Financial products must be adapted to women’s needs, like enabling them to open their own account or improving their financial literacy. Photograph: World Bank Photo Collection
Two billion people worldwide still lack access to regulated financial services. Despite significant progress and the increased technical and financial resources devoted to financial inclusion, much work remains ahead.
There is broad consensus that access to a transaction account can help people better manage their life and plan for emergencies.
But financial access and the underlying financial infrastructure taken for granted in rich countries, such as savings accounts, debit cards or credit as well as the payment systems on which they operate, still aren’t available to many people in developing countries. This past September, I participated in the Global Policy Forum of the Alliance for Financial Inclusion (AFI) held in Mozambique. This annual meeting convened policymakers, the private sector and other stakeholders to assume new commitments, discuss best practices and agree on the way forward.
Since childhood, Gircilene Gilca de Castro dreamed of owning her own business, but struggled to get it off the ground. Her fledgling food service company in Brazil had only two employees and one client when she realized she needed deeper knowledge about what it takes to grow a business. To take her business to that next level, she found the right education and mentoring opportunities and accessed new business and management tools.
- financial inclusion
- International Finance Corporation
- Goldman Sachs
- Small Businesses
- Overseas Private Investment Corporation
- Career & Money
- Income Inequality
- Gender Gap
- Private Sector Development
- East Asia and Pacific
- Latin America & Caribbean
- Congo, Democratic Republic of
- United States
When it comes to understanding the needs and behaviors of low-income people, the financial inclusion literature is full of contradictions. Experts celebrate poor people for their complex, active financial lives, but then seek to educate them financially. Researchers document how resilient and purposeful their informal practices are, but then investigate ways to protect them against their own financial habits. Giving the poor a wide range of financial choices is an admirable goal, but do we really need to “nudge” them to change behaviors, as if the choice had already been made for them?
When I was a teenager, I went hiking in the French Alps. When I arrived at the top, the view was magnificent. It was like a picture postcard with the sun glimmering off the snow under a clear, blue sky.
This was the issue the president of the World Bank Group, UN Secretary-General, UN Secretary-General’s Special Advocate for Inclusive Finance for Development, private and public sector leaders discussed at an event, Universal Financial Access 2020, during the 2015 World Bank Group-IMF Spring Meetings.
Transaction accounts can open up access to those currently left out of the banking system, providing a basic entry point, or pathway, to broader financial inclusion.
It’s spring in Washington during a pivotal year in development. Thousands of government officials, journalists, civil society representatives, academics, and CEOs are arriving for the Spring Meetings of the World Bank Group and International Monetary Fund the week of April 13.
It’s one of the last such gatherings before decisions are made on the world’s development priorities and goals over the next 15 years – and how to finance them. In fact, the only item on the April 18 agenda of the Development Committee concerns these post-2015 goals and financing for development.
Two and a half billion people in the world do not have access to formal financial services. This includes 80% of the poor — those who live on less than $2 a day. Small businesses are similarly disadvantaged: As many as 200 million say they lack the financing they need to thrive.
This is why we at the World Bank want men and women around the world to have access to a bank account or a device, such as a cell phone, that will let them store money and send and receive payments. This is a basic building block for people to manage their financial lives.
Why is this so important? Financial inclusion helps lift people out of poverty and can help speed economic development. It can draw more women into the mainstream of economic activity, harnessing their contributions to society. And it will help governments provide more efficient delivery of services to their people by streamlining transfers and cutting administrative costs.
A step out of poverty
Studies show that access to the financial system can reduce income inequality, boost job creation, and make people less vulnerable to unexpected losses of income. People who are "unbanked" find it harder to save, plan for the future, start a business, or recover from a crisis.
Being able to save, make non-cash payments, send or receive remittances, get credit, or get insurance can be instrumental in raising living standards and helping businesses prosper. It helps people to invest more in education or health care.