Global Findex, The World Bank’s Financial Inclusion Data

Launched in 2011, the Global Findex is the World Bank’s financial inclusion database.

The collection of data is done with the collaboration of the Gallup World Poll and funded by the Bill & Melinda Gates Foundation. The database collected illustrates how the world’s population makes payments, save, borrow and manage risk. For example, the 2014 edition of the Global Findex shows that 62% of the global adult population possesses an account with a financial institution or mobile money provider.

The data also shows that from 2011 to 2014, the percentage of the unbanked fell by 20% to 2 billion. Also during that period, 700 million adults became account holders. The 13% increase of account ownership has largely been attributed to the introduction of mobile money to the Africa.  

Apart from showing the gains that have been achieved in the area of financial inclusion, the amassed data also indicates that there are still untapped opportunities for financial inclusion especially among the marginalized sections of the population such as the poor and womenfolk.

To spur the usage of these accounts, the government sector and private sector can play a crucial role by shifting social transfer payments and salaries into the accounts.

Formal savings around the world in 2014 (source: world bank)

2011 & 2014 Global Findex Database

While there are many initiatives that have been implemented to expand financial inclusion around the world, it is important that there exist a means to measure the effectiveness of these initiatives. The Global Findex database is the key to measuring their effectiveness in a systematic manner. The first edition which was published in 2011 covered 148 different economies and had more than 60 indicators on how adults use their account to receive, store payments and manage risks. The second edition of the Global Findex was released in 2014 covers more than 100 indicators and gave an update on the indicators that was first published in 2011. It also added more data on domestic payments and mobile money.

Comparative Results of 2011 & 2014 Global Findex

By comparing the indicators from the 2011 Global Findex to the 2014 Global Findex, the following have been noted:

• Progress in Expanding Financial Inclusion

The comparison shows that there were 700 million uptakes in new account opening. There was a 20% decrease in the number of unbanked from 2011 to 2014. The number of the world’s adults that has an account also increased by 11% from 51% in 2011.

• Success of Mobile Money in Sub-Saharan Africa

Although only 2% of the global adult population has a mobile money account, it was noted that 12% of the adults in Africa have a mobile money account. Furthermore, only 1% of the world’s adult are dedicated to using only a mobile money account as compared to 45% of the Sub-Saharan Africans adults.

• Additional Opportunities for Financial Inclusion

The results of the 2011 and 2014 Global Findex also helped experts to identify further opportunities in financial inclusion among the poor and women. Although there is an increase in the number of adults holding an account, the gender gap did not show any significant sign of narrowing, 65% of men having an account compared to 58% of women.

Although the indicators has shown a decline of 17% in the number of adults in the poorest 40% of households in every country surveyed, more than half of the adults of the 40% poorest households in developing economies still do not have an account.

• Digital Payments of Wages and Transfer by Private Sector and Governments

It was noted that by shifting the payment of wages and transfers from cash to digital payment directly into the accounts result in a faster uptake of account opening and hence expanding financial inclusion more rapidly.

Purchases of agricultural products done through digital payments also increase security and represent one of the first entry points to the formal financial system. The conclusion of this observation meant that governments and the private sector play a crucial role in expanding financial inclusion.

Account penetration around the world (source: World bank)

• Data Indicated Promising Usage of Accounts

It has been understood that while the ownership of an account is the first step to financial inclusion, the use of the account is what really matters. The data shows that in excess of 65% of the account holders in developing countries use their accounts at least 3 times a month. In addition, 1.3 billion adults in developing countries utilize their account to pay for utilities and services.

• Better Management of Risks

It has also been observed that financial inclusion allows people to save their money in a secure manner. It also provides for easy access in times of financial emergency hence allowing people to better manage risks.

Conclusion

Findex has provided us with a reliable database about financial inclusion around the globe. Financial inclusion is one of the main sustainable goals set by the UN to be achieved in 2020. Recent technological innovations such as blockchain, IoE and artificial intelligence, will certainly have an important role in achieving prosperity for all, and help develop the more disadvantaged communities.