a wage or government payment

2.6 OPPORTUNITIES FOR INCREASING ACCOUNT OWNERSHIP FOR THE UNBANKED THROUGH DIGITALIZING PAYMENTS

This chapter opened with evidence on the ways in which using financial services—in particular, payments— gives recipients better privacy, security, and control over their money, while also increasing savings and financial resilience. For example, digital payments of wages can encourage workers to save using their account, and digital payments for agricultural products can make it easier for farmers to access additional financial products such as input financing and crop insurance. Digitalizing wage or government payments also helps recipients by reducing the time and cost of receiving such payments, and it can help payers by ensuring the money goes to the intended recipients and by reducing leakage. However, these benefits can accrue only to those who have an account and use it. This section explores opportunities to further increase account ownership based on the Global Findex 2021 survey findings on the use of financial services.

Digitalizing cash transactions offers a pathway to increasing account ownership

Just as there are opportunities to help people who have an account make more use of it, there are also opportunities to increase account ownership by digitalizing cash transactions for the unbanked. Millions of unbanked adults around the world still receive regular payments in cash from employers or from the government. Digitalizing such payments is a proven way to increase account ownership. In developing economies, 39 percent of adults—or 57 percent of those with a financial institution account—opened their first account at a financial institution specifically to receive a wage payment or to receive money from the government (figure 2.6.1).37 The share is higher in some economies. In India, Malaysia, South Africa, and República Bolivariana de Venezuela, 70 percent of account owners opened their first account at a financial institution to receive a wage or government payment. The same is true for about two-thirds of account owners in Mongolia, as well as in a few economies in Europe and Central Asia, including Bosnia and Herzegovina, Kazakhstan, and Serbia.

FIGURE 2.6.1 Millions of adults opened their first account at a financial institution to receive a wage or government payment

Adults with an account at a financial institution (%), 2021

Opened first account to receive a wage payment or money from the government

Source: Global Findex Database 2021.

37. This question was asked in different ways in the Global Findex 2021 survey and the Global Findex 2017 survey.