Finance

Extend economic and financial inclusion to underserved and marginalized groups

Every system shift we track and target should reflect equity considerations, but economic and financial inclusion represents an important shift in itself that enables all systems to become more just. 

A just transition toward a decarbonized, sustainable economy will result in more inclusivity and fairness than the high-carbon, unsustainable economy it leaves behind. It will give underserved and/or marginalized groups new economic opportunities for high-quality employment and enable their participation in the benefits of thriving, sustainable industries. 

A just transition will also offer further options to expand financial inclusion. This will include extending financial services to all people, especially underserved and/or marginalized groups. Financial inclusion is an important development goal in its own right, and can allow all people to further share in the benefits of the transition to a low-carbon economy and the protection of nature. 

Populations can be excluded from financial services due to a range of factors, including race, gender, age, income, occupation and geography. This inequity is found in lower-income countries as well as higher-income countries. Though many of these communities contribute comparatively little to global greenhouse gas (GHG) emissions, they are likely to be hit hardest by the effects of climate change and biodiversity loss. 

When people have access to financial resources like bank accounts and well-regulated lending, it helps them build financial security and makes them more resilient to economic shocks, including those caused by climate change impacts, biodiversity loss or other failures of natural systems. They may also be more capable of taking advantage of low-carbon technologies. However, if the path to decrease emissions and safeguard the global commons is not managed equitably, vulnerable communities will suffer disproportionate hardship. 

Financial services can’t replace the natural systems on which people rely, but families and communities can use such services to rebuild damaged properties, migrate to a stable area, prepare for the next extreme weather event, switch to cleaner energy sources, adopt climate-resistant agricultural practices, or otherwise adapt to a changing environment. Increasing the share of the global population that is included in the regulated financial system will require efforts from both the private and public sectors. 

Private financial institutions will need to expand their presence in remote and rural areas and broaden lower-cost services, such as mobile money. Public financial institutions will need to adopt financial inclusion strategies, help finance infrastructure (such as internet services), and directly provide financial services themselves. Financial services must also be carefully regulated to avoid predatory financing.

Data Insights

Is the world making enough progress toward the most important outcomes?

Systems Change Lab assesses progress made toward targets across 4 outcome indicators. Click a chart to explore the data.

What factors may enable or prevent change?

Systems Change Lab identifies 8 enablers and barriers that may help spur or impede change. Click a chart to explore the data.

Progress toward targets

Systems Change Lab tracks progress made toward targets across 4 outcome indicators. outcome indicator. Explore the data and learn about key actions supporting systems change.

Number of quality green jobs

More information is coming soon.

More information is coming soon.

Proportion of climate finance flowing to underserved and marginalized communities

Data on whether investments in climate and nature are benefiting underserved and marginalized communities is essential to making such investments more equitable.

Data on whether investments in climate and nature are benefiting underserved and marginalized communities is essential to making such investments more equitable. This indicator will be updated as the subnational distribution of climate finance is better tracked.

Adult population with a financial account

According to the World Bank, in 2021, 76% of adults worldwide had access to a bank account, mobile money service or other financial institution, a slight increase from 68% in 2017, but still short of the “100% by 2030” target.

The proportion of the population with an open bank account is an important indicator of financial inclusion and resilience. An estimated 1.4 billion adults worldwide do not have an account at a regulated financial institution or with a mobile money provider. These adults, defined by the World Bank as those aged 15 or older, are considered “unbanked.”

Access to financial services can be challenging for people who live in rural areas far from a physical branch, as well as people who may not have enough money to start or maintain an account due to deposit or balance minimums. Women also experience a financial inclusion gender gap and may face significant barriers to access financial services.

Financial services aren’t restricted to private financial institutions. The public sector often offers banking and credit products, and these can accomplish public and social goals beyond profit-making.

According to the World Bank, in 2021, 76% of adults worldwide had access to a bank account, mobile money service or other financial institution, a slight increase from 68% in 2017. To reach the 100% target by 2030, this access will need to grow at about 1.4 times the historical rate between 2021 and 2030.

