Financial Inclusion - Hard Facts
Measuring & Progress
The Global Financial Inclusion (Global Findex) database was introduced by the World Bank in 2011 and updated in 2014 and 2017. It measures “how adults in more than 140 economies access accounts, make payments, save, borrow, and manage risk.”
Compiled using nationally representative surveys of more than 150,000 adults age 15 and above in over 140 economies, the 2017 Global Findex database includes updated indicators on access to and use of formal and informal financial services including the latest financial technology.
According to the latest available survey, the global share of adults owning a bank account is up by 18% since 2011 to 69% or 515 million adults gaining access to financial tools. Government policies, digital payments and mobile technology are the main drivers of this progress. Regarding the latter, 21 % of adults, the highest share worldwide, use mobile payments in Sub-Saharan Africa. Digital payments, making payments using mobile phones or the internet to make payments or purchases, has also increased by 10% worldwide since 2014.
While some progress has been made to close the gender gap, still 65% of women own an account in contrast to 72% of men. Other gaps, access to accounts between rich and poor and between rural and urban dwellers have not seen much improvements.
The use of accounts for saving and borrowing has stagnated.
Having access to financial services and using them are two different things, as the following graphs from the World Bank report succinctly reveal.
While the use of digital payments in developing countries have increased by 12% from a low base in 2014 to 44% in 2017, this still lags hugely behind high-income countries.
Use of mobile phones making direct payments from an account: the picture is similar to the above, with 51% of adults in high-income economies vs 19% in developing economies reporting to have at least made one mobile payment in the last 12 months.
On a global scale, about a fifth of all accounts have not been used for deposits or withdrawals over a period of 12 months and are regarded as inactive.
Overall, the graphs illustrate again stark differences between how high-income and developing economies save. Apart from a much higher number of savers, high-income countries also have more savings deposited in formal financial institutions. While saving for old-age has a higher priority in high-income countries (50% vs 16%), saving for a business is surprisingly of similar importance (14%), except for Sub-Saharan Africa, were 29% save to invest in a business.
The funding sources depicted by the graphs are very interesting indeed. Overall, more than half of adults have borrowed money. Borrowers in high-income countries have mostly accessed loans from formal institutions, while in developing economies, the main funding sources are almost equally split between friends and family on the one hand and formal institutions on the other. Semi-formal sources such as savings-clubs only feature in developing economies.
Buying land or a home is the most common borrowing reason in high-income countries, 27% vs 10%.
Improving financial inclusion aims to make people financially resilient and improve income earning opportunities. Nearly 80% of citizens in high-income countries state that they are able to raise emergency funds in contrast to about 50% in developing countries. While savings are the main source of emergency funds in high-income economies, only a small percentage of developing countries' population can resort to this source.
The Progress made so far is encouraging, and there are new technologies that promise to close gaps even faster. Their impact on financial inclusion now depends largely on digital inclusion. Therefore, the focus of financial inclusion may be shifting from access and affordability to addressing cultural and religious resistances.
(1) Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar, and Jake Hess. 2018. The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. Washington, DC: World Bank.