Financial inclusion refers to the availability to both individuals and businesses of useful and cost-effective financial goods and services, including payments, transactions, savings, credit, and insurance, that are provided in a sustainable and ethical manner.
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 considers financial inclusion a key enabler to reduce extreme poverty and boost shared prosperity.
Since a transaction account enables people to keep money and send and receive payments, having access to one is a first step toward greater financial inclusion. Making sure that everyone can access a transaction account continues to be a concern for the World Bank Group because a transaction account acts as a gateway to additional financial services (WBG). The World Bank Group’s Universal Financial Access 2020 effort, which came to an end at the end of 2020, was particularly interested in it. Even if this campaign yielded many successes, the fact that more work needs to be done is a sign of how difficult the situation is.
Daily life is made easier by having access to money, which also helps families and businesses prepare for everything from long-term objectives to unanticipated emergencies. Account holders are more likely to use additional financial services like credit and insurance to launch and grow enterprises, make investments in their children’s or own health or education, manage risk, and recover from financial setbacks, all of which can enhance their overall quality of life.
The need for greater digital financial inclusion has been furthered by the ongoing COVID-19 dilemma. Digital financial inclusion entails the use of cost-effective digital means to provide populations that are currently underserved and financially excluded with a variety of formal financial services that are responsibly delivered at a cost that is affordable for customers and sustainable for provider
Financial inclusion has advanced significantly, and between 2011 and 2017, 1.2 billion adults globally gained access to an account. 69% of adults worldwide had accounts as of 2017. More than 80 countries have now introduced digital financial services, some of which have attained a sizeable market, including those utilizing mobile devices. As a result, millions of formerly underserved and excluded poor clients are switching from only using cash for formal financial transactions to doing so while utilizing a mobile phone or other digital technologies.
The next phase for nations where 80% or more of the populace has accounts is to go from access to usage (China, Kenya, India, Thailand). These nations relied on reforms, innovation from the business sector, and a push to develop low-cost accounts that accepted mobile and electronic payments.
However, the most recent Findex data show that 1.7 billion persons, or close to one third of all adults, were still without a bank account in 2017. (2021 data forthcoming).
Women from low-income rural households or those who are unemployed made up about half of the unbanked population.