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Youth Preferences for Financial Services

Market Research Findings

This section explores the perceptions, experiences and preferences of youth with respect to financial services and implications for product design. 

Perceptions of formal financial services. The perceptions that youth have of formal financial services are typically formed by word of mouth and the experience of others (e.g., close friends or family members). If parents and close friends have had a positive experience with formal financial services, then young people will often have a good image of banks and MFIs, but if the former have had a negative experience, young people will have a poor image of FSPs (YouthInvest–Morocco, Savings Innovation and Expansion for Adolescent Girls and Young Women–Dominican Republic, ESAF–West Bank/Gaza). This finding indicates that parents’ perceptions of formal financial services carry over to their children (Savings Innovation and Expansion for Adolescent Girls and Young Women–Mongolia). Youth may also choose to open an account at a particular financial institution based on the recommendations of NGOs that provide training for youth or that of a close friend or relative (YouthInvest–Morocco).

In the Dominican Republic, at least half of the parents of girls who were interviewed for a market research project save in a bank. As a result, girls described feeling “happy,” “light,” “comfortable,” or “excellent” upon entering a bank (Savings Innovation and Expansion for Adolescent Girls and Young Women–Dominican Republic). 

Youth have several biases and fears with respect to formal financial services. These include (Savings Innovation and Expansion for Adolescent Girls and Young Women–Mongolia, AGEP–Zambia, YouthStart, AIM Youth–Ecuador):

• Banks are only for depositing large amounts of money and not for making small deposits. As a result, youth feel  shame or embarrassment about making small deposits and think the bank or FSP will turn them away or view them  as inferior clients.
• Belief that banks are for the rich.
• Belief that banks are only for adults.
• Belief that banks are for people with jobs.
• Fear of losing access to their money.
• Fear that the institution will collapse.
• Fear of losing their money due to fraud or high fees. As a result, most youth mistrust formal financial  institutions, think banks steal from them, or won’t give them the promised interest rate. 

As a result, many youth choose informal financial services that are cheaper, require minimal—if any—documentation, and provide more accessibility, especially for emergencies (YouthStart). Even though most youth have limited experience of formal financial services, they can still compare the advantages and disadvantages of formal and informal financial services based on the perceptions and experiences of others (AGEP–Zambia). In some cases, this may be slightly easier for older youth (18+ years) (Savings Innovation and Expansion for Adolescent Girls and Young Women–Mongolia).

Comparison of Youth Perceptions on Formal and Informal Saving 

Comparison of Youth Perceptions of Informal and Formal Borrowing:

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