Financial inclusion is the ability of individuals and companies to access practical, affordable, and appropriate financial products and services. This includes transactions, payments, and savings, as well as credit, insurance, and credit.

  • Seven Sustainable Development Goals have been identified as enabling financial inclusion.
  • The G20 reaffirmed its commitment to implement the G20 high-level principles for digital financial inclusion.
  • The World Bank Group views financial inclusion as a critical tool to reduce extreme poverty and increase shared prosperity.

Access to a Transaction Account is the first step towards broader financial inclusion, as a Transaction Account allows users to send and receive money and store it. The World Bank Group’s (WBG) focus is ensuring people worldwide can access transaction accounts. It was the main focus of the Universal Financial Access 2020 initiative of the World Bank Group, which ended at the end of 2020. This initiative has made many improvements, but it also shows the magnitude of the task.

Financial access helps people plan their day-to-day lives and help families and businesses prepare for anything from long-term plans to unexpected emergencies. Account holders are likelier than non-accountholders to utilize other financial services such as insurance and credit to manage risks, start or expand businesses, finance education, health, and improve their overall quality of life.

The COVID-19 crisis, which is still ongoing, has reinforced the need to increase digital financial inclusion. Digital financial inclusion uses cost-saving digital technologies to reach financially excluded and underserved groups with formal financial services that meet their needs and are delivered responsibly at a price affordable for customers and sustainable to providers.

1.2 billion adults have accessed a bank account in the last five years. In 2017, 69% of adults worldwide had a bank account. More than 80 countries have launched digital financial services, including mobile phones. Some of these services are now available on a significant scale. Millions of previously excluded and underserved customers are now switching from cash-only transactions to formal financial services using mobile phones or other digital technologies.

In countries with 80% of their population or more having accounts (China, Kenya, India, Thailand), the next step is to move from the access of funds to their usage. These countries have relied on private sector innovation and reforms to open low-cost, mobile, and digitally enabled accounts.

According to the latest Findex Data (2021 data coming), nearly a third of adults, or 1.7 billion people, were unbanked as of 2017.

In developing countries, the gender gap in account holdings remained at 9 percent between 2011 and 2017, preventing women from having absolute control over their finances. In countries with high mobile money account ownership, gender inequality was lower. It is yet to be seen what impact COVID-19 will have on this gender gap.

Since 2010, over 55 countries have committed to financial inclusion, and over 60 are either developing or launching a national strategy. The countries that have made the most significant progress in financial inclusion are:

  • Aadhaar/JDY accounts and universal digital ID in India are examples of policies delivered at scale. More than 1.2 billion people are covered.
  • Leveraged payments from the government. For example, 35% of adults in low-income countries who receive a government payment have opened their first account.
  • Mobile financial services flourished. Mobile money accounts in Sub-Saharan Africa rose from 12% to 21%.
  • New business models, such as using e-commerce to improve financial inclusion, were welcomed
  • A strategic approach is taken by developing a National Financial Inclusion Strategy (NFIS), which brings together diverse stakeholders, including financial regulators and telecommunications, education, and competition ministries.
  • Promoting sustainable and responsible financial services requires attention to the consumer’s protection and financial capabilities.

Our research shows that countries that develop national financial inclusion strategies, including financial regulators and telecommunications and competition ministries, increase the speed and impact of their reforms.

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