Financial inclusion is becoming a priority for policymakers, regulators and development agencies globally: World Bank

Financial inclusion has been identified as an enabler for 7 of the 17 Sustainable Development Goals. The G20 committed to advance financial inclusion worldwide and reaffirmed its commitment to implement the G20 High-Level Principles for Digital Financial Inclusion.

The World Bank Group considersfinancial inclusion a key enabler to reduce extreme poverty and boost sharedprosperity, and has put forward an ambitious global goal to reach UniversalFinancial Access (UFA) by 2020.

Since 2010, more than 55 countries have made commitments to financial inclusion, and more than 30 have either launched or are developing a national strategy. Our research indicates that when countries institute a national financial inclusion strategy, they increase the pace and impact of reforms.

Countries that have achieved the most progress toward financial inclusion have put in place an enabling regulatory and policy environment, and have encouraged competition allowing banks and non-banks to innovate and expand access to financial services. However, creating this innovative and competitive space has to be accompanied by appropriate consumer protection measures and regulations to ensure responsible provision of financial services.

Digital financial technology, or“fintech,” and particularly the global spread of mobile phones, has facilitatedexpanding access to financial services to hard-to-reach populations and smallbusinesses at low cost and risk:

• Digital IDs make it easier than ever before to open an account
• Digitization of cash-payments is introducing more people to transaction accounts
• Mobile-based financial services bring convenient access even to remote areas
• Greater availability of customer data allows providers to design digital financial products that better fit the needs of unbanked individuals

As countries have accelerated efforts toward financial inclusion, it has become apparent that they face similar hurdles which impede their progress. These include:

• Ensure financial access and services extend to hard-to-reach populations, including women and the rural poor
• Increase citizens’ financial literacy and capability so they understand different financial services and products
• Make sure everyone has valid identification documents, and a low-cost, accessible means for them to be authenticated
• Devise useful and relevant financial products, tailored to consumer needs
• Establish robust financial consumer protection frameworks, and adapt relevant regulatory and supervisory authorities, including by utilizing technology to improve supervision (so-called “regtech”)
• Globally, a lack of IDs makes it hard to open a bank account, access capital and credit.

As it is Published by World Bank, Last Updated: Apr 05, 2017