The Universal Financial Access 2020

In October 2013, the World Bank Group (WBG—comprising of the World Bank and its organisation, the International Finance Corporation) President Jim Kim formalised the goal of attaining Universal Financial Access (UFA) by 2020. It read, “By 2020, adults globally have access to an account or electronic instrument to store money, send and receive payments as the basic building block to manage their financial lives.” The World Bank has been stressing on the crucial necessity of financial inclusion from a global economic and societal viewpoint since quite a while now. Around 30 partners have assembled to pledge commitments for achieving UFA by 2020.

The UFA approach in priority and other over 100 countries essentially includes: developing a regulatory milieu to facilitate access to transaction accounts, increasing access points, develop financial means, steering scale and viability via pumped-up government programs—social transfers, attributing core attention on reaching underserved (marginalised) populations—women and rural producers, igniting interest in financial services, boosting account use, making accessible the alternative financial services—savings, insurance, and credit. It also mainstreams the focus on a ‘platform approach’ that consists of triple layers—a biometric identity database, virtual payment, and interoperability of digital payment; and on the ‘national policies’ meant to make available scale via a mix of digital ID and digitised G2P (government-to-person) payments.

The WBG’s goal for facilitating universal financial access to primary transaction accounts by 2020 is a crucial consideration in removing poverty and elevating prosperity by 2030. Reports indicate that the financial inclusion initiatives taken by the World Bank have led to a 20% fall in the number of unbanked consumers. According to the World Bank’s Global Findex 2014, the net number of financially excluded people plummeted from 2.5 to 2 billion since 2011. Access to banking services has augmented thanks to mobile money technology. With over 700 million new adult subscribers becoming account holders globally (since 2011), the national financial system has benefitted from the governments’ policy stance in emerging markets of letting the NBFCs (non-banking finance companies) enter the market.

What has also buoyed the market growth is the provision of payment services via digital money and mobile money products. The advent of agent-based models of banking, advancing ecosystem of national payment systems and making available the access of the network infrastructure to mobile operators are also among the key growth stimulating factors. The G20 (Group of Twenty) has also placed financial inclusion in their priority list. This has led close to 50 countries drafting coherent policy goals to champion financial inclusion.

An essential tool for realising these goals is an initiation of policy actions to governments in emerging markets meant to assist in creating a levelled field of operation, and facilitate the availability of affordable and eased financial services to most of the population. The WBG increased investment, financial, advisory, knowledge, and convening resources. The benefits arising out of the UFA for the financial regulator as the stakeholder include: the configuration of the national financial inclusion strategies (NFIS), risk and compliance framework, technology, standards, infrastructure, and business model.

Universal Financial Access 2020 & India

India is one of the 25 UFA focus countries for the financial inclusion initiative. In India, the unbanked population stands at 21% of the unbanked adults of the world. During the period 2011 – 2014, the account holder penetration in India increased from 35% to 53%—according to the Global Findex Report 2014. This translates to a total of 175 million (new) account holders. However, the dormant account rate in India stood at 43%—195 million—following the Pradhan Mantri Jan Dhan Yojana. Also, the account penetration rate in the case of India is 53% whereas a mere 15% of adults use their account to pay or receive money, according to the Global Findex Report 2014. According to the UFA 2020 progress report for India, as of 2017, there are 80% adults owning a transaction account in India as compared to 35% in 2011. Also, there are 423.2 millions of adults that are still unbanked. In 2011, the adults reporting documentation as a barrier stood at 11%, in 2017 it reduced to 5%. It is also worth noting that the adults using electronic payment instrument to transact rose from 13% in 2011 to 29% in 2017. The WBG has supported several success stories across the UFA focus countries—like in the case of India, $93 million Bandhan investment was given a green signal for elevating faster approach to MSMEs (Micro, Small and Medium Enterprises). Also, by 2020, under the auspices of the UFA 2020, 22 million unique customers are anticipated. Concerted efforts are also underway to augment access to savings services for families belonging to lower income category, and to facilitate access to a broader variety of financial products.