Half of the World is ‘Unbanked’

The Financial Access Initiative (FAI), a research consortium based at New York University, has identified that 2.5 billion adults worldwide do not have a savings or credit account with either a traditional (regulated bank) or alternative financial institution (such as a microfinance institution).

Nearly 90% of the financially un-served live in Asia, Africa, the Middle East and Latin America. FAI published the findings in a new paper, “Half the World is Unbanked“.

“Until now, the margin of error when considering the world’s unbanked was about plus or minus a billion — unacceptable in any other field,” said Jonathan Morduch, professor of economics and policy at New York University, managing director of the Financial Access Initiative, and author of Portfolios of the Poor, a new book examining the surprisingly sophisticated financial lives of the world’s poor. “These findings are a real step ahead, and they show how better data can help policymakers truly target and serve poor populations with appropriate financial services.”

The analysis also revealed new insights; for example, that India, a country with low per capita income and a large rural population, demonstrates much greater use of financial services than many relatively richer and more urban countries.

The global data indicate that countries can improve levels of financial inclusion by creating effective policy and regulatory environments and enabling the actions of individual financial service providers. More than 800 million of those using financial services live on less than $5 per day, so it is possible to provide these services to very low-income communities — but there are still nearly 2 billion to reach.

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