The World Economic Forum and 15 of its partners on Thursday launched a new financial inclusion measurement framework. It defines the metrics that are crucial to understanding and improving how hundreds of millions of people access and use financial products like digital payments, savings accounts, and loans in the developing world.
The report complements ongoing efforts to quantify how financial services are being used, and their impact on people’s lives. “More nuanced metrics provide businesses and governments with the necessary inputs to offer customer-centric strategies that increase access and usage of financial services in a sustainable manner,” said Cheryl Martin, Managing Director, Head of Industries, World Economic Forum.
The findings, summarized in Advancing Financial Inclusion Metrics: Shifting from access to economic empowerment, proposes specific metrics to analyze the maturity of payments, credit, savings services and the overall regulatory environment. Greater visibility into these inputs is vital to financially include those left out of the formal economy whether in India or Mexico, Tunisia or Zimbabwe.
The initiative’s 15 core partners include financial providers, consulting companies, foundations, and consumer goods companies who together reach the majority of the world’s population, including the estimated 2 billion who currently don’t have bank accounts, debit or credit cards, or access to loans. They are Alliance for Financial Inclusion, BBVA, Bill and Melinda Gates Foundation, Credit Suisse, International Finance Corporation, Mastercard, Mercy Corps, MTN Group, PayPal, SWIFT, Tata Consultancy Services, Telenor Group, Unilever, UNSGSA, and the World Bank.
Paul Polman, Chief Executive Officer, Unilever said: “Data is critical to better understand the relationship between financial inclusion and greater wellbeing. By digitizing the processes of buying supplies and selling goods, small and micro businesses in emerging markets can gain access to appropriate low-interest credit, further boosting business growth.”
The report highlights that much of the required consumer data is already available. However, expanded data collection is needed in certain cases. In India, for instance, a country with 251 million people without access to financial services, only 11% of consumers used debit cards for payments over the course of a twelve month period 1.
This statistic is interesting, but fails to tell the whole story. Going several levels deeper, the application of more granular metrics would provide insights into the actual percentage of registered and unregistered businesses accepting digital payments; the barriers preventing both men and women from using digital financial services , alternative payment methods used (e.g., account direct transfer, card top-up), and the types of purchases made (e.g., groceries, utilities, healthcare, etc.). Understanding the customer at this level of detail would allow for more targeted solutions for increasing debit card acceptance.
As emphasized by H.M. Queen Máxima of the Netherlands, United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development, “I always emphasize the importance of data. Without good data, we cannot map potential demand for financial services, track progress, and develop customer-centric products and services for the excluded, including women. The knowledge data provides, in turn, will help shape effective policies and generate the strong political will needed to achieve full financial inclusion.”