Adult population with savings in a financial institution in the past year

The share of adults worldwide saving formally at a financial institution was 29% in 2021, a slight increase from the 27% share in 2017, but notably short of the target of 100% coverage by 2030.

Having savings in a public or private financial institution can help a person become more financially secure. Savings can also help households bounce back after natural disasters or invest in climate-resilient technology, providing a buffer against the effects of climate change and environmental degradation. Households with savings under the formal financial system also benefit from government regulations and insurance that can protect their assets, helping ensure financial stability.

However, trust in financial institutions and governments runs low in some countries. In these areas, leaders must earn the public’s trust by building a fair, resilient financial system. Increasing the number of adults with formal savings will require easier access to financial services, a growth in government cash transfer policies, and expanded economic opportunities.

According to the World Bank, 29% of adults worldwide saved formally at a financial institution in 2021, a slight increase from 27% in 2017. To reach 100% coverage by 2030, the share will need to grow eleven times faster than the historic rate.

Enablers and barriers

We also monitor change by tracking a critical set of 8 enablers and barriers enabler or barrier that can help spur or impede change. Explore the data and learn about key actions supporting systems change.

Number of countries with climate finance equity commitments

Countries committed to climate justice should ensure their in-country investments benefit underserved and marginalized communities, but few countries have made commitments to do so.

Countries committed to climate justice should ensure their in-country investments benefit underserved and marginalized communities, but few countries have made commitments to do so. This indicator will be updated as more countries make these commitments and when these commitments become better tracked.

Adult population that borrowed from a formal financial institution in the past year

According to the World Bank, 22% of adults worldwide borrowed from a financial institution in 2017; this number increased to 28% by 2021.

As financial inclusion expands, more people can access financial services like bank and savings accounts, and can begin to use lending from public and private financial institutions. 

Loans provide funds that can unlock new health, educational and business opportunities, and an increase in consumer borrowing can circulate funds throughout communities and foster economic growth. At the same time, governments must closely monitor lending practices to prevent unsustainable borrowing and prohibit predatory lending that traps people into cycles of debt. Improving financial literacy can help individuals evaluate loans and identify risks. 

While excessive debt in a household or economy can be dangerous, the widespread use of lending services is a good indicator of financial options. According to the World Bank, 22% of adults worldwide borrowed from a financial institution in 2017; this number increased to 28% by 2021. 

Number of countries with financial inclusion strategies and/or payment systems

The Alliance for Financial Inclusion, which tracks and promotes financial inclusion in 89 developing countries, found that 72 of those countries have national financial inclusion strategies, up 47% since 2018.

People can be excluded from financial services as a result of a range of demographic factors, including race, gender, age, income, occupation and geography. To remedy this, countries need to implement financial inclusion strategies that can expand financial services and payment systems to populations that lack them.

Financial inclusion strategies — such as financial consumer protection, financial literacy, gender-inclusive finance and microfinance expansion — support general social and economic development by strengthening the resilience of the most at-risk populations. Governments can coordinate with the private sector to create an infrastructure that facilitates access to financial services for all.

Payment systems that are accessible, efficient and secure play a critical role in expanding financial inclusion and can also serve as a gateway to additional financial services. According to the Alliance for Financial Inclusion, which tracks and promotes financial inclusion in 89 developing countries, 72 countries have national financial inclusion strategies, a 47% increase since 2018.

Adult population that received government transfers in the past year

The number of adults worldwide receiving government transfers is up from 14% in 2017 to 19% in 2021, according to the World Bank.

Government transfers (especially cash transfers) are a critical lifeline for vulnerable communities. They can foster greater financial inclusion and serve as an entry point into the formal financial system. Other forms of transfer payments related to welfare, such as education-related and unemployment benefits, can also promote economic resiliency and financial inclusion. Cash assistance coupled with other financial inclusion programs, such as savings programs in a regulated financial system, can further increase economic benefits to communities. Some countries are even integrating climate considerations into broader social protection programs — which include cash transfers — in order to build resilience and protect the vulnerable from the harmful impacts of climate change.

