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.
lastupdated: Oct 02, 2018