Financial inclusion is a hot topic at the moment, with the rise in the financial technology (fintech) industry helping more people access financial services than ever before. Financial inclusion and financial literacy have been identified as two of the most significant stumbling blocks in the developing world, but this research shows that great strides are finally being made.
The results of the research
The research found a significant discrepancy between the proportion of people with a bank account in high income countries (94 percent), and those with a bank account in developing countries (53 percent. The region with the lowest proportion of people with a bank account was the Middle East, where just 14 percent had an account at a financial institution, up 3 percent on the figures for 2011.
The greatest rise in bank account use was found in the East Asia and Pacific region, and South Asia, where bank account usage rose by 14 percent between 2011 and 2014, to 69 percent and 45 percent respectively.
Those without accounts are disproportionately poor and female
Of those without bank accounts, the research found evidence that gender inequality is very much alive and well. 42 percent of women around the world are unbanked, compared to just 35 percent of men. As you might expect, wealth also plays a part in levels of financial inclusion around the world. Half of the world’s unbanked, some 1 billion people, belong to the poorest 40 percent of households.
Poverty was also cited as a common reason for not having a bank account. 59 percent of the unbanked said a ‘lack of money’ was one of the reasons they did not have an account, although just 16 percent said it was the only reason. This compares to the 4 percent of people who cited ‘lack of need’ as the reason for their unbanked status.
The research found that in the world today 2 billion adults are excluded from the financial system, and for the most part this is not due to a lack of financial literacy. Financial literacy remains a problem in many developing countries, and this is something services like the money academy, launched by the South African payday loans lender Wonga, hopes to do something about. However, the findings show that most of the world’s unbanked do want to open an account. It is now down to the private sector and governments to do all they can to educate individuals about the potential benefits bank account use can bring.