The financial services industry has a long history of underinvesting in underserved communities, like the youth population. Fintech, one of the key elements in shaping the industry, is working hard to close these gaps and empower underserved groups through technology. Here’s how fintech is empowering youth:
Fintechs providing financial literacy
Managing finances is not an innate skill but rather something that people should learn. Young people start dealing with money in early adolescence. However, until this day, most schools still do not teach financial literacy. A survey conducted on 15-year-olds in the United States found that 18% of respondents did not learn the financial skills required for everyday life. Moreover, financial literacy is less common in low-income societies because they usually do not have access to accurate financial information.
With the penetration of mobile phones followed by the internet, we are currently in the age of information. According to a UNICEF report in 2017, 71% of the youth globally is connected to the internet. Fintech saw the literacy gap and decided to do something about it. Emerging fintechs are creating apps for the youth to provide them with a set of financial tools and skills. They are providing fun and accessible resources on everything related to personal finance from saving, investment, debt, loans, etc…
Fintech providing financial inclusion
Most traditional financial institutions, especially in low-income societies, overlook the importance of financial inclusion of the youth. According to the OECD, 84% of young people in high-income countries are financially included versus fewer than 40% in the MENA, SSA, Latin America and the Caribbean. Financially excluding the youth has many drawbacks. For example, they won’t be able to invest in their education, gain autonomy, or launch their entrepreneurial ventures. Moreover, when the youth move into adulthood, they have difficulty becoming financially included. They grow up to have difficulty understanding financial products and services. This leads to them lacking trust in the institutions and having fears of costs.
Fintech startups acknowledged the importance of the financial inclusion of the youth and started targeting them. Fintechs such as Zywa and Verity started providing the youth with apps to ease their inclusion. They are helping them keep track of their money and expenses. In addition, they are teaching them how to establish goals and limits.
Fintechs providing job opportunities
One common global issue is the lack of job opportunities and increasing rates of unemployment, especially among youth. The Covid-19 pandemic heavily accelerated this issue. According to ILO, employment fell by 11.2% for young men and 13.9% for young women in the second quarter of 2020 in a study conducted on a sample of 58 countries. In middle-income economies, these numbers were almost double.
Although companies always preferred to hire older generations because of the experience they have, in fintech things have changed. Fintech is a young industry that is based on technology that the youth of today are familiarized with since birth. In fintech, younger generations are the ones who have the capability to drive technology-led change and innovation in the industry. Since the fintech industry is still evolving, there’s always a need for growth and expansion. This creates a constant need for hiring young people who can easily accommodate a dynamic and fast-paced work environment.
Fintechs enabling entrepreneurship
As mentioned above, a huge portion of the youth population does not have access to basic financial services. Fintech was able to change this by unlocking finance for the younger generations. When given access to all components of finance, the young generation is becoming more encouraged to start their own business and their entrepreneurial journey. This allows youth to gain autonomy and become socioeconomic actors and in return create new job opportunities and aid the economy of their country.
Fintech, with a long and promising future, is bridging all sorts of gaps, especially in underserved communities that traditional institutions neglected. When it comes to youth, fintech is providing opportunities that can reshape their generation.
Written by: Mayssa Abillama