Overview

  • Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.

    Being able to have access to a transaction account is a first step toward broader financial inclusion since a transaction account allows people to store money, and send and receive payments. A transaction account serves as a gateway to other financial services, which is why ensuring that people worldwide can have access to a transaction account is the focus of the World Bank Group’s Universal Financial Access 2020 initiative.

    Financial access facilitates day-to-day living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies. As accountholders, people are more likely to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health, manage risk, and weather financial shocks, which can improve the overall quality of their lives.

    Great strides have been made toward financial inclusion and 1.2 billion adults worldwide have gotten access to an account since 2011. Today, 69% of adults have an account.

    Moving from access to account to account usage is the next step for countries where 80% or more of the population have accounts (China, Kenya, India, Thailand). These countries relied on reforms, private sector innovation, and a push to open low-cost accounts, including mobile and digitally-enabled payments.

    However, close to one-third of adults – 1.7 billion – are still unbanked, according to the latest Findex data.

    About half of unbanked people include women poor households in rural areas or out of the workforce.

    The gender gap in account ownership remains stuck at 9 percentage points in developing countries, hindering women from being able to effectively control their financial lives. Countries with high mobile money account ownership have less gender inequality.

    Since 2010, more than 55 countries have made commitments to financial inclusion, and more than 60 have either launched or are developing a national strategy. When countries take a strategic approach and develop national financial inclusion strategies which bring together financial regulators, telecommunications, competition and education ministries, our research indicates that when countries institute a national financial inclusion strategy, they increase the pace and impact of reforms.

    Countries that have achieved the most progress toward financial inclusion have: 

    • Policies delivered at scale, such as universal digital ID - India and Aadhaar / JDY accounts - more than 1.2 billion residents covered
    • Leveraged government payments. (For example, 35% of adults in low income countries receiving a government payment opened their first financial account for this purpose.)
    • Allowed mobile financial services to thrive. (For example, in Sub-Saharan Africa, mobile money account ownership rose from 12% to 21%.) 
    • Welcomed new business models, such as leveraging e-commerce data for financial inclusion 
    • Taking a strategic approach by developing a national financial inclusion strategy (NFIS) which bring together diverse stakeholders including financial regulators, telecommunications, competition and education ministries
    • Paying attention to consumer protection and financial capability to promote responsible, sustainable financial services

    Last Updated: Oct 02, 2018

  • The World Bank Group plays a critical role in advancing financial inclusion in the world since it can leverage its financial sector expertise, country engagement and dialogue, financing and risk-sharing instruments, unique datasets and research capacity, and influence with standard-setting bodies and the G20.

    Our work on financial inclusion also underpins the institution’s efforts in other development areas, including shifting social transfer payments from cash to digital, support to SMEs and agriculture, and the World Bank Group’s Identity for Development (ID4D) initiative.

    It is also interwoven into other institutional initiatives, including:

    • The Women Entrepreneurs Finance Initiative (We-Fi) which focuses on removing financial and non-financial constraints for women small-business owners.
    • The Digital Economy for Africa (DE4A) Initiative to support Africa’s efforts toward building inclusive and sustainable digital economies.
    • Work in IDA countries as part of the IDA18 framework on women’s financial inclusion.

    To be successful in achieving financial inclusion, it’s essential for a country to have a strong political commitment and coordination across relevant public and private stakeholders, and be able to create an enabling environment and wide-reaching policies that promote responsible financial access, financial capability, innovative products and delivery mechanisms, and high quality data to inform policy-making.

    We have two institution-wide specific initiatives to promote financial access and inclusion:

    Universal Financial Access (UFA) by 2020: In 2013, the World Bank Group committed to extending access to financial services to 1 billion adults through the Universal Financial Access 2020 initiative, which envisions that adults worldwide will be able to have access to a transaction account to store money, send or receive payments. While the UFA2020 initiative focuses on 25 countries where almost 70% of all financially excluded people live, we are working with more than 100 countries to advance financial access and inclusion. As of December 2017, we estimate that our advisory, technical assistance, and financing operations will help reach 738 million new accountholders by 2020 (toward a 1 billion goal). Track progress toward UFA.

    Financial Sector Assessment Programs (FSAPs): As governments and standard-setting bodies started prioritizing financial access, financial inclusion topics have become prevalent in FSAPs, which are assessments the World Bank and the IMF developed to help strengthen countries’ overall financial systems and cover a range financial sector issues.

    We have developed an integrated and unified approach in our work to help countries achieve financial access and responsible financial inclusion, which focuses on 9 intertwined areas:  

    1.   National financial inclusion strategies (NFIS): offer governments technical assistance to design and implement national or subnational roadmaps and action plans to achieve their financial inclusion objectives.

    2.   Modernize retail payment systems and government payments: help countries design strategies to promote the use of electronic payments, instead of cash and paper-based instruments. Many countries are successfully digitizing government payments by shifting all government-to-person payments into accounts, which typically lowers costs and increases financial access. It also leads to significant cost savings in the administration of payment schemes, as well as to reduced leakages related to corruption and fraud.

