With more people than ever using formal financial services, the challenge to move the industry further forward lies in striking a balance between the public and private sector.

Customers line up at an online financial services provider in Mumbai. Bloomberg

By Joseph Dana | April 25, 2018

Every three years, the World Bank publishes a Global Findex Database tracking the state of financial services. From Finland to Angola, analysts survey how people use financial services to gather insights on financial inclusion and identify barriers to access. The most recent report was published on April 19 and, unsurprising for anyone following the industry, uncovered several positive trends.

More people than ever before have some sort of financial services account. Since the last report in 2014, 515m more people have opened a formal account. That means 3.8bn people around the world now have access to financial products while the global unbanked population hovers around 1.7bn.

Mobile money is a bright spot. Increased access to smartphones and improved mobile infrastructure have helped mobile money accounts grow since 2014. This is especially true in Africa, where the use of mobile money is spreading from saturated East African markets to countries like Senegal, Gabon, and Ivory Coast. Among those surveyed in sub-Saharan Africa, 21% of adults said they had a mobile money account compared to 12% in last year’s report.

The financial gender gap

Despite the growing number of mobile money accounts and more people than ever using some form of financial services, analysts found that the gender gap in account ownership hasn’t changed in many developing countries. Globally, the gap between men’s and women’s account ownership was 7%, but in some markets such as Pakistan and Bangladesh that number is closer to 30%.

Digitization of wage payments (e.g. electronic transfers) coupled with increased public sector engagement including government-to-person digital payments is one way to bridge the gender gap. In an interview with emerge85, Dorothe Singer, one of the report’s authors, elaborated further:

“There are still 100m unbanked adults today in the world who receive [government] payments in cash, providing an opportunity to bring those people into the financial system by digitizing those payments. Similarly, we also asked about private sector wage payments. There we see there are around 230m unbanked adults receiving a wage payment in cash today. By digitizing those payments, the private sector could play a role in increasing financial inclusion.”

The not-so-invisible hand of the government

While innovation in financial inclusion has undoubtedly been driven by technological advancements and the creation of critical mobile infrastructure over the last three years, the authors of the report noted the need for public-private partnerships to expand the sector. Singer noted:

“I want to emphasize there the importance of the public and private sectors working together. When we talk about digitalization, we know it’s been very important and it will be very important in the future for expanding access. We also want to recognize that there are challenges to ensuring digitalization happens. And this requires not only physical infrastructure as we’ve been talking about, but also it requires a role for the government to ensure that there are appropriate protections for consumers. And we also want to make sure there are incentives for the private sector to appropriately design these types of instruments so they can be used by those that have low literacy and numeracy skills. So all these things [should] happen collaboratively.”

According to the report, at this stage the role of the government in financial inclusion is critical for the provision of infrastructure. From digital identification standards to the regulation of physical banking branches, financial institutions rely on governments to establish the infrastructure that allows their business to grow. This is especially true in countries such as India that are undergoing national biometric ID programs, but is also evident in less developed markets.

“Regulation has already played a very important role,” Asli Demirguc-Kunt, another author of the report, said in a phone interview. “For example, the ability to use agent networks and correspondent banking has been very important for non-digital users to be able to withdraw cash safely and conveniently. And the encouragement and requirement to have digitization of the accounts, provision of national ID, those are all things that come through government regulation, which has had an enormous impact in various countries. India is a specific case where we have seen a very significant increase in inclusion because of some of the specific things the country has undertaken.”

Trends and opportunities in financial inclusion

Cost will determine opportunities in financial inclusion. With the rise of smartphones and greater connectivity, the cost of sending money between countries or cities has become cheaper. This has given rise to mobile money accounts and new initiatives to digitize all manner of payments from government wages to standard electricity bills. Perhaps the greatest disruptor with regard to the cost of digital money will be the influence of blockchain technology.

Yet, the World Bank report didn’t highlight blockchain prominently. One reason is that blockchain is a relatively new addition to the sector and few people are using blockchain-enabled technology as a method of storing and sharing money. “We are sure to see much more [blockchain] in many areas in fintech that range from remittances and international flows of money to potentially improving different ways in which people are included in the financial sector,” Demirguc-Kunt noted.


A growing number of people around the world are using formal financial services, that much is clear from the latest World Bank Findex report. This forward momentum is part of a long-standing positive trend that microfinance institutions and individuals like Muhammad Yunus pioneered in the 1970s. Digitization and its underlying infrastructure have gone further and brought financial products to more and more people.

While there is much to celebrate, we also shouldn’t rest on our laurels. A large part of the world remains unbanked and the gender gap is a stubborn challenge with no clear solution. Digitization has raised a whole host of new questions that can either accelerate financial inclusion or slow things down considerably. How will governments handle data privacy and ownership as more and more people provide biometric information for digital IDs?

What innovations will the private sector offer to a new class of financial customers? From cheaper phones, to more user-intuitive applications, to the right product mix, to the best technology – what will unlock truly inclusive digital economic participation across the global? With more people than ever using financial services, these questions will have ramifications for sectors beyond financial inclusion.

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