Global financial access growing despite crisis – new CGAP and World Bank research

Despite an environment dominated by tight credit markets and slowing economies, more people in developing countries gained access to financial services in 2009, a recent survey has revealed.According to the Financial Access 2010 report, the second annual survey of financial regulators in more than 140 countries carried out by CGAP and the World Bank Group, new technologies are introducing more cost-effective retail infrastructure at global level and the picture of financial inclusion is shifting.

Despite this growth is financial services accessibility worldwide, an estimated 2.7 billion people around the world continue to live with no access to formal financial services, which are both safer and less expensive than the informal alternatives.

Still regulators will need to ensure that the capacity to implement sound regulations keeps pace with the introduction of new laws, so that increased outreach maximizes the benefits for poor people.

The survey found that the number of bank accounts around the world was growing even as the volume of loan and deposit accounts dropped. Sixty-five deposit accounts were added per 1,000 adults in 2009, representing 4.3 percent average growth in the number of deposit accounts. The impact of the financial crisis could be more clearly seen in the use of credit services, with the number of loans per 1,000 adults broadly unchanged between 2008 and 2009.

The majority of the world’s poor resort to informal services to manage their family’s financial lives – saving under the mattress, borrowing from family and friends, or moneylenders. But around the world policy makers are committing to an agenda that supports financial inclusion and offers greater access to safe, formal financial services.

The data also confirm the need for lawmakers and regulators to pay even closer attention to consumer protection and financial sector regulation as the number of users grows.

While this trend is good news for future savers and borrowers, Financial Access 2010 shows that regulators are often hampered by a lack of resources to implement the policies or, in the case of consumer protection legislation, lack of enforcement powers.

Despite the numerous hurdles to implementing sound policies, there are promising trends in financial inclusion, including the expansion of retail infrastructure and use of new technologies to deliver financial services cost effectively. Globally, one bank branch, five ATMs, and 167 point-of-sale (POS) terminals were added per 100,000 adults in 2009.

For the first time, the number of ATMs exceeded the number of bank branches in low-income countries last year. But low- and middle-income countries still lag behind high-income countries in terms of physical outreach. Burundi doubled its number of ATMs, but still only has a total of four ATMs in the entire country.