest mobile financial service (MFS) usage of all other measured demographics, with 49.7 percent having used some kind of mobile banking service over a 12 month period. This will raise the economic opportunity for youth and build a strong foundation for the future.