Summary of the Report on Global Findex Database 2017

Taejun
6 min readApr 22, 2018

The World Bank finally issued the report on Global Findex Database 2017, the document that I was waiting for so long. For those who work for financial inclusion, this report is perhaps the most important periodical, giving the practitioners a lot to think about where we are and how the world’s financial inclusion situation will evolve.

The only shortfall of the report in my personal opinion is that the entire report spends much less on implications and insights on the facts. The report explains where we are but is silent or superficial on why it is. That said, structuring reasons of where we are should be the job of entrepreneurs, not researchers.

Here’s the summary. I made the summary according to my interest and mainly for personal use (so there could be typos etc.), so please read the full report if you are keen on it.

1.Account ownership
The definition of account in the report is an individual or jointly owned account either at a financial institution or through a mobile money provider. The account ownership is 69% in 2017, up from 62% in 2014 and 51% in 2011.

In developed nations, 94% of adults have accounts, whereas the number is 63% in developing nations. Even among the same income-level economies, the rate varies considerably.

In developing nations, the financial inclusion gap between the poor and the rich is bigger, because of literacy / education level, cost barriers, and higher wage income (which often necessitates account ownership in receiving wages).

About 1.7 billion adults remain unbanked. Among them, about half are in Bangladesh, China (225mil), India(190mil), Indonesia(95mil), Mexico, Pakistan(100mil) and Nigeria. Half are from 40% poorest households. 56% (980 million) are women.

2.Top reasons for not having accounts

2/3: too little money to use an account
1/4: the services are costly or the providers are distant
1/4: the other family members have it so they don’t need it
1/5: lack of documentation or distrust in the financial system
6%: religious reason

3.Payment

Category:
■ Payments from the government to people (public sector wages, public sector pensions, and government transfers)
■ Payments from businesses to people (private sector wages)
■ Other payments for work (payments for the sale of agricultural products and payments from self-employment)
■ Payments from people to businesses (utility payments)
■ Payments between people (domestic remittances)

24% of adults in developing nations receive private sector wages; half of them receive the wages by cash, much higher proportion than developed nations.

15% of adults in developing nations receive payment by selling agricultural products; most of them receive the payments in cash with some exceptions in developing nations.

8% of adults are self-employed; 2/3 of them in developed nations receive the payment into account, whereas ¼ in developed nations.

In developing economies, on average 27% of adults reported having used domestic money transfer; high in Sub-Saharan Africa and low in Asia. In developing nations, 46% of adults making the remittances used an account, up by 12% from 2014.

4.Digital payment

In high-income economies, 91% of adults (97% of account owners) had one or more digital payment in the past year; in developing economies 44% of adults (70% of account owners) did. 80% of adults in developed nations use credit/debit card, whereas 22% in developing nations; the number is rising in developing nations.

In high-income economies, 51% of adults have made a payment using phone or internet, whereas the number is 19% in developing economies. The ratio varies country to country, e.g., Japan & Italy has only 33% and 22% respectively for example.

5. Gender financial inclusion gap is still there

Globally, 72% men own accounts whereas the figure is 65% among women; no change in the gap over the last 6 years. In some countries, the gap shrank thanks to intervention by the government, e.g., in India the gap shrank from 20% to 6%.

6. Saving

In rich countries, 71% do saving; 43% in developing nations

The reasons for saving:
21% (44% in rich countries / 16% in developing) is for old age
14% (for both economies) is for starting or expanding business

Although the account ownership % increased, % of adults saving formally had shown slow growth: 23%(2011) → 27%(2014) →27% (2017).

3/4 of adults in rich countries use formal financial institutions to save; in developing nations it’s less than half.

Saving behaviors differ country to country

More in high-income economies can raise emergency funds through saving.

7. Borrowing

47% of adults in the world borrow (64% in high-income economies and 44% in low-income). In rich countries, people rely on formal financial institutions when borrowing (almost 90%); in developing nations, 50% are from families and friends

8.Opportunity of Fintech

93% of adults in high-income economies have mobile phones, while 79% in developing nations. In developing nations, 84% of men have it while it’s 74% for women.

92% of adults in rich countries have mobile phones connected to the Internet, while the figure is 40% in developing nations.

2/3 of the unbanked (480 million) people have smart phones. Given the low price and usability, the mobile money boosted the increase of financial inclusion in Sub-Saharan Africa; it also may help to reduce the financial inclusion gap between the poor and the rich. Digital payments can reduce the number of the unbanked by 100 million globally.

To ensure that people benefit from digital financial services requires a well-developed payments system, good physical infrastructure, appropriate regulations, and vigorous consumer protection safeguards.

Whether digital or analog, financial services need to be tailored to the needs of disadvantaged groups such as women, poor people, and first-time users of financial services, who may have low literacy and numeracy skills.

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