Bank Accounts Not Accessible to Billions

Bank Accounts

In the U.S. and other higher-income countries, people take bank accounts for grounded as paychecks are direct deposited, debit cards are used for $5 lattes and parking meters, and carrying cash is more and more unnecessary. It may be easy for a high school kid in Los Angeles to open a checking account, but for billions of other people worldwide bank accounts are not accessible and cash rules.

More people do have bank accounts or participate in some financial institution than ever before, according to the World Bank report issued Wednesday. The report, entitled “The Global Findex Database 2014: Measuring Financial Inclusion Around the World,” indicated that approximately 62 percent of adults around the globe have a bank account. That represents a significant increase from the 51 percent access reported in 2011. China and India accounted for roughly half of the increase, with 355 million opening new accounts. However, the numbers indicate that banking services are not accessible for two billion of the world’s adults.

Some might question why financial inclusion is important considering that some aspects, such as access to easy credit, have worsened some lives as well as helping others. But, credit is not the big issue – it is access to simple savings accounts, particularly for women.

The World Bank report showed that 58 percent of females around the world had bank accounts in 2014. For men, the number is 65 percent. The gap may look like it is only 7 percentage points; in some parts of the world, however, the gap is much wider. The report estimates that 1.1 billion women do not have access to the formal financial system.

Cultural factors come into play in parts of the world, where men still earn the money. But In some parts of the world, access to digital monetary sources could enable women to help their families. Just look at microloan efforts to help women start small businesses. Being able to access banking, particularly mobile payment platforms, enables them to succeed. Many of the women strive to keep their meager assets hidden from the men in their lives; again, banking access would help. (The reports show that joint accounts are typically used in higher income countries, not poorer ones.)

Repeated studies show there are extra benefits when women become empowered with access to banking or control of some household or personal funds. One area is resource allocation in homes, which results in improved nutrition, according to Jake Kendall, deputy director of the Bill & Melinda Gates Foundation research and innovation on the financial services for the poor team. The Foundation funded the Global Findex research for the World Bank.

One interesting item in the data is that Chinese women did not follow the global stats. Just as they have a greater proportion of women who work in the labor force, they have a greater percentage of women with bank accounts (75 percent). One theory is that the widespread use of mobile banking enables access in remote areas.

The report does look at why billions say they do not have a bank accounts and what barriers there might be that make them not accessible. For women, 30 percent cited having a family member who had a bank account; 26 percent of men said this too. The cost of bank accounts was mentioned by a little less than one-fourth of respondents. The distance to a bank site was the third most mentioned reason.

By Dyanne Weiss

Wall Street Journal
The New Yorker

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