Today, on the release of the Global Microscope 2015, we are celebrating some good news: the environment for financial inclusion is improving worldwide. Most of the 55 countries surveyed by the publication increased their scores, which measure the enabling environment for financial inclusion. In addition to an overall increase, we noticed a few particular exciting success stories as certain countries have made significant improvements to their policy and regulatory environments. It’s clear that 2015 was a year of progress, and we expect that the benefits of improved policy, regulation, and infrastructure will have an impact on the lives of clients for years to come.
For the second year in a row, the Global Microscope features an expanded scope that focuses on the overall environment for financial inclusion. The Center for Financial Inclusion has played a critical role in this shift, improving on the methodology and expanding the number of countries that the publication assesses.
Three countries—Peru, Colombia, and the Philippines—continue to set the standard for the environment for financial inclusion, topping the list for the second year in a row. There were some surprises in the top 10, however. India’s score increased by 10 points between 2014 and 2015, thanks to some very dramatic changes in the past year which pulled it into the fourth position, such as the new licenses for payment banks and small finance banks. Other countries in the top 10 that improved their scores include Pakistan, Tanzania, and Ghana. Ghana saw the most dramatic rise among this group, with a seven-point jump. Four distinct regions—Latin America and the Caribbean, East Asia and the Pacific, South Asia, and Sub-Saharan Africa—are represented in the top 10 countries.
Consistent with overall scores increasing, we also saw most indicators increasing. In particular, average scores on government support for inclusion increased, as more countries developed new national strategies. Regulations on branches and agents also improved markedly across the world, along with the environment for electronic payments.
The story, however, is not all positive. Three indicators in the methodology—regulatory and supervisory capacity, prudential regulation, and regulation of deposit-taking—saw slight decreases on average, indicating that while the overall environment for financial inclusion is increasing, the capacity of regulators and supervisors is not. It appears that while specific attention is being paid to new areas such as electronic payments, the bread and butter of basic regulation and supervision is not receiving similar attention. It is important that the basics not be overlooked, as they are the foundations on which more specific regulatory developments rest.
A specific area where see room for improvement is the payment infrastructure. In most countries in the world, payment infrastructure only partly addresses the needs of low income populations. There are a few bright spots in each region where infrastructure is both reliable and addresses the need of the low-income population, but certainly this is an policy and regulatory area where we would hope to see growth in coming years.
Finally, this year, we were happy to see evidence to support some of the hypotheses we have been putting forward over the last few years. In short, commitment to financial inclusion matters, consistency in policy matters, and market conduct matters to financial inclusion. We found that countries which had high commitment to financial inclusion did quite well this year. We also found that countries that showed consistency year-over-year also received high scores. Finally, and most interestingly, there was a high correlation between market conduct rules and overall score, indicating that countries which implement measures like dispute resolution systems and pricing transparency are also more likely in general to have environments more conducive to financially inclusive activity.
We’ll be blogging more about the findings of the report over the coming weeks, but in the mean time, we encourage you to check out the report on our website and explore the data through the benchmarking model in Excel
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