Benchmarking Financial Inclusion Progress

By studying where we’re making progress and where we aren’t, CFI is a critical and credible advocate for financial inclusion.

2017

Why Benchmarking Matters

HOW DO WE KNOW WE’RE BEING EFFECTIVE?

Achieving financial inclusion requires continuously evaluating how well the industry is progressing and how far we still have to go. Benchmarking activities help us measure progress and identify priorities for research and action. To reach 3 billion people who are left out of or poorly served by the financial sector, a full understanding of progress and setbacks is essential.

 

Approach

INDEPENDENT AND CRITICAL PERSPECTIVE

We are committed to keeping the industry focused on financial inclusion that benefits consumers. CFI assesses public industry data, like the Global Findex and the Gallup Global Financial Health Study with an independent and critical eye, shining a spotlight on where action is most needed. We also participate in joint benchmarking exercises with partners to examine specific aspects of the sector, like the regulatory environment or risk perceptions. In all our benchmarking and research endeavors, we are keen to reality test prevailing narratives, ask tough questions and shine a light on overlooked trends.

 

Results

WHAT HAVE WE ACHIEVED?

Benchmarking the Enabling Environment

Together with partners, CFI sponsors and contributes to the Global Microscope—a project led by the Economist Intelligence Unit. Intended to benchmark the enabling environment for promoting financial inclusion, the Microscope assesses the institutional and regulatory ecosystem based on selected indicators across over 50 developing economies. We have helped the Microscope evolve from a study of microfinance in Latin America and the Caribbean into a global study of the broader financial inclusion ecosystem. Additionally, we also look at new indicators on the enabling environment for digital financial services.

With 2018 marking its eleventh edition, the Microscope is one of the few benchmarking tools in the financial inclusion sector that spans a decade or more. Regulators across the world use its scoring and rankings as yardsticks for their own performance. Investors also consult the study when considering investment strategies. Many countries are cognizant of where they stand in the global rankings and are motivated to improve.

 

 

 

 

Challenging the Global Narrative

The Global Findex is a survey of the financial habits of adults in 144 countries with data collected in 2011, 2014 and 2017. Our industry relies on the Findex to understand how people are using (or not using) financial services. It is the best available demand-side data for measuring global progress toward financial inclusion, and the World Bank generously makes the data publicly accessible.

With each new release, CFI conducts its own critical review of the Findex data. In our 2015 analysis, we analyzed which countries were on track to achieve universal financial access by 2020 and projected where the gaps would be. We also highlighted the gap between access to and usage of financial accounts, emphasizing that account ownership is only valuable if accounts are actively used. This message only intensified when we analyzed the 2017 data, and we honed in on three new messages: the absence of discernible progress in savings, credit or resilience. Given the global effort to promote savings and extend access to credit, the flat or negative growth in these core financial services was indeed disappointing. And resilience – the ability to recover from a financial shock – is an essential component of financial health. The lack of growth in resilience, savings and credit suggests a need to reflect, re-calibrate and re-engage as we continue to pursue our common goals.

 

 

 

Calling Attention to Major Trends and Markets

We believe it’s important to focus attention on under-appreciated trends and market segments. In our Mapping the Invisible Market project (2013-2015), we examined the likely impact of global demographic and economic trends on financial inclusion. On the economic side, we noted that an enormous segment of people is moving from abject poverty to the $4-$10 dollar a day range, which gives them a small amount of disposable income and potentially increases their demand for financial services. On the demographic side, we highlighted a nearly unremarked demographic shift: older people are the fastest growing population segment in regions including East Asia, Latin America and Eastern Europe. We followed up by examining the financial services needs of older people and the inadequacy of pension services for the vast majority of people in our target market.

We also focused on people with disabilities – another severely excluded group. Through partnerships with microfinance institutions in Paraguay and India, we developed and promoted a roadmap for disability inclusion that remains one of the only such guides available. And our partner institutions continue to reach out and serve thousands of people with disabilities who were previously excluded.

 

 

 

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