Is the World Bank's drive towards global financial inclusion working? Yes and no.
April saw the release of the Global Findex Report, the global data for financial inclusion, from the World Bank, Gallup and the Gates Foundation. It is the third report of its kind and is released every three years.
According to the report, 69% of adults - 3.8 billion people around the world - now have an account at a bank or mobile money provider, up from 62% in 2014 and just 51% in 2011. Since the last report, 515 million adults obtained an account and 1.2 billion have done so since 2011.
While progress has been made, it is still a long way from the goal that World Bank president Jim Yong Kim set in 2013 of having universal financial access by 2020.
The data has been heralded as largely positive by the Bank, but those who work in the field say it is far too early to celebrate - especially when the data has some questions about usage: though the number of accounts has increased, some 13.6% of accounts tracked by the report had not been used for withdrawals or deposits for more than 12 months.
Elisabeth Rhyne, managing director at the Center for Financial Inclusion at Accion, points out that interpreting the full meaning of this data is difficult. In the last Findex report, for example, usage data was more detailed and showed activity by income level and month. "It's important to have consistent usage data," says Rhyne, to see what is happening.
"Is usage down? Or is it skewed by large countries such as India and China?" she asks. Despite India's enormous efforts to ensure every citizen has a bank account - known as Jan Dhan Yojana - it turns out that as many as 300 million of those accounts are inactive.
"In China, there are some 100 million inactive accounts also," says Rhyne. "It's hard to truly know what's going on here when it comes to usage, and yet that is one of the most important barometers regarding financial inclusion. If people have accounts that they don't use, no one is better off."
Indeed, the Findex report seems to show that while efforts to improve access to financial services have been successful, there is a gap when it comes to understanding if those efforts have been successful.
"We have to think about impact," says Andrée Simon, chief executive of Finca Impact Finance, a network of 20 community-based microfinance institutions and banks that use fintech to expand financial inclusion.
Simon points out many people who are opening mobile wallets do not understand them. At best, that means they are not using them and at worst it means they do not realize the implications of the credit they are signing up for.
"In east Africa, the levels of over-indebtedness are growing, for example, and people are being blacklisted by credit bureaus for tiny amounts," says Simon.
She also says that in some cases in Kenya so-called nano-loans are being used for gambling: "We need to figure out how to increase financial inclusion in tandem with financial education and support, or else we will risk ending up with situations like we have in developed countries - where we may have 100% inclusion, but vast numbers of people in debt and in poor financial health. We have a chance to get this right by being more intentional."
Rhyne agrees. "We need to remind ourselves why financial inclusion is important," she says. "The focus is on getting people to move money and make payments electronically. Of course, transacting digitally does have some benefits, but ultimately financial inclusion is about improving financial health and standards of living. And the Findex data is a little disheartening on that front."
The savings data from the report is case in point. Savings made at a financial institution have slightly decreased since 2014. Without elaboration on that data from the World Bank, it can be inferred that despite more people opening accounts and using mobile payments, the goal of improving financial health remains elusive.
Simon says savings declines could be due to macroeconomic pressures in many developing countries over the last two years, but adds that there is a long way to go in providing cost-effective savings tools.
Her organization launched a microsavings product last year in Tanzania called HaloYako that allows individuals to save amounts as small as $1.
"Mobile savings would move the needle," she says, because many individuals are not incentivized to save when they have to walk for miles to a branch to deposit just a small amount. Rhyne adds that part of the challenge around promoting savings lies with the banks.
"It's not very profitable to offer savings accounts, so many simply don't," she says. "Or they offer them but don't actively pursue clients to use them. It's a tough nut to crack, but we need to give more attention to this."
Again, she points out that mobile devices might make it easier for people to save regularly. The report also shows that the gap in developing economies between men's and women's access to financial services has not improved since 2011. It remains unchanged at 9 percentage points.