2016 Global Microscope Highlights Gains in Financial Inclusion, Led by India; Digitization on the Rise

  • Latin America and the Caribbean (LAC) and East and South Asia have the most conducive environments for financial inclusion. India stands out for the most progress in the last three years and is now ranked third
  • Further policy changes are needed if financial inclusion is to play the role envisioned in the Sustainable Development Goals
  • The digitization of financial services is key to increasing access to finance

The 2016 Global Microscope on Financial Inclusion shows that essential policies for bringing financial services to low-income groups are now widespread in the developing world. Nine of the 12 financial inclusion indicators covered in the benchmarking index improved globally in 2016, building on gains which have been made during the last decade. Even so, many countries have not moved significantly beyond basic policies, and greater focus is needed if financial inclusion is to play the critical role envisioned in the Sustainable Development Goals (SDGs).

The Global Microscope is produced by The Economist Intelligence Unit (The EIU), with policy guidance and financial support from leading organisations in the field including the Center for Financial Inclusion at Accion. Now in its 10th year, the Microscope is the global standard for financial inclusion policy in developing economies.

Digitization of financial services holds great promise for improving access to finance. Overall, for the indicator on electronic payments, the average of countries’ scores rose by a total of 14 points, or by 32 percent, between 2014 and 2016. This suggests widespread, positive action to create a regulatory environment more conducive to digital economic activity. Governments are also doing more to embed digitization by using it in their transfer payment programs. The Microscope report highlights examples of such transfer payments in Brazil, Mexico, Mongolia, and Uruguay.

India has shown particularly dramatic advances in its financial inclusion institutions and policies. It has, for example, set quantifiable goals for account opening for low-income families, with more than 200 million accounts opened, assisted by a national biometric identification program. The policy also emphasizes access to credit, insurance and pension facilities, as well as channeling all government benefit payments into individuals’ bank accounts to increase usage. India also has targets to provide alternative sources of access through bank branches, bank correspondents, ATMs, and satellite branches in villages of 2,000 or more residents. In addition, the Reserve Bank of India (RBI, the central bank) is working to facilitate digital money transfers through the launch of the Unified Payment Interface (UPI), and has issued guidelines to strengthen financial literacy.

Consistent with last year’s overall performance, Latin America and the Caribbean (LAC) and East and South Asia tie for the highest average overall scores by region, with LAC countries capturing four of the global top ten spots by rank. This year’s Microscope celebrates steady progress in countries that have continued to increase their commitment to financial inclusion, such as in India, Costa Rica, Honduras, and Egypt. These countries have made the biggest gains over the last three editions of the Microscope and have policies in place to continue this success.

For more, read the 2016 Global Microscope report here.

Have you read?

Global Microscope 2015: Progress on the Financial Inclusion Front

The ‘2014 Global Microscope’: Results and Surprises

Global Microscope Finds the World Getting More Microfinance-Friendly



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