The latest edition of the Global Findex shows that account
ownership has grown across the globe and three out of four adults worldwide
today have a financial account. Yet 1.4 billion adults remain unbanked. How can
policies and products help bring more unbanked adults into the financial
system?
Insights from the Global Findex Database 2021 about the ways
in which account owners use their account for payments, saving, and
borrowing—and how these financial services interact as part of a broader
financial ecosystem—reveal a key opportunity for expanding financial inclusion.
Namely, by leveraging payments, one of the financial transactions that unbanked
adults already make.
Payments into an account serve as a gateway for using
other financial services
People who receive payments into an account are more likely
than non-recipients to use their accounts to store money for cash management,
make payments, and save and borrow formally.
Global Findex 2021 data show that in developing economies,
20 percent of adults received a wage payment—from the private sector or from
the government—into an account (figure 1). Almost all (91 percent) of those
recipients also made a digital payment from their account. At the same time,
about 70 percent of those who received a payment into their account also used
their account to store money for cash management, about half used their account
to save money and about half to borrow money.
The relationship between receiving a digital payment and the
use of other financial services suggests that once money is received into an
account, it is becoming easier for account owners to keep the money there until
it is needed—and then make a payment from the account. Similarly, we know from
behavioral studies that once money is in an account, it is relatively easy to
keep it there as savings. Receiving a payment into an account might also make
it easier to get approved for formal credit if the payment can be used to
document a regular income stream.
Digitalizing cash payments is a proven way to increase
account ownership
Millions of unbanked adults still receive regular cash
payments from employers and the government. Global Findex data suggest that
shifting some of these payments into an account could expand financial
inclusion among the 1.4 billion unbanked adults—and potentially lead to the
broader use of financial services. Digitalizing such payments is a proven way
to increase account ownership. In developing economies, 39 percent of adults—or
57 percent of those with a financial institution account—opened their first
account at a financial institution specifically to receive a wage payment or to
receive money from the government. Researchers also show that digitalizing wage
payments can encourage workers to save and improve financial resilience and
financial savviness.
Creating an enabling environment to leverage wage
payments for increased financial inclusion could reduce the number of unbanked
adults by 165 million
Global Findex 2021 data find that 165 million unbanked
adults received private sector wage payments in cash only (map 1). Shifting
wage payments and other types of payments (such as payments for the sale of
agricultural products) from cash into accounts can serve as an entry point to
the formal financial system.
Adults without an account receiving private sector wages in
the past year in cash only, 2021.
But Global Findex data also find that one in five adults in
developing economies who receive a wage payment into a financial institution
account, like a bank or similar institution, paid unexpected fees on the
transaction. The challenge for businesses and governments is to ensure that
digital payments are safer, more affordable, and more transparent than
cash-based alternatives—so that workers can use their accounts to improve their
financial wellbeing.
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