    3.   Reform national payments systems (NPS), including remittance markets: conduct a comprehensive diagnostics of countries’ payments and settlement systems, including remittance markets, and make recommendations to improve NPS.

    4.   Diversify financial services for individuals: support legal, regulatory and policy reforms, capacity building for supervisors, design of government programs to open up access to a range of financial services, including savings, insurance and credit, so that transaction accounts provide a pathway to full financial inclusion.

    5.   Leverage technology for financial inclusion: work with national authorities to create an enabling environment to take advantage of “fintech” opportunities and new technology, level the playing field, and expand financial access. We also support G20-led work-streams relevant for “fintech.”

    6.   Strengthen competition and expand access points: support regulatory and supervisory reforms to open up access and ensure level playing field for banks and non-bank (or non-traditional service providers), such as telecoms companies, “fintech” firms, post offices, cooperatives and agent networks.

    7.   Financial consumer protection: work on building legal and regulatory framework for financial consumer protection, disclosure and transparency, including advising on institutional arrangements and redress mechanisms, and building capacity.  

    8.   Financial capability: work with governments to design national financial education strategies (NFES), collect data and create surveys to measure the level of financial literacy, capability and awareness, and design and evaluate financial capability programs.  

    9.   Financial inclusion data: Our global and country-level surveys provide data and insights on financial inclusion. Our global surveys include the Global Findex, surveying more than 150,000 people in some 140 countries; the Global Payment Systems Survey (GPSS), surveying regulators in some 120 countries on financial infrastructure related to payments and mobile money; and the Global Financial Inclusion and Consumer Protection (FICP) Survey, surveying regulators in some 140 countries to assess the enabling environment for financial inclusion and consumer protection. We also conduct country-level diagnostics and surveys on financial capability and consumer protection, and finance for small and medium enterprises (SMEs). Finally, our Remittance Prices Worldwide (RPW) database provides data on the cost of sending and receiving remittances in 365 country corridors.  

    We also work through several global trust fund programs on financial inclusion:

    Financial Inclusion Global Initiative (FIGI), started in 2017, advances global program to advance research in digital finance and accelerate digital financial inclusion. This program focuses on three pilot countries, China, Egypt, Mexico, and is supported by the International Telecommunication Union (ITU), the Committee on Payments and Market Infrastructures (CPMI), and the Bill & Melinda Gates Foundation. 

    Financial Inclusion Support Framework (FISF) program, started in 2013, supports reforms and other country-led actions to achieve national financial inclusion goals and targets. FISF scales up and leverages the World Bank Group’s policy dialogue, analytical work and financing for financial inclusion. The program currently covers eight countries and is supported by the Ministry of Foreign Affairs of the Netherlands and the Bill & Melinda Gates Foundation.

    Harnessing Innovation for Financial Inclusion (HiFi) program gives technical assistance to financial service providers to help them develop technology-driven business models to deliver financial services to the underserved. It also provides expertise to help developing countries modernize government, retail and remittance payment systems. It’s supported by the UK Government Department for International Development (DFID) and implemented by the World Bank Group.  

    Consumer Protection and Financial Literacy (CPFL) Trust Fund: provide technical assistance through existing financial consumer protection and literacy programs to improve laws and regulations that strengthen consumer disclosure, prohibit abusive business practices, and establish effective out-of-court mechanisms to address consumer disputes as well as to enhance consumer knowledge and awareness of financial services, especially for the poor and vulnerable. It’s supported by the Swiss State Secretariat for Economic Affairs (SECO).  

    Globally, we engage with standard-setting bodies, help shape standard-setting initiatives and convene forums.

    G20 Global Partnership for Financial Inclusion (GPFI):  The World Bank Group is an implementing partner of the GPFI, an inclusive platform for all G20 countries, interested non-G20 countries and relevant stakeholders to work on financial inclusion. Under the China G20 Presidency leadership, the World Bank Group helped develop the G20 High Level Principles (HLPs) for Digital Financial Inclusion, and provided technical input to the New G20 Indicators for the Digital Financial Inclusion. The eight High Level Principles encourage governments to promote a digital approach to financial inclusion, and are being used as a reference tool by many countries.  The principles catalyze cross-government actions to drive financial inclusion through digital technologies, and also help ensure that consumer interests are at the forefront of policy concerns, emphasizing consumer protection and financial literacy.

    Payment Aspects of Financial Inclusion (PAFI) report outlines seven guiding principles and suggests actions countries can take to advance access to transaction accounts. It was prepared by a financial regulator task-force chaired by the Committee on Payments and Market Infrastructures (CPMI) and the World Bank Group.

