The tri-annual 2014 Global Findex Data, the world’s most indepth financial inclusion data on how people save, borrow, make payments and manage risks, is in. Leora Klapper, a lead economist in the development research group at the World Bank, shares the highlights, surprises and disappointments in helping arm the world’s poorest households with banking services.
Describe the methodology behind these mammoth surveys. What’s involved?
Researchers built upon the 2014 and 2011 Gallup World Poll Surveys to collect the Findex data, funded by the Bill & Melinda Gates Foundation. This year we interviewed about 148,000 adults, aged 15 years and above in 143 countries over the 2014 calendar year – a heroic effort. Gallup does all the sampling, translations, and data quality control centrally, harmonizing the methodology.
Describe some exciting breakthroughs with the new data.
The biggest news is that the unbanked population dropped from 2.5 billion to 2 billion adults globally. We researched adults living in the poorest households globally vs people living in wealthier households and saw a narrower gap between the two groups. So the percentage of adults living in the poorest 40% of households without an account decreased by 17% in developing countries compared with 2011. We’ve provided more accounts for the underprivileged, yet over half of adults living in the poorest 40% of households still lack accounts in 2014, so we have some way to go.
Another breakthrough was doubling the questionnaire’s length to study how people send and receive money, specifically how people pay and receive domestic remittances, make payments for school fees and utility bills, and receive their wages, government transfers, and payments of the sales of agriculture products.
We also built on our data on mobile money. In 2011, we asked respondents if they have a bank account with a financial institution; now, we also ask respondents if they personally make a payment directly from their mobile money account, which telecom companies often offer in developing countries, especially in Sub-Saharan Africa. We also asked adults with an account if they make payments directly via their mobile phone.
Any disappointments?
The gender gap remains stubbornly at nine percentage points in developing countries. We see proportionate growth between men and women for account ownership in developing countries, but we haven’t narrowed the gap.
Opportunity exists. For example, women struggle paying school fees – they pay bus fare, wait in line, and juggle business and family responsibilities. Yet these women also receive a wage or government money via an account. With this new data, banks can now set up appropriate services and products to help make these women’s lives easier.
How does the 2014 data build on the 2011 Global Findex Data?
The 2011 data was new, but incomplete. In 2010, mobile money accounts were new. So when we asked respondents if they make mobile payments, we received large data from surprising places, especially in Sub-Saharan Africa, when no real mobile providers existed. We suspected that people were reporting payments made by sending airtime credit, which users commonly used as an alternative currency.
With the 2014 data, our larger goal was identifying people making payments directly from a mobile money account. The GSMA’s report, whose members are mobile money operators globally, helped us ask about specific mobile money services.
Are there any new findings on mobile money accounts that look promising?
Building on the Finclusion Surveys done by the Gates Foundations, which collected data on mobile money account ownership in seven countries in Africa and Asia, we could research mobile money account ownership globally. Impressively, we found that in 13 countries in Sub-Saharan Africa, more than 10% of adults have a mobile money account. In five countries – Somalia, Cote d’Ivoire, Tanzania, Uganda and Zimbabwe – more adults have a mobile money account vs an account with a financial bank or institution.
We found globally only 2% of adults report having a mobile money account. However, in Sub-Saharan Africa, 12% of adults – about 64 million people – report having mobile money accounts. Côte d’Ivoire and Zimbabwe are real success stories. Following their political situations and weakened infrastructure, mobile money presents real opportunity for financial growth and development.
So, it would seem some adults view mobile accounts as safer.
We hear people are likely to find mobile accounts more affordable and convenient than services offered by banks. For example, in Tanzania, 37% of accounts at financial institutions are dormant. But among those with dormant accounts, 62% reported making a mobile transaction in the past year.
Where are the opportunities to reduce the numbers of unbanked people around the world?
Our new data includes the number of adults receiving wages via accounts vs in cash. This progress is a tremendous opportunity for increasing account ownership. For example, we found that 20% of unbanked adults – just over 400 million adults – receive wages or government transfers in cash.
Did you spot any new trends in how people use accounts?
Having an account is only the first step towards financial inclusion. The new data offers new insight into whether people actually use their accounts. We now know more than 65% of account users in countries report having used their account to save or to make and receive an electronic payment in the past year.
We also know account usage varies regionally. In the East Asia and Pacific, 50% of account holders used their account to save. In Latin America and the Caribbean, 50% of account holders used a debit card to make a direct payment from their account. In Europe and Central Asia, over half of account holders use their account to receive their wages and other electronic transfers. In Sub-Saharan Africa, over half of adult account holders use their accounts to send or receive remittances. It’s good to see adults in developing countries using their accounts.
Where do you feel most hopeful in terms of closing the gender gap?
The evidence is mixed. In Cote d’Ivoire and Tanzania, where over 20% of adults have a mobile money account, we find no gender gap in mobile money accounts, suggesting mobile money accounts are helping close the gap. However, in Tanzania and Uganda, we find contrasting data: men are significantly more likely than women to have a mobile money account. From my own interviews in people’s homes, I still hear women in Sub-Saharan Africa, particularly those in rural areas, defining a bank account as a safe place to store their money outside of their home. For women struggling with the cost and time required to get to a bank to deposit money into an account, technology-enabled accounts like mobile money accounts or card-based accounts offer convenience and savings.
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