New Database Shows Three Quarters of World’s Poor Are “Unbanked”

April 19, 2012

WASHINGTON, April 19, 2012 – Three quarters of the world’s poor do not have a bank account, not only because of poverty, but also because of the cost, travel distance, and amount of paper work involved in opening one, says the World Bank.

Those without access to formal banking often have to rely on money lenders who often charge high fees. The “unbanked” are also less likely to start their own business or insure themselves against unexpected events.

Financial inclusion, or being “banked” can be transformative, as it allows poor people to build a more secure future. The ability to save and borrow allows them to build their assets, start a business, invest in education, establish a credit rating, and eventually own a home.

"Providing financial services to the 2.5 billion people who are ‘unbanked’ could boost economic growth and opportunity for the world's poor,” said World Bank Group President Robert B. Zoellick. “Harnessing the power of financial services can really help people to pay for schooling, save for a home, or start a small business that can provide jobs for others. This new report on the world's 'unbanked' makes the case: the more poor people are banking today, the more they are banking on their future."

Women are particularly disadvantaged when it comes to access to financial services. Only 37% of women in developing countries have an account, whereas 46% of men do. That gap is even bigger among those in poverty: Women living below $2 a day are 28% less likely than men to have a bank account.

Worldwide, 22% of adults report having saved at a formal financial institution in the past 12 months, according to the World Bank’s Global Financial Inclusion Database, or Global Findex. Findex provides the most comprehensive picture yet of how people around the world save, borrow, make payments and manage risks.

Even among those who do have a formal bank account, only 43% of adults use their account to save. Yet 61% of account holders worldwide use their account to receive payments from an employer, the government or family members living elsewhere.

The data was collected by Gallup, Inc. using the Gallup World Poll Survey. The Bank’s Development Research Group is building the database with a 10-year grant from the Bill & Melinda Gates Foundation.

Few adults in developing countries use formal financial products to manage risk. More than 11% of adults in developing countries have an outstanding loan for emergencies or health-care needs, but more than 80% of these adults use only informal sources of credit. Of adults in developing countries working in farming, forestry or fishing, only 6% of them have crop, rainfall or livestock insurance.

“Good, comparable national data is so important for the development of effective policies. I hope policy makers will use this research to help make sure everyone, everywhere, has access to financial services,” said Her Royal Highness Princess Máxima of the Netherlands and the UN Secretary General’s Special Advocate for Inclusive Finance for Development.

Money transfers through mobile phones is a form of increasingly popular nontraditional banking that often doesn’t require users to travel or set up an account at a brick-and-mortar bank. Such mobile banking, which allows account holders to pay bills, make deposits or conduct other transactions via text messaging, has expanded to16% of the market in Sub-Saharan Africa, where traditional banking has been hampered by transportation and other infrastructure problems. Kenya, where 68% of adults report using a mobile phone for money transactions, has seen particularly impressive growth in this market.

“Nearly two-thirds of the unbanked cite poverty as the obstacle to financial access, but about a third also blame the cost of opening and maintaining an account or the banks being too far away, which means long bus rides for many,” said Asli Demirguc-Kunt, the Bank’s director of development policy and chief economist of the Finance and Private Sector Network.

The Bank’s financial inclusion portfolio totals over $3 billion, with projects in over 60 countries. It supports country action plans for financial inclusion as well as increasing access to financial products and services such as credit, savings, payments, and insurance through low cost delivery mechanisms (ATM kiosks, mobile phones).


High Income: Nine out of 10 adults in high-income economies report having an account at a formal financial institution.
East Asia and Pacific: 28% of adults in EAP reported having saved at a formal financial institution in the past 12 months, compared to 10 percent in the rest of the developing world.
Europe and Central Asia: 61% of account holders in ECA use their accounts to receive wages, compared to 32% in the rest of the developing world.
Latin America and Caribbean: 41% of non-account-holders in LAC cite cost as a reason for not having a formal account. 19% of adults in LAC report having a credit card, compared to 5 percent in the rest of the developing world.
Middle East and North Africa: Account holders in MENA access their accounts less frequently than do account holders in other regions: 17% of adults with a formal account report zero deposits and withdrawals in a typical month, compared to 8% globally.
South Asia: The relative gender gap in formal account ownership is highest in South Asia: 41 percent of men and 25 percent women have an account. 73% of savers in South Asia report saving for an expense in the future such as an education or a wedding.
Sub-Saharan Africa: 16% of adults in SSA report having used a mobile phone to pay bills, send or receive money in the past 12 months, compared to 3% in the rest of the developing world.

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