Banking on the unbanked in the digital era – Part 1
THE GLOBAL Findex database provides more than 200 indicators on topics such as account ownership, payments, saving, credit and financial resilience. The Global Findex database shows that 515 million adults worldwide opened an account at a financial institution or through a mobile money provider between 2014 and 2017. This means that 69 per cent of adults now have an account, up from 62 per cent in 2014 and 51 per cent in 2011.
It is evident that even as account ownership continues to grow, inequalities persist. There is a gendered component to account ownership, and perhaps this has to do with the institution of patriarchy, which is more pervasive in some societies where women continue to be voiceless and have very little rights outside the domestic sphere. Data show that 72 per cent of men have an account compared to 65 per cent of women. That gender gap of seven percentage points was also present in 2014 and 2011.
In developing economies, the gender gap remains unchanged at nine percentage points. The Global Findex reports that the gap between richer and poorer narrowed. Among adults in the richest 60 per cent of households within economies, 74 per cent have an account. Among the poorest 40 per cent only 61 per cent do, leaving a global gap of 13 percentage points. The difference is similar in developing economies, and neither gap has changed meaningfully since 2014. Data also indicate that account ownership is also lower among young adults, the less educated, and those who are out of the labour force.
The Global Findex declares that about 1.7 billion adults remain unbanked without an account at a financial institution or through a mobile money provider. Because account ownership is nearly universal in highincome economies, virtually all these unbanked adults live in the developing world. Indeed, nearly half live in just seven developing economies: Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan. Fifty-six per cent of all unbanked adults are women. Women are overrepresented among the unbanked in economies where only a small share of adults are unbanked, such as China and India, as well as in those where half or more are, such as Bangladesh and Colombia. Unbanked adults are more likely to have low educational attainment. In the developing world about half of all adults have a primary education or less. ‘Unbanked’ is an informal term for adults who do not use banks or banking institutions in any capacity. Unbanked persons generally pay for commodities in cash. Unbanked individuals typically do not have insurance, pensions or any other type of professional money-related services. The ‘unbanked’ persons are usually to be found in the informal economy of the society. They are oftentimes the most vulnerable in the society and readily become prey for unscrupulous persons. The ‘unbanked’ may take advantage of alternative financial services, such as cheque-cashing and payday lending, if such services are available to them. Whereas the coronavirus pandemic continues to impact the Jamaican economy, tens of thousands of individuals have been furloughed or laid off since the first COVID-19 case was confirmed on the island on March 10.
See tomorrow’s Gleaner for the continuation of this article.