COVID-19 aided financial inclusion, says World Bank

COVID-19 is expanding financial inclusion efforts, driving a large increase in digital payments amid the global expansion of formal financial services, the World Bank has said.

It explained that the expansion created new economic opportunities, narrowing the gender gap in account ownership, and building resilience at the household level to better manage financial shocks.

According to the Bank’s Global Findex 2021 database, the pandemic has also led to an increased use of digital payments.

It pointed at how in low and middle-income economies (excluding China), over 40% of adults who made merchant in-store or online payments using a card, phone, or the Internet did so for the first time since the start of the pandemic.

It added the same was true for more than a third of adults in all low- and middle-income economies that paid a utility bill directly from a formal account.

In India, more than 80 million adults made their first digital merchant payment after the start of the pandemic, while in China over 100 million adults did.

It revealed that two-thirds of adults worldwide now make or receive a digital payment, with the share in developing economies growing from 35% in 2014 to 57% in 2021.

“In developing economies, 71 per cent have an account at a bank, other financial institution, or with a mobile money provider, up from 63 per cent in 2017 and 42% in 2011. Mobile money accounts drove a huge increase in financial inclusion in Sub-Saharan Africa,” the report said.

In his response to the findings, World Bank Group President, David Malpass said: “The digital revolution has catalyzed increases in the access and use of financial services across the world, transforming ways in which people make and receive payments, borrow, and save. Creating an enabling policy environment, promoting the digitalization of payments, and further broadening access to formal accounts and financial services among women and the poor are some of the policy priorities to mitigate the reversals in development from the ongoing overlapping crises.”