Mobile money drives financial inclusion but gender gap persists

Daily wage workers wait for employment on a street side at an industrial area in Mumbai

By making wage payments electronically, businesses in Latin America and the Caribbean could expand account ownership to as many as 30 million unbanked people.

India has significantly reduced the gender gap in providing access to financial services with 77% women against 83% men having bank accounts, the World Bank said in its Global Findex database 2017 released on Thursday. This despite the government's successful Jan Dhan Yojana, which is a national mission to ensure financial access in an affordable manner for the poorer sections of the society.

Globally, 69 percent of adults have a bank account. It may be noted that China has an unbanked population of 225 million adults, followed by India which is just 35 million short with 190 million. On the flip side, only 7% of the account holders used them for savings and 48% of the accounts remained inactive, the highest in the world.

Part of the explanation might be Indias Jan-Dhan Yojana scheme, developed by the government to increase account ownership, brought an additional 310 million Indians into the formal banking system by March 2018, many of whom might not yet have had an opportunity to use their new account, it said.

While the report acknowledges the role of Jan Dhan Yojana in increasing the number of people with a bank account, the interesting part is, nearly half the accounts remained inactive in the past year. Although more people have access to banking in India now, cash is still the dominant mode of payment. This is important because financial inclusion is crucial in helping people save money for an emergency, get loans to start businesses, and escape poverty.

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Two global studies - a study of 150,000 consumers polled by Gallup for the World Bank for its Global Findex Database, and a survey of 5,200 consumers by the tech giant Oracle - found complementary trends in the use and adoption of digital banking.

In India three years ago, men were 20 percentage points more likely than women to have an account.

In India, for example, 42 per cent of male account owners use digital payments, while just 29 per cent of female account owners do, it said. This comes as a blow to the government, which has been taking many steps to increase financial inclusion, lower cash dependence and increase digital transactions. Digital public pension payments could reduce the number of unbanked adults in Europe and Central Asia by up to 20 million.

Progress was driven by India, where a government policy to increase financial inclusion through biometric identification pushed the share with an account up to 80 per cent, with big gains among women and poorer adults.

With approximately 60 million unbanked adults in Indonesia using mobile phones today, there is a massive opportunity for a greater penetration of mobile payments and transactions in Indonesia.