Three key findings that show that financial equality is within reach in our lifetime

The past decade has seen great strides in increasing access and usage of financial services to millions of people. Worldwide, account ownership grew by 50 percent over the past decade. Key findings from the Global Findex Database 2021 confirm trends observed in our work with Alliance members. As of 2021, 71 percent of adults in emerging economies have an account at a bank or regulated institution such as a credit union, microfinance institution, or mobile money provider — a considerable increase from 63 percent in 2017 and 42 percent in 2011. Globally, two-thirds of adults now make or receive digital payments, with emerging economies increasing their share from 35 percent in 2014 to 57 percent by 2021. Below are three key reasons, backed by 2021 Findex data, to be optimistic about these trends continuing.

1. Digital payments are driving account ownership and usage, and reducing the gender gap.

Over the course of the COVID-19 pandemic, governments rushed to provide financial assistance and social protection, creating opportunities as well as challenges for expanding financial inclusion in a responsible and sustainable way, particularly for women. For the first time since the Global Findex started in 2011, the gender gap in account ownership has dropped to 6 percent, from 9 percent where it remained for many years.

Alliance members, in particular, have made great strides.

• In Bangladesh, the gender gap in account ownership dropped from 29 percent in 2017 to 19 percent in 2021.
• In Indonesia, there is no current gender gap in account ownership.
• In India, significant increases in account ownership reduced the gender gap from 22 percentage points in 2011 to ‘insignificant’ in 2021.
• In Peru, the gender gap decreased by almost half from 17 to nine percentage points between 2017 and 2021.
• Uganda saw its rate of account ownership more than triple, from 20 percent to a striking 66 percent. This significant growth in account ownership had a great impact on women, thereby removing any gender gap.
  

The global community has clearly made incredible progress – and yet more work lies ahead. In 2021, the Alliance launched the UN Principles for Responsible Digital Payments, highlighting the crucial responsibilities of governments, companies, and international organizations in ensuring digital payments meet people’s needs, while protecting the most vulnerable. Following those guidelines and collaborating effectively across sectors will be vital to driving financial equality for all.

2. Digitizing merchant payments is helping to scale global account usage.

In 2021, for the first time, the Findex included an expanded module on digital merchant payments in emerging economies, where 37 percent of adults made digital merchant payments. This average is heavily skewed by China, where 82 percent of adults made such payments, but excluding China, an impressive 20 percent of adults made a merchant payment using a card, mobile, or online — around 40 percent of whom did so for the first time in the pandemic. Social distancing measures may have accelerated the adoption of digital merchant payments in economies where the necessary infrastructure was in place. In India, for example, about 12 percent of adults — fewer than 20 percent of total account owners — made a digital merchant payment. However, two-thirds of those did so for the first time in COVID-19, suggesting that the pandemic helped spur adoption.

Source: Global Findex Database 2021.

Banked adults who make merchant payments in cash present another opportunity for increasing digital merchant payments. In emerging economies, 1.6 billion adults with an account made merchant payments only in cash. In India, that share was 85 percent; in Indonesia,75 percent; in Kenya, 54 percent; and in Brazil, 40 percent. Ideally, people would keep their funds in the account and use them to make purchases or payments directly from the account. The Findex shows that many people did just that.

However, in many countries, digital payments are not yet widely accepted for everyday purchases. Merchants still find it challenging to accept digital payments if fees are high and the regulatory environment makes it cumbersome to formalize a business. Alliance government members have been taking the lead globally, working with public and private sector players to incentivize and accelerate the digitization of merchant payments in their economies.

3. Digitizing wages is a gateway to other financial services and improving resilience

In 2021, around 165 million unbanked adults received private sector wages in cash, representing a clear opportunity to drive financial inclusion and reduce the share of unbanked adults. In Pakistan, for example, such digitalization would result in a 13 percent increase in account ownership, and would bring around 20 million unbanked adults into the formal financial system.

Digital wage disbursement can encourage workers to save and access additional financial products, can reduce the time and cost of receiving payments, and can help reduce leakage by ensuring payments reach intended recipients. According to 2021 Findex data, 83 percent of adults in emerging economies who received a digital payment also made a digital payment —up from 66 percent in 2014. Almost two-thirds of digital payment recipients also used their account to store money for cash management. 39 percent of adults, or 57 percent of those with a financial institution account (excluding mobile money), opened their first account specifically to receive wage or government.

Globally, 28 percent of surveyed adults received at least one wage payment from a private sector employer in emerging economies. These averages mask large variations among economies. Although in some emerging economies, levels of digital private wage payments are comparable to high-income economies, others still have room for growth. For example, in Indonesia and the Philippines, about a quarter of adults received a private sector wage payment, and this ranges between 17 percent to 41 percent in East Asia and Pacific as a whole.

In Bangladesh, 1.92 million new e-wallets were created as a result of a stimulus package of around US$600 million introduced by the government to maintain employment and pay workers’ salaries, especially in the ready-made garment sector. Around 60 percent of Bangladesh’s four million garment workers are women. Leading brands and Alliance members Gap Inc., H&M, Inditex, and Marks & Spencer endorsed the call to move away from cash, in alignment with the goals of the Government of Bangladesh. As a result, 82 percent of workers were receiving their wages digitally in 2020, leading to a growth of 22 percent in mobile money accounts owned by women. However, more work remains to increase uses cases, reduce costs, and fully roll out interoperability for wage digitization to fully reap its benefits.

The most important takeaway from the Global Findex Update 2021 is that the biggest gains overall — and the most significant progress in gender equality — are in countries where the government has made digital payments a top priority. In too many instances, it is still very expensive to provide financial services to people with limited options for digital payments. This lack of payment options creates significant structural barriers to broader social and economic inclusion, not least, for women.

A comprehensive recovery from COVID-19 must be a just and inclusive one that continues to focus on the Sustainable Development Goals. A concerted effort to build responsible digital payment foundations for inclusive economies will unleash everyone’s potential, especially for women. By making digitization truly responsible, we will continue to enable impact, scale, and sustainability ahead of the next Global Findex update in 2025.

The views expressed in the United Nations-based Better Than Cash Alliance blogs are those of the author(s) and may not necessarily reflect the official position of the organization.