Promoting Asset Building Among Kenyan Youth POSTBANK’S EXPERIENCE.

Presentation by

KASIO MUTUKU 13TH MAY 2014

Kenya’s Financial Landscape •  Kenya’s financial sector is still developing. •  The key players are;

•  Central Bank of Kenya –Regulator of 43 commercial banks, one Mortgage bank and 9 Deposit Taking MFIs.

•  Insurance Regulatory Authority: regulates all insurance companies.

•  Retirement Benefits Authority: Regulates retirement/pension schemes.

•  SASRA: regulates SACCOs (credit unions). •  The CCK that controls all mobile money transfer players. •  Stock Exchange. •  Postbank: Reporting to the Min of Finance.

Financial Landscape Dynamism •  The majority in the population, comprising the youth,

the lower income population and the unemployed, can determine prosperity and stability of the Economy through promotion of wealth creation and asset building.

•  Financial exclusion is a risk to political stability and impedes economic advancement, hence the need to balance financial stability, financial integrity, and inclusion.

•  Banking the youth therefore is a move in the right direction.

The youth in Kenya

•  The youth in Kenya accounts for more than 65% of the Kenyan population.

•  For this presentation, we will be talking of anybody below the age of 28 year.

•  The youth is therefore very important in the Financial sector.

Youth Potential in Savings

Kenya Post Office Savings Bank (Postbank), has strengthened the Youth product portfolio by researching and designing a youth product dubbed SMATA that become the third in the area of youth products. – Market research and on going research confirms that youth have the propensity to save. – They tend to save to compensate for uneven income streams for such purposes as education, food, pocket money, personal grooming, entertainment gadgets, supplement parents/family emergencies, investments, social and religious obligations, and for future consumption

How Youth Save

Where youth save With Postbank youths can save and are saving the….

Postbank’s Delivery Channels

Cash x-press Debit Card(Used at Branch

& Agent)

Early Age Savings Culture

•  Appropriate financial services can help improve household welfare and spur small enterprise activities.

•  Savings banks need to inculcate savings culture to society at an early age. •  Savings should be included in schools curriculum, school savings clubs,

national debates. •  Educational institutions including the universities should be seen to play an

active role. –  This will bring out access to child & youth friendly products & services. –  Bring out savings know how and culture of financial inclusion.

•  Can governments automatically opens School/College Savings Account for every child in the state / county?

Promoting Asset building Among Youth in Kenya

•  Account ownership depends on the KYC documentation required by banks hence locking out the youth from the financial sector.

•  The design of SMATA was meant to address this Challenge.

•  Key features include a free ATM card, savings diary, low opening amount and easy to operate.

•  Low income youth are excited about having and operating a bank account with Postbank.

Promoting Asset building Among Youth in Kenya

•  As at 5th May 2014. more than 78, 000 accounts had been opened and 83% of these are participating in an on-going SDA research.

•  Mobilization is done through, Direct Marketing by bank staff and participation of partners (currently 4 NGOs).

•  Bank staff and community resource persons keep on encouraging and reminding parents to support their children to save.

•  Radio presentation through youth-focused Radio Stations for example GHETTO radio.

•  The SMATA account is the Framework for the impact assessment study.

Challenges in youth savings. Challenges that confront the youth in meeting their savings needs.

•  Accessibility: The geographical isolation of many of the poor, living in areas far removed from banks’ branch networks.

•  Prohibitive Fees: such as opening balances, transaction fees minimum operating balances, minimum deposit requirements

•  Prohibitive Regulatory Requirements: Legal Framework and national laws are discriminative of youth under ages of 18 years who require an adult to transact, production of ID documents and general access to banking services.

Emerging Innovations that Impact on the Youth in Kenya

•  E-Payments – Paying for public transport – Paying for goods and services – Paying bills – Purchase of air time –  Internet purchases

•  When should the youth be free to participate fully in the financial sector, now!

Need for Paradigm Shift in Product Design

•  FIs need to design, deliver, and market products that respond to youth needs. To address; –  Massive youth market populations, –  Bank branches, ATMs, Agent networks, digital

finance and Mobile Banking, –  Savings, insurance, payments/Remittances, –  Regulation, Banking Policy, Consumer Protection, –  Funding Landscape, Governance, Social

Performance and involvement.

The Future of Kenyan Youth in Banking

–  The aspects of convenience, accessibility, cost, support, and security of mobile payment systems have led to high usage by individuals and micro-business operators in Kenya.

–  It is estimated that there are 74 mobile phones for every 100 Kenyans, well above the African average of 65.

–  Definitely youth are in step with these adults milestones and own mobiles with a high percentage of internet subscriptions in the same gadgets.

•  YOUTH SAVINGS IMPACT STUDY IN KENYA

Branch Selection - Impact Assessment Study

•  Branch Manager and Staff should understand the objectives and purpose of the study.

•  Identify participating public primary schools. •  Deliver invitation letters to the school, ensure school management

gives authority and confirmation to participate in the study. •  Assist in identifying suitable research assistants as per approved

criteria. •  Introduce the research team to the schools. •  Conduct marketing activities in the experiment schools (Treatment

schools) once directed by Marketing department to do so. •  Support the research team during fieldwork activities.

Impact Assessment Study –Schools Selection Criteria

•  Must be a mixed (girls and boys)public primary school, gender balance.

•  Must be within a distance of 5kms from the branch-proximity, accessibility.

•  The branch manager or a member of staff from the branch should have a good relationship with the school head teacher, Principal or the general management of the school for acceptance.

•  Must be a school where Postbank has not done marketing of the youth at all, this is to avoid contamination.

Impact Assessment Study – Research Assistants

•  Must be a Kenya with a valid National ID or Passport. •  Must be between 18 and 28 years of age. •  Must be a resident of the branch area and available for the

research. •  Should not have a criminal record and MUST be of good conduct. •  Minimum education: Bachelor’s degree. •  Must be prepared to abide by the rules/code of conduct set for the

research. •  Must be prepared to work with and respect the youth. •  Must hold an account with Postbank. •  Must be prepared to undergo Child Safeguarding training and risk

assessment –National Focal Point on Child Protection.

Opportunities •  Research:

–  Household vulnerability versus asset building. –  Impact of youth savings in the household / community: Participation of parent,

guardians and care-givers in future studies. –  Sustainable, high impact models e.g. Partnership / Linkages to other NGOs and

CBOs and relevant government agencies and institutions of learning –  Establishment of permanent offices to coordinate various studies of youth asset

building. –  Out of School Youth: Best Practices –  Leveraging social media and other innovations to promote asset building

•  Asset building –  Parents/guardians : Are potential bank agents. –  Through the Financial Education conducted under the Youth Save project, youth

below 12 years are requesting to open accounts. –  Youth outside of formal establishment are opening accounts. –  Suggest change of policy for registration of Kenyans from 12 years old. –  Non banked parents, guardians and care-givers also opening accounts –  Development of business case in collaboration with CGAP –  Supporting youth in starting SMATA clubs hence building assets.

Q & A

Thank you