    Last Updated: Oct 02, 2018

  • Finance, Competitiveness & Innovation Global Practice (FCI), World Bank Group

    As of June 2016, active financing operations to support national authorities to improve financial inclusion amounted to $4 billion in commitments, with another $1 billion in the pipeline. We’ve also developed new guidance, diagnostic tools, data, and research to enable more effective national policy, regulatory, and supervisory frameworks. Since June 2012, our work has reached more than 70 million people, microenterprises and SMEs with financial services.

    Through IDA17, the World Bank Group committed to supporting at least 10 IDA countries in achieving national commitments/targets to financial inclusion, which was met and surpassed. Since demand outstripped the original target, a total of 16 IDA countries, nine of which are in sub-Saharan Africa, were identified for Bank Group support to help meet national financial access and inclusion commitments. Eleven of those 16 countries now have new or expanded World Bank Group-financial access/inclusion projects.  These projects include comprehensive programs of technical, knowledge, and financial support to design and implement National Financial Inclusion Strategies, as well as to support transformational reforms and investment in innovative payment services, digital finance, micro/SME finance, responsible finance and related areas.

    Our work compliments the efforts of other entities within the World Bank Group that also focus on financial inclusion:  

    IFC, the World Bank Group’s private-sector investment arm, works to advance financial inclusion through its engagement with financial institutions and intermediaries.

    Also, the Consultative Group to Assist the Poor (CGAP), a global partnership of 34 leading organizations housed at the World Bank, works to advance financial inclusion through responsible market development and advocacy to increase access to financial services for the poor.

    Country examples:

    Indonesia established a new National Financial Inclusion strategy in August 2016, and in the last couple of years has undertaken various financial inclusion reforms to develop the culture of savings, strengthen the existing credit guarantee scheme and community empowerment schemes, improve financial infrastructure and payment systems, increase access to insurance, and enhance financial literacy.

    The Bank Group is working with the country on reforms to expand financial access and digitize payments (including social transfers), expand access points, strengthen the regulatory and supervisory environment, and raise the population’s financial awareness and capability.

    Mexico: In June 2016, Mexico launched its national financial inclusion strategy to accelerate access to financial services for more than half of the population currently left out of the formal and regulated financial system. The Bank Group is helping the country strengthen financial sector oversight, foster credit and expand financial inclusion.

    Mozambique: With support from the World Bank, Mozambique launched a new financial inclusion strategy in July 2016, designed to increase access to financial services from 24% to 60% of the population by 2022.

    Pakistan: The World Bank is supporting country-led efforts with reforms and other actions to expand financial access and inclusion. The Bank Group’s support has enabled Pakistan to strengthen its banking system and increase private sector participation.   

    Peru: The country’s national financial inclusion strategy, formulated with the Bank’s assistance and launched in 2015, committed the government to ensure that at least 75% of adults have access to a transaction account by 2021. 

    Last Updated: Oct 02, 2018

  • The World Bank Group works globally with standard-setting bodies to develop guidelines, standards and good practices. We also work with the G20 to develop guidance for regulators and policymakers and to catalyze new actions in support of financial inclusion. We are also an implementing partner for the G20 Global Partnership for Financial Inclusion (GPFI).

    We also work closely with a number organizations and donor partners to advance financial inclusion, including Alliance for Financial Inclusion (AFI), AusAid, the Bill and Melinda Gates Foundation, DFID, Financial Sector Development Trusts, GIZ, the Ministry of Foreign Affairs of the Netherlands, the OECD, SECO, UNCDF, UNCITRAL, UNSGSA, USAID, and regional development banks.

    The Ministry of Foreign Affairs of the Netherlands and the Bill and Melinda Gates Foundation provide the funding for the Financial Inclusion Support Framework (FISF), while SECO provides funding for the Consumer Protection and Financial Literacy (CPFL) program, and DFID provides funding for the Harnessing Innovation for Financial Inclusion (HiFi) program.

    Specifically on the UFA2020 initiative, we also work with partners to catalyze private sector investment in financial inclusion. Leading financial service providers have set ambitious targets in line with the UFA 2020 goal. The UFA financial sector partners with concrete commitments include financial institutions, payments and technology companies, telecommunications firms, networks and industry associations.

    Last Updated: Oct 02, 2018

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In Depth

Dec 14, 2014

CGAP

The Consultative Group to Assist the Poor (CGAP) is a global partnership of 34 leading organizations that seek to advance financial inclusion.

Dec 14, 2014

Responsible Finance: Financial Capability & Consumer Protection

The Financial Inclusion and Consumer Protection Service Line provides country diagnostic reviews, household surveys, and technical assistance to strengthen legal and institutional frameworks.

Dec 14, 2014

G20 Financial Inclusion Indicators

These indicators cover access to financial services, usage of financial services, and the quality of the service delivery (including financial literacy).

Dec 14, 2014

Global Partnership for Financial Inclusion

The Global Partnership for Financial Inclusion (GPFI) brings together interested stakeholders working on financial inclusion to implement the G20 Financial Inclusion Action Plan.

Additional Resources

Media Contacts

Washington, D.C.
Dina Elnaggar
delnaggar@worldbank.org