–The following is an extract from the Unlocking Investment and Finance in Emerging Markets and Developing Economies (EMDEs) World Bank program
–Building Robust Financial Markets and Institutions in EMDEs presented by Douglas Pearce
My name is Douglas Pearce and I am the Global Lead for financial inclusion. I work in the financial markets global practice. My favorite number is two billion. Two billion is the number of adults that don’t have access to formal financial services. We tend to take this for granted in the developed world. Having a bank account is like having electricity or access to running water. We’ve decided to identify twenty five countries as priority countries or focus countries for the universal financial access goal. This is because in those twenty five countries have an estimated seventy three percent of the world’s on by. And the way that we have framed the World Bank group’s goal for universal access is an account for every individual. It’s not an account at the household level.
This is very important for women’s participation and benefits; economic participation benefiting from that account. Financial inclusion at its best opens up opportunities in a way that perhaps no other single intervention does. Access to basic savings and payment services has direct poverty reduction impact and income impacts food nutrition impacts. Being able to tapping to savings provides that level of cushion and of protection for households or individuals falling back into poverty it is a particular shock which affects their income more unexpected expenditures. People are increasingly accessing financial services through mobile phones or through cards – payment cards credit cards debit cards.
That’s a significant improvement in terms of people being able to save conveniently. Being able to access remittances in a way that they don’t have to go to a nearby town and waste half a day of valuable income also an insecurity of having to bring back cash. But even when they have an account if the data on the transactions on the payments isn’t being made use of then their ability to benefit from cheaper more diverse financial services is limited. If people need a loan for a house a home improvement they don’t just want to have a balance on the front they want to be able to save for their children’s education or for that the costs of the agricultural season next year of the harvest.
Accounts need to be a gateway to a range of credit insurance payments saving services and not just an account. One of the best parts of my job is that I get to work with a country that is allowing experimentation in digital technologies and that’s having a huge impact in terms of individual’s entrepreneurs being able to access services that I never had access to before. So finance inclusion has the potential to unlock that for people. So we have tremendous opportunity to live for the reality for people on the ground in terms of how they are able to access financial services. If we get it right. If we’re not cutting edge in the way we need to be then that’s a lost opportunity. So that’s a challenge which motivates me and it’s a great opportunity but its also significant responsibility. There is no automatic guarantee that we will reach them or reach them quick enough and what if we have to be effective in speeding up the pace at which people are brought into the financial sector. It’s to open up a pathway to rule out full financial inclusion. It’s also a critically important service in terms of our goals of poverty reduction and ensure prosperity.