Financial inclusion which is banking the unbanked countries and economic growth both greatly benefit from widespread access to banking services. Given the widespread availability of convenient digital banking services, it’s natural to assume that everyone these days has a savings account.
However, this is not the case at all. Many nations still have sizable populations that lack access to official financial institutions and services (known as “unbanked”). The World Bank estimates that almost 1.7 billion individuals around the world do not have access to formal banking services.
In this article, we will look into the top seven most unbanked countries in the world.
The 7 most unbanked countries worldwide
The North African country, Morocco, has a long way to go before it can achieve its goal of full financial inclusion. 71% of the population does not have access to formal financial services. This is due to the country’s large rural population and inadequate banking facilities.
Many Moroccans struggle to gain access to official financial institutions due to a lack of financial awareness and geographical limitations.
Vietnam has a huge unbanked population (69%) that is especially prevalent in the country’s rural areas, despite its rapid economic expansion. The difficulties of gaining access to banking services are exacerbated by language hurdles and a lack of financial literacy.
67 percent of Egyptians still don’t have access to the country’s formal financial system. The efforts to expand access to financial services are hampered by factors such a lack of identifying documents, high illiteracy rates, and the preponderance of cash transactions.
The Southeast Asian archipelago of the Philippines has a long way to go before its population can fully participate in the financial system. Roughly 66% of the population does not use a bank.
Geographic barriers and a lack of sufficient financial infrastructure have prevented many Filipinos from using conventional banking services.
The majority of Mexicans, approximately 63%, do not have bank accounts, despite the fact that the country is considered middle-income. This problem is exacerbated by the prevalence of the informal economy, widespread distrust of banks, and the high cost of banking services.
Nigeria is one of the most populated countries in Africa and is struggling to achieve comprehensive financial inclusion. About 60% of its adult population does not have a bank account. This is largely due to the lack of access to banking services in rural areas, inadequate identification, and a general lack of knowledge about money management.
While the country’s economy is booming, about half of the population in Indonesia does not have access to a bank account. Many communities in the country are economically excluded due to factors such as the country’s archipelagic terrain and its associated socioeconomic gaps.
How unbanked countries can be banked
Financial inclusion, or “banking the unbanked countries,” requires a multipronged strategy. Here are some key strategies that can be employed:
1. Digital Banking and mobile money
The gap between the financially included and the financially excluded can be closed with the use of digital banking and mobile money solutions. Because of their widespread availability, especially in outlying places, mobile phones can be an effective means of expanding access to banking services.
To increase the number of people who use mobile banking, governments and banks should work together to design intuitive mobile banking applications.
2. Agent banking and branchless banking
Branchless banking and Agent banking networks can provide a critical need in areas with restricted access to conventional bank branches. Many small business owners at the community level serve as agents to facilitate access to basic banking services. This method eliminates the need for residents in remote and underserved areas to travel great distances to access banking services.
3. Financial education
Increasing people’s ability to understand and use financial information is vital to fostering faith in the formal financial system and giving people agency over their own financial futures. Financial education programs can be implemented by governments and groups to help people learn about budgeting, saving, and the ins and outs of various financial products and services.
4. Simplified account opening
Removing obstacles to account opening can help the unbanked get access to financial services. Many people are put off opening bank accounts due to a lack of identifying documents or the excessive paperwork required. More people may be able to create an account if banks adopt modern Know Your Customer (KYC) practices and begin accepting alternate forms of identification.
5. Microfinance and microcredit
Financial aid in the form of modest loans and other services can be made available to people and businesses with low incomes through microfinance institutions. These organizations are essential because of the vital role they play in fostering the development of micro- and small-scale businesses and so boosting the local economy.
6. Public-private partnerships
It is essential for governments, businesses, and NGOs (non-governmental organizations) to work together to advance financial inclusion programs. In order to establish inclusive banking solutions, governments can provide an appropriate policy framework, while private sector companies can provide the technology knowledge and financial resources necessary to do so.
7. Leveraging fintech
The adoption of fintech technologies has the potential to completely alter the playing field for previously unbanked countries. The efficiency and availability of financial services can be improved through the use of fintech innovations like peer-to-peer lending platforms, blockchain-based identities, and digital payment.
Achieving global financial growth
Unbanked people continue to be a major problem in many regions of the world. Thus stunting economic development and making poverty more entrenched.
These countries are making strides toward a more equitable financial system through the introduction of novel financial solutions, the growth of banking networks, and the promotion of financial literacy.
The good news is that closing the unbanked gap is crucial to reaching global financial inclusion targets. And is also an issue of financial prosperity.