For the past 15 years, the Global Microscope team at <a href="https://impact.economist.com/" target="_blank" rel="noopener noreferrer">Economist Impact</a> (formerly part of the Economist Intelligence Unit) has collected data on the policies and regulations that governments around the world have adopted to promote an inclusive financial system. In 2021, we looked at the historical data from the countries included in the Microscope to identify the policies that drove change and have led to greater rates of account ownership.  We used the findings to develop a new assessment framework that regulators and policymakers can use to promote more accessible, usable, and safe financial systems.

As a result, the <a href="https://www.centerforfinancialinclusion.org/rethinking-the-global-microscope-for-financial-inclusion-2021-key-findings-report">2021 Global Microscope</a> is different from previous versions and poses four key questions. In this report, we discuss the policies that have driven change, the priorities to keep in mind for the future, the tools that will help achieve these goals, and the unique ways these priorities and tools apply across different parts of the financial system. The Global Microscope work is supported by CFI, the Bill &amp; Melinda Gates Foundation, and IDB LAB.
<h1>Question 1: Looking Back, What Policies Have Driven Change?</h1>
A country’s overall Global Microscope score historically has been a composite of five categories, each measuring a different aspect of the enabling environment: Government and Policy; Stability and Integrity; Products and Outlets; Consumer Protection; and Infrastructure. This year, our regression analysis found that the overall Global Microscope scores have a positive relationship with account ownership. The correlation was mostly driven by two of the five categories: infrastructure and consumer protection – revealing that more extensive infrastructure and strong consumer protection propel financial inclusion. Within the category of infrastructure, connectivity proved to be a highly significant indicator of account ownership and digital IDs were also moderately significant.
<blockquote class="pullquote--right">The speed and magnitude of reform adoption significantly impact financial inclusion.</blockquote>
In line with findings from a <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/31179/WPS8711.pdf?sequence=1" target="_blank" rel="noopener noreferrer">World Bank study</a>, our analysis also found that the speed and magnitude of reform adoption significantly impact financial inclusion. Broad financial inclusion strategies have helped drive fast and concerted efforts to create more inclusive financial systems and are another indicator that demonstrated a highly significant relationship with account ownership.

Our analysis also allowed us to identify the leading countries enacting meaningful change. Argentina, China, and Jordan have had the greatest leaps in scores since the Microscope began its global coverage in 2014. Tanzania, Côte d’Ivoire, and Costa Rica have seen the greatest improvements since we began covering the digital financial services revolution in 2018.
<h1>Question 2: Looking Ahead, What Policies Should We Keep in Mind for the Future?</h1>
The new Microscope framework focuses on capturing the main regulations, policies, and infrastructure investments that governments should prioritize over the coming years. Instead of aggregating all data under one score, the new framework allows users to identify the enablers of three desirable outcomes: accessibility, usability, and safety.
<ul>
 	<li data-leveltext="" data-font="Symbol" data-listid="3" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">The accessibility category looks at policies and regulations that seek to increase the reach and volume of financial services to low-income customers.</li>
 	<li data-leveltext="" data-font="Symbol" data-listid="3" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">The usability category looks at policies linked to the quality of products and customer engagement.</li>
 	<li data-leveltext="" data-font="Symbol" data-listid="3" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">The safety category looks at challenges arising because of the spread of digital financial services and threats to the integrity and stability of the financial system, which are part of the core mandate of financial regulators.  </li>
</ul>
These measures are not necessarily correlated with increased access to financial services but are key to creating a trustworthy financial system.

Identifying What Works: 15 Years of Microscope Data Reveal Key Policy Drivers of Financial Inclusion

The Global Microscope has assessed the enabling environment for financial inclusion across 55 countries since 2007. This report summarizes the key findings of an assessment of the Global Microscope index’s existing data from 2007 to 2020. This was aimed at understanding the relationship between key financial inclusion enablers (ie, policies, regulation, and infrastructure) and financial inclusion outcomes.

This report discusses the policies that have driven change, the priorities to keep in mind for the future, the tools that will help achieve these goals, and the unique ways these priorities and tools apply across different parts of the financial system. Below are key findings from the 2021 report:
<ul>
 	<li>A higher overall Global Microscope score showed a positive relationship with the number of accounts with formal financial institutions and mobile money providers among the population.</li>
 	<li>The infrastructure domain had the strongest relation to account ownership, documenting the positive effects on inclusion from policies facilitating the expansion of payment systems, strong digital identification regimes, widespread connectivity, and robust credit information systems. The other four domains are government and policy support, stability and integrity, products and outlets, and consumer protection.</li>
 	<li>Consumer protection was also positively linked to the prevalence of bank accounts, underscoring the importance of measures to ensure that financial consumers are treated fairly across the range of distribution channels and products.</li>
 	<li>The magnitude and quality of regulatory implementation significantly impacts financial inclusion. Larger regulatory improvements were associated with increasingly larger gains in account ownership.</li>
</ul>
The Global Microscope work is supported by CFI, the Bill &amp; Melinda Gates Foundation, and IDB LAB.

