By Aliska Bajracharya
Knowledge Management Consultant and
DFS Expert in Nepal
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Would you be surprised if we told you that there are over 5 million youngsters in Nepal and 82% of them are literate and over 95% of them have access to internet and mobile phones- Pretty good, right? But what if we tell you that only 19% of them are banked- have access to an official banking product. It’s astonishing that not only in Nepal, but globally most people between 16 and 24 years don’t have or think they don’t require financial services. Now, you must be thinking; ‘Do young people really need financial services?
Surely you would agree that planning ahead, efficiently managing money and building assets are some of the essentials needed to achieve sustainable economic development. And access to appropriate financial services, paired with financial literacy can be a key enabler for a young person to get into a habit of making sound financial decisions. If these people are all aware about this concept then the country in parallel with the youth can be one of the contributing factors that can help a developing economy to transition into a developed economy.
Recently, UNCDF-MM4P and its partner organization Prabhu Management Pvt. Ltd. conducted a series of focus group discussions at Kathmandu University with youngster from 19 to 24 years. The idea was to get their outlook on digital finance. All the participants were students, some part-time job holders and everybody owned a smart phone. The students stayed at the university accommodations and relied on cash send by their parents (into their bank accounts) to meet the daily expenses and to pay tuition fees. Some of the students were already using digital payments and mobile wallets. They were well-informed about these services and eager to try out new and innovative solutions. While other students had bank accounts from which they withdraw their money 2-3 times a week.
“I spend more than I need and on a frequent basis, not just me but my friends do the same as well. We will start thinking about spending cautiously once we have jobs and a decent income. But for now, this is the way things are,” said one participating students.
The interaction with students confirmed one thing; Educational Institutions have always focused on teaching students how to make money. Maybe the next best thing to teach them would be- how to save money.
Every economy needs an inclusive financial system. Inclusive financial systems shouldn’t be constrained to adults over 25 who are employed. It should be inclusive of one and all in the country. UNCDF-MM4P programme in Nepal is pursuing projects and research that explore how financial inclusion can enable young people to achieve their economic goals. The programme has been actively involved in studying the market and supporting local partners in developing digital financial solutions for an all-inclusive financial system.
When talking about digital financial services and based on the discussions students are looking for:
• Safety and savings: The possibility to receive the money directly in their wallet as opposed to keeping the money in their pockets, where there is always the risk of losing it or spending it too quickly.
• Meeting basic requirements: An easy, fast and reliable technology to pay their bills and buy goods without spending hours queuing or getting stuck in traffic.
• Financial literacy: There is a need to get well acquainted with digital financial services and the potential it holds. Basic knowledge can be shared by the large network of well-trained agents and merchants on mobile money, apart from the traditional means of reports and studies on the topic.
• Efficient marketing: Proper marketing skills reflected by the communication strategies of the digital financial service provider that inform and develop customer’s knowledge on the offered product(s).
The financial needs and requirements of the youth should be an important factor to consider when developing an all-inclusive digital financial service. In Nepal, children are given a ‘piggy bank’ made of clay to save money from a very early age. Now the same should be done with mobile phones - their digital piggy banks.
This post is the first of the three looking at the financial inclusion of youth in Nepal. The next blog will describe more on the implications of digital finance in the lives of youths. Stay tuned!