The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”
As people age, their use of financial services changes. We explored this in detail when we published a lifecycle approach to financial services in Peter Kasprowicz and Elisabeth Rhyne’s Looking Through the Demographic Window. People of working age need to plan for the future while also providing for their families in the present. People who are elderly need to be able to draw on their savings, manage their wealth, and in many cases, draw on and use their pensions.
When we look at the world as a whole, we see little difference between bank account ownership among the working age population (defined as ages 25 to 64) and those who are older (age 65+):
Source: World Bank Global Findex Microdata, 2012
This global equality between the two age groups masks interesting variation in regions in account ownership by age. In Sub-Saharan Africa and East Asia and the Pacific, a much higher percentage of working age adults than older adults have accounts, while Latin America and the Caribbean shows little difference between those groups.
Source: World Bank Global Findex Microdata, 2012
And in the Middle East and North Africa, the elderly have a higher rate of bank account ownership than their younger counterparts.
Financial needs across the lifecycle follow major life events and are therefore person-dependent. A person could, for example, have children at age 18 or at age 35, and the difference changes the way she thinks about her personal finance management.
While we do see differences in regions when it comes to the ownership of accounts, there is more uniformity among regions when we look at use of accounts.
Source: World Bank Global Findex Microdata, 2012
In all regions (excluding out high income economies), frequent use of accounts peaks in the working age years. Those who are 65 and older use their accounts much less actively than those who are younger. Possibly, one explanation of this trend is that people who are older might not receive wages into their accounts. Beyond this explanation, there may be other factors at play, like a lack of financial literacy, a reliance on younger family members or friends for regular financial support, or simply the decision not to use accounts as a money management tool.
When we zoom in on the population aged 65+, therefore, we notice that the financial inclusion community may not truly understand how people are using financial services, and what kinds of financial needs they have. Elisabeth Rhyne discusses this lack of understanding as it pertains to income groups in a recent blog post. The difference between access and use is tremendous in many regions and presents an important frontier to consider as we recognize the financial services needs of people across their lifecycles.
Continuing to spotlight different segments of national populations will be critical as we move toward understanding how financial inclusion will be achieved for all people. Increasing life expectancy around the world, coupled with rapidly aging working populations means the elderly have become a critical population segment.
For a further discussion on demographics as an important window through which to view financial inclusion, see Elisabeth Rhyne and Peter Kasprowicz’s paper here. For more on the Global Findex, visit the World Bank here.
*In most countries surveyed by the World Bank Global Findex, the overall sample size was large enough to generalize to the population. When we break out the data by age, however, the data are not necessarily as reliable to apply to the whole countries or regions. We did nevertheless weight the surveys according to the World Bank’s calculations.
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Age Ain’t Nothin’ But a Number