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May 18, 2018

Gains in Financial Inclusion, Gains for a Sustainable World

An MTN mobile money subscriber providing an electronic signature while having her identity verified through a mobile device in Abidjan, Côte d’Ivoire. © Nyani Quarmyne/IFC


Mary Banda in Zambia runs a small restaurant in one of Lusaka’s oldest markets. Before she learned that financial services could make the way she did business easier, her profits were low. But today, her profits have increased, both because she banks her money and because she uses mobile money transfer services.

Using financial services has simplified managing her business and increased profits. And business proceeds now pay her children’s school fees.

Women, Banda said, must not fear banks. “It is very important to save money because the informal sector where we operate has no social security.”

Financial inclusion may sound like an esoteric concept, but its meaning is more than real for the 1.2 billion people who have gotten access to a financial account since 2011, including more than half a billion people in the last three years.

With access to a financial account, people no longer need to rely on and transact solely in cash, or use their mattresses as savings cabinets.

Take Mohirahon B in Tajikistan as an example. She has started her own sewing business, after participating in a financial literacy training where she learned to handle and budget money. Or Sameh Seddik in Egypt who has expanded his business in Luxor, which now employs 40 seamstresses, all women, thanks to a micro-loan, aimed at expanding financial inclusion in Egypt. Meanwhile, in Mexico, extending access to finance in rural areas is helping farmers and rural businesses thrive.

Without financial access, these micro-entrepreneurs would be telling a different story. 

World Bank Group and Financial Inclusion

In fact, the foundation of financial inclusion is woven into seven of the 17 Sustainable Development Goals.

In 2011 the World Bank Group launched Global Findex, a database which tracks financial inclusion efforts around the world. Its third edition was just released in April 2018.

At the same time, as part of its efforts to improve the financial sector stability, develop a thriving private sector and create jobs, the World Bank Group realized that too many people didn’t have access to a financial account, which would help them participate in the economy.

The 2011 Findex data showed that 2.5 billion adults were ‘unbanked’ and the 2011 IFC MSME Finance Gap database showed that over 200 million micro to medium enterprises in developing economies lacked access to affordable financial services and credit.

That’s why in 2013, the World Bank Group announced a global vision for financial access and launched Universal Financial Access by 2020 (UFA2020) to enable adults worldwide to gain access to a transaction account. Since then, more than 30 partners across the financial sector have signed on to help reach this goal.

, according to the latest Findex data.

 The World Bank partners with governments and regulators to support responsible regulatory reform, while the International Finance Corporation (IFC)’s investments help expand and strengthen high-performing companies across borders, which stimulates demand for financial services. This is particularly true in the Bank Group’s work to close the gender gap on financial inclusion, which is an IDA18 theme.

Drivers of Access and Inclusion

Rapid changes and innovations in technology, especially the spread of mobile phones, have been driving access and inclusion. The mobile money industry processes 1 billion dollars a day through 276 mobile money deployments in 90 countries, according to GSMA, a global association of mobile network operators. Mobile phones and various other access points have brought financial services to the people rather than requiring people to travel long distances to actual brick and mortar banks.

Fintech companies are rapidly disrupting the financial sector landscape, making it easier than before to expand access. For example, super-platforms such as Ali Baba/Ant Financial, are rapidly expanding access through internet marketplaces or social media.

This innovation and “mobility” in financial services has been key.


Infographic: Gateway to Financial Inclusion. Click here to view the full infographic.

Having vs. Using Financial Accounts

Global financial inclusion objectives have also evolved. Having access to a financial account is a great start, but it’s not enough. And having a financial account and using it are two different things, Findex data show.

Today, some emerging markets are now at 80 percent financial access or greater, such as China, India, Kenya, and Thailand. As countries make progress on access to accounts, they need to focus on improving usage.  Globally, one-fifth of accounts are inactive—with neither a deposit nor a withdrawal in the past 12 months, according to Findex.

China is an excellent example of how access to accounts can transition to usage: Today, over 80 percent of adults in China have an account. 85 percent of adults who buy something online also pay online (as opposed to paying cash on delivery).

To increase account usage, countries can digitize cash payments — government transfers and wages. Alternatively, they can start by investing in fundamental infrastructure such as digital IDs and online credit histories — if people can prove who they are and can provide a credit history, financial institutions are much more likely to let them open an account.

Closing the Remaining Gaps

As countries focus on account usage, they also need to focus on extending access to finance to population segments that are more difficult to reach, such as women, the poor and those living in rural areas. About half of unbanked people are women, live in poor households, or are out of the workforce, according to the latest Findex data.

Financial services need to be tailored to the needs of first-time users, who may need customized products and accompanying financial literacy services that explain how to use financial products.

Financial capability – knowing and understanding how to use financial services – is what gave Mohirahon the confidence to open her own shop. Likewise, for Farzona, an Afghan refugee living in Tajikistan. Participating in the financial literacy training taught her to record all her purchases. “That helped me cap unnecessary spending. Now I'm smart with my money. This technique allowed me to increase savings, increasing my family budget,” she says.

As these new consumers enter the formal financial sector, financial capability training helps them make informed choices. However, they also need to be protected from harmful business practices, which is why it’s important that countries establish robust financial consumer protection frameworks.

Also, focus on women is key to gender equality and women’s empowerment. Although 65 percent of women now have an account, up from 58 percent in 2014, the gender gap remains at persistent 9 percentage points in developing countries. Those countries that had a gender gap back in 2011 when Findex started, continue to have it today – and it is particularly wide in South Asia.

"When the government deposits social welfare payments or other subsidies directly into women’s digital bank accounts, the impact is amazing. Women gain decision-making power in their homes, and with more financial tools at their disposal they invest in their families’ prosperity and help drive broad economic growth."
Melinda Gates
Co-Chair of the Bill & Melinda Gates Foundation



Financial services are increasingly relevant in fragile and conflict situations. Being able to provide quality financial services before, during and after periods of humanitarian crises can improve people’s resilience and help sustain livelihoods. For example, emergency cash transfers, particularly through digital mechanisms, can help address immediate vulnerability and mitigate the impact of crises.

Why It Matters

Financial inclusion translates into many other potential development benefits—especially from the use of digital financial services, including mobile money services, payment cards, and other financial technology (or fintech) applications.

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.