This report outlines global trends and areas of future focus in the field of financial inclusion, based on a survey of 112 professionals from 46 countries, representing financial service providers (FSPs), infrastructure organisations and consultancies as well as researchers and investors.
In the quantitative section of the survey, participants were asked to rank what they believe to be the most important ongoing developments and priority areas for the future. The qualitative section presented the respondents with open-ended questions, including regarding the greatest challenges to financial inclusion now and the most promising opportunities going forward.
Out of 20 pre-selected financial inclusion trends, the respondents ranked “digital transformation” as the most impactful, followed by “client-side expansion of digital innovations,” “strengthening of client resilience,” “innovation in financial product development” and “development of client protection.”
Despite these overall results, notable discrepancies exist among the opinions of different groups of respondents. For instance, researchers placed the highest ranked trend overall – “digital transformation” – only in 9th place. Preferences of some respondent groups also changed significantly since last year’s survey. For example, FSPs ranked “development of non-financial services” as sixth most important this year, up from 17th in 2021. (Among all respondents, this option rose to 13th place from 14th place last year.)
Looking forward, the top five areas of future focus were, in descending order of importance, “small and medium enterprise (SME) finance,” “agri-finance,” “green and climate-smart finance,” “women’s empowerment and gender equality” and “financial inclusion for the very poor.” Although the first three of these have remained the same since 2019, preferences differed among groups. For example, whereas infrastructure organisations displayed particular interest in “food security,” consultants ranked it near the bottom of the list.
In the qualitative section, the responses were quite diverse, addressing issues such as the financial risks created by increasing digitalisation, the necessity to foster financial literacy to enable consumers to protect themselves from such risks, and still-looming effects of the COVID-19 pandemic.
As for biggest opportunities for financial inclusion, the advent and growth of digital finance was cited often for its potential to reduce information asymmetries and make finance more accessible in rural areas. Other major opportunities – not wholly separate from digitalisation – included increasing “stakeholders’ understanding of clients’ lives and needs,” fostering “green and climate-smart finance” and utilising digital innovation to serve consumers “in a gender-inclusive way.”
Regarding the most significant industry-wide changes, respondents pointed out issues such as the risk of a vacuum in leadership caused by the loss of several actors in the financial inclusion sector, such as the Small Enterprise Education and Promotion Network, a US-based NGO that announced its closure in 2021. Other respondents cited positive changes, such as greater understanding of the importance of client protection.
This is a summary of a paper by Sam Mendelson, published by the European Microfinance Platform (e-MFP), October 2022, 44 pages, available at https://www.findevgateway.org/paper/2022/10/financial-inclusion-compass-2022.
By Saulius Simonas Ramanauskas, Research Associate
Additional Resources
European Microfinance Platform (e-MFP) homepage
https://www.e-mfp.eu
The Financial Inclusion Compass 2022
https://www.findevgateway.org/paper/2022/10/financial-inclusion-compass-2022
The Financial Inclusion Compass 2021
https://www.findevgateway.org/paper/2021/07/financial-inclusion-compass-2021
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