Across the globe, there are still an estimated 1.7 billion adults without a bank account,1 The majority of these "un-banked" adults live in emerging market (EM) countries, with the highest number in China and India.
Un-banked adults are typically marginalized or vulnerable, likely to be unemployed with low levels of education. There is also gender disparity, as 56% of all un-banked adults are women. These socioeconomic vulnerabilities are made worse by the fact that adults without bank accounts expose themselves to high-cost or risky financial arrangements. This includes borrowing from informal and high-interest moneylenders and having to carry cash or store it, sometimes literally, under a mattress.
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There’s a huge opportunity to increase access to banking all around the world. When people have bank accounts, they have a safe place to keep their money. They can create savings and access affordable credit and cheaper services. A bank account makes it easier to access housing and employment. This all reduces inequality and increases economic growth.

The UN’s Sustainable Development Goals (SDGs) include specific targets aimed at expanding financial inclusion. Examples include:

  • Strengthening the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all
  • Increasing the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets

In many countries, governments have taken the initiative to launch financial inclusion programs to expand access to financial services. In India, Prime Minister Narendra Modi’s flagship People’s Wealth Scheme enabled every Indian to open up a "no-frills" free bank account with benefits such as debit cards, insurance and overdraft facilities. This program more than doubled India’s banked population from 2011, allowing it to reach 80% by 2017. That said, half of India’s bank accounts are currently inactive.

In many countries, governments have taken the initiative to launch financial inclusion programs to expand access to financial services.

Companies could help lead the way

Another solution is the provision of affordable, accessible retail loans that enable customers to improve their quality of life. Retail loans in emerging markets are typically for financing education, buying a home or launching a small/medium-sized enterprise. One barrier is that 48% of the working population in India has no written job contract, making it next to impossible to take out a loan from a bank.

However, non-bank financial companies (NBFC) can offer affordable, low-interest (and often instant) loans and products for underbanked adults without credit history or formal income documents. In fact, 60% of Indian borrowers prefer microloans from NBFC and micro-finance institutions compared to banks. The alternative is informal loans from money lenders, who charge up to 50% annually and have unregulated collection methods.

Investment in digital initiatives is another key enabler of financial inclusion. Consider Mexico, where just 37% of adults have access to a bank account, but 60% have access to the internet. This suggests that Mexico is a fertile environment for fintech.3 Elsewhere, in Kenya, mobile phone-based bank account systems have been successful, proving that certainly in some countries and situations, banks do not need bricks-and-mortar branches to be widely adopted and trusted. In the UK, challenger banks offer mobile-only accounts that are often more accessible than traditional accounts to those with a poor credit score, for example.

One core reason for the low financial participation rates in emerging markets, and among certain demographics in developed countries, is a lack of financial literacy. Financial inclusion is very much part of our sustainable development goals framework. As such, we scrutinize the ways in which banks and financial institutions are educating marginalized customers and engaging with government-level financial inclusion initiatives.

Final thoughts…

In our opinion, financial inclusion is a core enabler of sustainable development. The breadth of opportunities is vast. Encouragingly, we are seeing more innovative products, digital initiatives and education programs to encourage the use of banks and financial services. In short, we believe this market is well placed for growth.

World Bank, Findex report, 2017. World Bank, Global Findex, 2017 World Bank, Systematic Country Diagnostic: Mexico



Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.