Paper
Building the Business Case for Youth Services
Demonstrating that youth are a viable market for financial service providers
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46 pages
This paper examines how business models can be optimized so that youth services contribute to the sustainability of the financial service providers (FSPs). It studies three FSPs in Ethiopia, Rwanda, and Uganda to assess the profitability of offering youth savings by analyzing if the marginal costs of serving youth are lower than the income FSPs would obtain from offering youth savings to other clients. It also examines the effort needed to achieve the profitability of youth services through variables like operating expenses and cost structure, savings volume, and returns from youth. Findings include:
- Impact of offering these services on operational self-sufficiency (OSS) is greater for small FSPs due to their lower institutional capacity to launch and implement a new product;
- FSPs can achieve more profitability through increasing youth average savings deposits than through increasing the number of youth clients;
- The profitability of youth services could also increase over time through generating additional returns from youth such as cross-selling to both youth and their families.
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