Thursday 28 Mar 2024
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KUALA LUMPUR (Apr 16): Between 2011 and 2014, some 700 million people became account holders at banks and financial institutions globally, while the total of “unbanked” individuals dropped 20% to two billion adults, according to the World Bank.

The World Bank said that according to the latest findings in Global Findex (gauge of progress on financial inclusion), between 2011 and 2014 the percentage of adults with an account increased from 51% to 62%, a trend driven by a 13 percentage point rise in account ownership in developing countries and the role of technology.

It said that in particular, mobile money accounts in Sub-Saharan Africa are helping to rapidly expand and scale up access to financial services. Along with these gains, data also show big opportunities for boosting financial inclusion among women and poor people.

The World Bank group president Kim Jim Yong said that access to financial services could serve as a bridge out of poverty.

“We have set a hugely ambitious goal, namely universal financial access by 2020 — and now we have evidence that we’re making major progress.

"This effort will require many partners — credit card companies, banks, microcredit institutions, the United Nations, foundations, and community leaders. But we can do it, and the payoff will be millions of people lifted out of poverty.”

Meanwhile, World Bank managing director and chief operating officer Sri Mulyani Indrawati said that when a woman had an account and a safe place to save outside the home, she also had greater control over finances and household incomes.

“Equipped with access to formal savings and credit, women participate more in the economy. They can set aside funds for emergencies, for schooling, or for starting a business.

“This is an important stepping stone out of poverty and towards more equality,” she said.

The Global Findex said technology also could spur account usage and transform the way domestic payments are made, a new topic probed in the 2014 Global Findex.

“For instance, 355 million adults in developing countries with an account report sending or receiving domestic remittances in cash or over the counter, including 35 million in Sub-Saharan Africa.

“Moreover, 1.3 billion adults with an account in developing countries pay their trash, water, and electric bills in cash, and over half a billion adults with an account in developing countries pay school fees in cash,” it said.

The report said access to digital payments, through a mobile phone or point-of-sales terminal, create opportunities to provide more convenient and affordable payment options.

The 2014 Global Findex also explored financial resilience.

It said people were polled about how they would pay for an emergency requiring spending the equivalent of one-twentieth of their annual income, assuming they would need access to the money within a month.

“Globally, 76% of adults reported that they could come up with the local currency, and 28% — 1.2 billion adults — in developing countries reported they would use their savings in case of an emergency.

“Yet 56% of these adults do not save at a financial institution,” it said.

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