Incentives, Subsidies, and Complementary Services to Promote Youth Financial Inclusion

This blog originally appeared on The SEEP Network Blogg, co-authored by Jennifer Denomy and Rebecca Hession.

The United Nations Population Fund reports that there are 1.8 billion young people between the ages of 10 and 24, with 89 percent of them residing in the world’s least developed countries (2014). With appropriate knowledge and tools, youth can be financially empowered to access a range of economic opportunities over the course of their lives. Although they represent a large potential market, the integration of youth into the formal financial system is still a relatively new concept in many countries. In order to address these operational issues and explore innovations in this area, the SEEP Network’s Youth and Financial Services Working Group commissioned and wrote four Promising Practices Briefs. The topics of the briefs were selected during a series of consultations held with Working Group members in January 2015.

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 In a world where 50% of the population in developing countries may be under 18, finding ways to include and retain youth in the financial sector is essential to foster sustainable development. Although almost half of the world’s youth have an account at formal financial institutions, in 2014 only 18% used them to save money, while the rest chose to use informal ways to save their money. In order to expand youth financial inclusion, young people must not only have access to financial institutions but must use their account as well. Smart subsidies, incentives, and complementary services, when carefully planned and implemented, can play an important role in achieving this goal.

What’s the difference between incentives, subsidies, and complementary services and how can they be ‘smart’? To see what works and what doesn’t in promoting increased financial inclusion for youth, the SEEP Network’s Youth and Financial Services Working Group examined how incentives and subsidies can be integrated into existing programs and initiatives (through market positioning, synergies with national agendas, engaging staff and other stakeholders, etc.) to lay the groundwork for sustainable financial development.

Definitions: Incentives, Subsidies, and Complmentary Services

  • Incentive: A gift or reward that can motivate the use of formal financial services.
  • Subsidy: Monetary assistance to make financial services more affordable.
  • Complementary services: Additional nonmonetary support programs that can create demand for financial services.

Incentives, subsidies and complementary services can include gifts, rewards, or monetary assistance that not only promote the use of financial services, but make them more affordable. When these incentives and services are well-designed (i.e., ‘smart’) they are valuable tools in not only attracting new clients, but also retaining and empowering young customers. However, the sustainability component is often more challenging.

What did the Working Group learn from their research? They found that there were four main lessons around using incentives, subsidies and complementary services, concentrating on sustainable financial inclusion for youth and their long-term participation:

  • Present subsidies as a temporary reward that will attract young people, but not cause them to rely totally on subsidies by setting time limits or digressive subsidies.
  • Giveaways, rewards, and other gifts can convince youth to try new financial services. Giveaways have been used successfully as advertising for financial institutions, and giveaways such as lock boxes and piggy banks promote saving money among youth and their households.
  • Introduce programs (through schools, campaigns, etc.) that focus on financial education to youth. This can help expand the market by revealing needs and product benefits to youth.
  •  Design marketing materials, services, and incentives to meet the concerns and needs of both provider and clients, and design the features that will ensure youth engagement and trust.

To learn more about incentives and subsidies and their roles in promoting youth financial inclusion, read the entire publication here!


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Rebecca Hession is the Program Assistant for Working Groups and Learning Initiatives at The SEEP Network. In this role, she supports the communication and facilitation of SEEP’s working groups, and the preparations for their respective projects and events. She has previous non-profit and NGO experience, including an internship with the World Bank Group while in graduate school. Rebecca holds a BA from the University of Central Florida, and an MA in Latin American Studies from Georgetown University’s School of Foreign Service, focused on development and human rights.
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