The World Bank publishes a new report on financial inclusion
A new World Bank Group report on financial inclusion urges policy makers to focus on products that benefit the poor, women and other vulnerable groups the most.A new World Bank Group report on financial inclusion urges policy makers to focus on products that benefit the poor, women and other vulnerable groups the most.
World Bank Group President Jim Yong Kim said: “Whether you are a public sector financial regulator or a private sector bank, it is in your interest to get everyone access to financial services. This is good for the world and will help us end poverty.”
According to the '2014 Global Financial Development Report: Financial Inclusion', mobile banking has played a key role in expanding financial inclusion among low-income populations in countries such as Kenya and Tanzania.
The poor benefit the most from technological innovations, which make financial services cheaper and easier to access. Low-income economies, especially those with remote, sparsely populated areas, have much to gain from allowing the provision of financial services outside of established bank branches, according to the report.
Other policies have proven to be especially effective, such as requiring banks to offer low-fee accounts, waiving onerous documentation requirements and using electronic payments to deposit government assistance into bank accounts. South Africa, with a public-private framework, increased the number of bank accounts by six million in four years.
However, the report warns that challenges remain. While several countries have quickly rolled out basic bank accounts for the unbanked, in some cases, millions of those accounts have remained dormant, and promoting credit without regard to cost actually exacerbates financial and economic instability.
To promote financial inclusion responsibly, the report urges policy makers to improve the standards for information disclosure and support innovative, well-designed financial products that address market failures, meet consumer needs and overcome some behavioural hurdles.