Just a few years back, a rural Bangladeshi family whose breadwinner lived abroad or in a city far from their village town, might have had to live on a frugal budget because the breadwinner could send a limited amount of money - particularly because of a lack of easy access to money transactions.
But now with a mobile financial service (MFS) account, the family can receive money sent from its breadwinner much more frequently and thus can spend more on necessities. The family can also have a savings account.
Over the past decade, Bangladesh has made huge strides in financial inclusion as a result of initiatives such as mobile financial services (MFS), agent banking, no-frills account and school banking.
This has enabled more people to make and receive payments easily, borrow in times of need, and even allow some to save for the first time. As per the 2021 Global Findex report, the percentage of Bangladeshi adults having formal financial accounts has increased from 31.74% in 2011 to 52.80% in 2021 - a rise of more than 66%.
The financial inclusion of youth, who comprises the bulk of our country's population, however, contrasts with the overall scenario as only 33.62% of Bangladeshi young people aged between 15-24 have a bank account.
On the other hand, 66.86% and 50.04% of youth in India and Indonesia, respectively, have bank accounts.
Why is youth financial inclusion important?
By the beginning of the next decade, Bangladesh's demographic dividend will likely come to an end. Thus, we need to reap its benefit at present by empowering the youth demographic.
Access to financial institutions and services helps empower this populace through the acquisition of new skills, the pursuit of higher education, or starting of entrepreneurial ventures – activities that can accelerate our country's economic growth.
Therefore, multiple studies since the early 2010s have shown that when youths are financially included, they are more likely to accumulate wealth and move up the economic ladder. Financial inclusion also helps in enabling greater financial security for their future.
Youth Policy Forum (YPF) and BRAC are collaborating on a project titled "Fin-Fit Future for Youth" to explore ways to improve youth financial inclusion in Bangladesh, which already organised a webinar focused on the existing policies present for youth financial inclusion in the country, implementation challenges, and interventions.
Irfan Abir, the Acting Business Head of Digital Credit at ShopUp (and a panellist in the webinar), explained the young population seems to lack considerable awareness in regard to existing financial products and facilities. "We [youths] get acquainted with finances once we enter the job market. It might be because of tax filing or something else but we are not aware of finances before that," he added.
There also appears to be a trust issue in regard to dealing with financial institutions. Rural youth coming to cities may find banks and their procedures complex and shy away from them.
Bipasha S. Hossain, a panellist in the webinar and team leader at Project Sarathi that works for the financial inclusion of industrial workers in the RMG sector said, "The experience we had was that there is generally a lack of trust for the banking systems – people are used to keeping their money to themselves."
Financial literacy can enable awareness and trust, which in turn will lead to higher interaction with financial institutions and pave the way for youth financial inclusion.
After Project Sarathi implemented financial literacy programmes, Bipasha mentioned how young workers initially withdrew all their salaries from the employee bank account at once. With time, however, they started withdrawing in parts and eventually after six months they showcased the habit of saving.
Financial literacy creates awareness and helps build trust in financial services. The process of getting started, however, can be difficult for some owing to the National Identity Card (NID) requirements, which can at times be quite time-consuming to attain. And "A good number of youths start to work even before they reach an age to be eligible for the NID," said Kazi Ha-Mim Saleh, the Regional Sales Manager of Dhaka South Sales Division at Nagad.
To that end, simplifying the registration process to avail of financial services may be helpful, as seen in India where a policy has been placed that allows banks to streamline the registration process for getting a loan by a youth applicant.
Additionally, female workers are especially expected to manage household affairs once they return home. So, we cannot use the conventional ATL (Above-the-line) or BTL (below-the-line) communication tactics for them (ie for their financial literacy), explained Bipasha. Hence, all aspects of youth financial inclusion, starting from literacy programmes to registration to offered products need to cater to the special needs of each group.
Considering youth and assuming that they're tech-savvy, there might be a tendency to propose digital solutions to ensure their financial inclusion. But Anjali Sarker, the Program Director of the Global Leadership Challenge at the University of Oxford and an international development practitioner, warned that digital solutions can just be "a bandage to a major wound."
Therefore, even if digital solutions for youth financial inclusion are to be prioritised, other issues need to be addressed before being widely implemented.
The road ahead
Apart from school banking by Bangladesh Bank (BB), no policy-level initiatives for youth financial inclusion have been undertaken by the government to date. In 2021, BB formulated the National Financial Inclusion Strategy-Bangladesh (NFIS-B), one of the targets of which is to develop policies for the financial inclusion of the youth. Beyond the setting of this target, no implementation of the strategy has yet been discussed to date.
Therefore, it is imperative that policymakers in Bangladesh design policies that ensure the financial inclusion of youth which emphasise financial literacy, accessibility, and fulfilment of the needs of various youth groups, particularly women and rural youths.