Rethinking the Global Microscope for Financial Inclusion: 2021 Key Findings Report

Rebuilding the post-COVID economy will mean more than preserving powerful players in global and national economies; it will mean saving the small businesses and ensuring employment for workers in the informal and formal sectors. The Global Microscope, which assesses the enabling environment for financial inclusion across five categories and 55 countries, explores the role that financial inclusion has played in policymakers’ crisis response, providing data on how the 55 countries have leveraged their financial infrastructures to support vulnerable individuals, small businesses, and the financial providers that serve poor households.

Below are some key takeaways from the 2020 edition:
<ul>
 	<li>The overall enabling environment for financial inclusion improved as a result of governments’ efforts to reach unbanked populations during the pandemic. Colombia, Peru, Uruguay, Argentina and Mexico lead the global ranking.</li>
 	<li>Investments in digital infrastructure have paid off, with 44 of the 55 countries in scope having used cash transfers to support vulnerable parts of the population</li>
 	<li>Digital IDs can facilitate verification for cash transfers, data integration is needed to target beneficiaries and ensure that marginalized segments of the population are not excluded</li>
 	<li>The pandemic necessitated changes in regulations around remote banking, with several countries relaxing e-KYC rules to facilitate remote account opening, paving the road to the development of a digital, inclusive financial system</li>
 	<li>Financial institutions that serve the poor face liquidity constraints impacting credit availability for the poor, as not all governments were able to address them while rolling out economic stimulus packages</li>
 	<li>Financial authorities should adapt to protect consumers from emerging risks, such as ones posed by the onset of the pandemic and the associated rise in cases of financial fraud</li>
</ul>
The Global Microscope is produced with support from EIU’s partnerships with CFI, the Bill &amp; Melinda Gates Foundation, IDB LAB and IDB Invest.

Global Microscope 2020

Regulators play a significant role in catalyzing or impeding a country’s progress toward financial inclusion. By evaluating five domains of the regulatory environments in 55 countries (i.e., government and policy support, stability and integrity, products and outlets, consumer protection and infrastructure), the Global Microscope identifies each country’s current policies and regulations and notes which are likely to create an enabling environment for financial inclusion.

The 2019 Global Microscope features 11 new gender-focused indicators that measure financial inclusion for both women and men. These new indicators can help policymakers identify areas that could potentially improve women’s ability to access and use the financial tools they need to thrive.

The Global Microscope is produced by The Economist Intelligence Unit with policy guidance and financial support from leading organizations in the field, including CFI.
<h2>Major Findings</h2>
<ul>
 	<li>The enabling environment for financial inclusion has improved in the 55 countries covered in the Global Microscope 2019. Colombia, Peru, and Uruguay maintained the top rankings again this year. Likewise, the countries covered in the study’s regional analysis of Latin America and the Caribbean maintained the most favorable regulatory environments. These findings are at odds with access and usage data that show that Latin America and the Caribbean have recently fallen behind other regions. This points to the limitations that policies play in driving outcomes. They can contribute, but policies alone are insufficient in driving desired outcomes.</li>
 	<li>Practical impediments – such as limited access to identification, the Internet, and/or mobile phones – restrict women’s ability to use digital financial services.</li>
 	<li>Argentina, Costa Rica, Honduras, Russia, and other countries continue to adopt financial inclusion strategies and incorporate digital approaches to foster inclusion. In the past, national-level programs have led to the most progress over the short and long term.</li>
 	<li>Consumer protection and privacy laws are evolving to respond to the unique challenges that fintech presents, but few countries have updated their consumer protection regulations to account for the risks posed by digital players.</li>
</ul>
<h2>Calls to Action</h2>
Policymakers must ensure that both women and men are enabled to utilize and empowered benefit from greater financial inclusion. As the landscape for financial inclusion continues to evolve, and as financial service providers adopt new technologies and approaches, governments will need to implement policies to ensure that potential users develop the necessary capabilities and possess key enablers to access and use these products (such as national ID and mobile phones). This includes developing and implementing policies specifically designed to address gender disparities in access to these enablers.

Governments must ensure their national strategies do not worsen the gender gap. As financial inclusion policy shifts its focus towards the promotion of digital financial services, regulators and policymakers must address this digital gender gap or risk contributing to even greater disparities in access to financial services between women and men. Although nearly four-fifths of countries in the Microscope have strategies or initiatives to promote digital literacy, only one-fifth incorporate a gender approach into these programs.

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Identifying What Works: 15 Years of Microscope Data Reveal Key Policy Drivers of Financial Inclusion

Rethinking the Global Microscope for Financial Inclusion: 2021 Key Findings Report

Global Microscope 2020

Global Microscope 2019: The Enabling Environment for Financial Inclusion