Transfer payments can also help build trust in the government’s financial infrastructure. While many transfer payment systems are based on economic needs, some advocate that universal payments build social solidarity. Government cash transfers can potentially provide opportunities for households to consider investments that could increase their climate adaptation capacity. According to the World Bank, 19% of adults worldwide received government transfers in 2021, an increase from 14% in 2017.

Percent of people with access to information and communication technologies

The International Telecommunication Union’s World Telecommunication/ICT indicators database reports that 67% of the world’s population used the internet in 2023.

Information and communication technologies (ICTs) — the internet, wireless networks, computers and mobile phones — are important factors for economic growth and financial inclusion.

Access to inexpensive and efficient ICT infrastructure enables underserved and/or marginalized communities to participate in the digital economy. These technologies can also play a role in poverty reduction by providing access to the formal financial system and reducing transaction and access costs.

ICTs have helped expand branchless banking services, which has improved financial inclusion and narrowed the financial gap for underserved and/or marginalized groups and rural populations. There is even some evidence that ICTs, when applied as part of a financial inclusion strategy, can accelerate economic growth and lower poverty and inequality. According to the International Telecommunication Union’s World Telecommunication/ICT indicators database, 67% of the world’s population used the internet in 2023.

Presence of ATMs across the population

The number of ATMs per 100,000 adults increased in 65 out of 149 countries between 2021 and 2022, with most of them being low-income countries according to the International Monetary Fund.

An automated teller machine (ATM) allows individuals to deposit and withdraw cash from their bank accounts without visiting a physical bank or interacting with a branch representative.

ATMs are part of the formal financial infrastructure and serve as an entry point for customers to access other financial services, such as savings and credit. They are an affordable option for countless consumers because cash remains a preferred choice of payment and exchange for many people, including vulnerable populations in high-income countries. Cash also provides privacy and autonomy benefits compared to electronic transactions, which can be tracked.

The number of ATMs per 100,000 adults provides an indication of the access a population has to withdraw cash. Data from the International Monetary Fund indicates that the number of ATMs per 100,000 adults increased in 65 out of 149 countries between 2021 and 2022, mostly in low-income countries. 

Average number of mobile money transactions per active mobile money account

The International Monetary Fund found that the average number of mobile money transactions per active mobile money account increased in 26 out of 38 countries between 2021 and 2022.

Mobile money accounts allow users to store, send and receive money on a mobile device. These services can include making a payment, taking out a loan or checking a bank account balance.

Because mobile money platforms are low-cost, accessible alternatives to traditional banking services, they are a viable means to provide financial services to underserved and/or marginalized communities. Access to mobile money can increase financial inclusion in rural populations that lack access to physical banks or ATMs.

Mobile financial services and mobile money payment systems can promote and expand financial inclusion, especially in low-income countries and communities where they often serve as gateways to other regulated financial services. However, governments must regulate and monitor mobile and other micro-lending services closely to protect consumers against predatory practices that lead to unsustainable debt traps. According to the International Monetary Fund, the average number of mobile money transactions per active account increased in 26 out of 38 countries between 2021 and 2022.

Number of registered mobile money agent outlets per 1,000 square kilometers

According to the International Monetary Fund, 31 out of 35 reporting countries increased the number of registered mobile money agent outlets per 1,000 square kilometers between 2022 and 2023.

Mobile money encompasses a range of financial services that can be conducted on a cellular device. However, customers in many low-income countries still conduct most transactions using cash, and must rely on mobile money agents to process cash-in and cash-out transactions like deposits and withdrawals. These agents are often individual entrepreneurs who operate under a franchise-like business model; compared to ATMs and banks, they are usually better suited for low-income, low-density populations due to minimal setup and operating costs. 

An increase in the number of mobile money agent outlets can expand access to financial services, providing the critical infrastructure that customers need to deposit, withdraw and transfer cash efficiently and safely. According to the International Monetary Fund, 31 out of 35 reporting countries increased the number of registered mobile money agent outlets per 1,000 square kilometers between 2022 and 2023.

Photo credits

Photo by Radek Kucharski