- Hope or Hype?Five Obstacles to Mobile Money Innovations for Youth Financial Services
Seen as a critical enabler of young people’s economic empowerment, youth financial inclusion has galvanized support and activity all over the world, garnering attention from policymakers, the financial sector, practitioners, and researchers. At the same time, technology, particularly the mobile phone, is increasingly seen as a potential tool to bridge gaps in information, products, and services to poor people worldwide. Services like M-PESA in Kenya have sparked interest and attention around the mobile phone’s potential to accelerate the pace toward global financial inclusion. As a result, there is growing consensus that mobile solutions are an important, effective development strategy.
Mobile-enabled solutions to financial access and capability bring hope to those working in youth financial inclusion at a time when existing tools are proving less effective and sustainable than envisioned. Classroom-based financial education has not catalyzed changes in behavior effectively, nor have we yet found a way to make youth financial services sustainable.1 Inspired by many of the mobile financial service successes for adults, including mobile wallets, mobile payments, and account access for deposits and withdrawals, the youth financial inclusion field sees a way forward. Theoretically, mobile solutions should allow the field to leapfrog many existing hurdles to financial access and experiment with delivery [End Page 233] channels, marketing, behavioral nudges, and other financial capability-enhancing activities.
Applying mobile solutions to goals for youth financial access has particular appeal, as young people are known to be early adopters of and innovators with new technology. Experience has shown that children and youth do not even need fomal training to be able to pick up and use a mobile phone.2 By building on this ease with technology, access to financial services early in their lives may maximize the positive economic, social, and behavioral impact on youth.3 Accumulating assets early can help mitigate the vulnerability and volatility that define the lives of low-income individuals and households. In fact, youth may even influence older household and community members by demonstrating the benefits of formal financial services.
If youth (a) generally have access to mobile phones, (b) are early adopters and fast learners of new technology, and (c) develop their stickiest behaviors (i.e., those most resistant to change) early in life, then mobile solutions should be an accelerator of financial capability and access among the youth demographic, even more so than for their adult counterparts.
Promise and excitement aside, however, we are still a long way from proving the accelerator hypothesis. There is a dearth of evidence on how low-income youth use mobile phones, on whether they have regular access to them, and if mobile-enabled financial services and information will be as accessible to youth as they seem to be for adults. To be sure, the youth financial services field is only beginning to understand how youth earn and manage money and, by extension, to understand whether and to what extent the mobile phone can effectively provide access to formal financial services. By synthesizing the current opportunities and obstacles to using mobile-based tools to advance youth financial access and by assessing current opinion among practitioners, this paper examines whether mobile solutions offer the youth financial inclusion field immense hope, or just hype.
The Promise of Mobile and Youth
A vast majority of the world’s 1.5 billion youth live in poor countries, with nearly 1.3 billion living in developing countries and one in five living on less than $1 a day.4 Low-income youth tend to start working earlier, get married and have children earlier, and engage in complex financial transactions early in life. Out-of-school youth are overrepresented among the unemployed and underemployed, even where unemployment rates are not high.5 As youth face major life transitions without adequate education, with low employment, and increasing responsibilities, financial services (especially safe, reliable savings services) can play an important role in how well they will adjust throughout their lives. We know that youth in and out of school save money, typically in small amounts.6 Yet, of...