On the surface, financial inclusion is working. According to 2021 Findex data, 76% of adults hold accounts at banks or other regulated institutions, up from 51% just a decade previously.
But that headline figure just tells part of the story. Indeed, it misses the heart of the issue.
AFI’s mission is to increase access and usage of quality financial services “among the underserved”. Those people (low income, disadvantaged, often living in rural or remote areas) are much less likely to be captured in Findex data.
Expanding access to modern financial services generally requires an enabling policy environment that is conducive to innovation while protecting consumers, as well as far-reaching digital infrastructure.
This works for most of the population. But where excluded groups are concerned, it is not enough. Leaving no one behind, whether in terms of financial inclusion or any other aspect of human development, requires a commitment to social justice and equity.
The barriers which disadvantaged groups encounter are considerable and often intersectional. The impact of social and cultural norms can be significant. It is all very well investing in last-mile infrastructure if social norms dictate that young people can’t manage money, or that a woman’s place is only in the home or field, or that women require a male guardian in order to have a bank account.
Equally, rolling out standard products and services to excluded communities does not work. Inclusivity requires differentiation: providing tailored solutions for society’s different groups that take account of the varying challenges they face in accessing and using financial services.
In other words, financial inclusion needs to be human-centred. It involves working to understand excluded groups’ needs, preferences, and challenges. It then requires involving them in figuring out solutions. Their empowerment becomes a catalyst for positive change, enabling them to invest in health, education, and business endeavours.
I see this approach taking root across the AFI network. In Egypt, the Central Bank held focus group discussions and interviews with people living with disabilities to identify the challenges they face in accessing financial services.
In Ecuador, the Superintendencia de Economía Popular y Solidaria solicited women-owned savings and credit cooperatives when designing regulations to tackle women’s historic lack of access to credit.
Elsewhere, the State Bank of Pakistan has implemented a Banking on Equality Policy to reduce the gender gap in financial inclusion by encouraging a shift towards women-friendly business practices in the financial sector.
You may say, central banks and financial regulators have enough on their plates without having to tackle social and cultural norms. Yet what I sense is a growing realization among banks and regulators that inclusivity creates a more robust and resilient society, and that meaningful progress cannot be achieved without asking tough questions: why are certain groups excluded, and what can we do to include them?
Financial inclusivity (as opposed to financial access) is the heartbeat of successful financial inclusion. It transforms financial systems from exclusive clubs to open platforms, where everyone can share in the benefits. By embracing inclusivity, we contribute to building a more equitable and prosperous world for all.