> Posted by Leora Klapper, Lead Economist, Development Research Group, the World Bank

Eroll Asuncion runs a grocery store on the remote Philippine island of Rapu-Rapu. It’s a three-hour boat ride to the nearest bank. Fortunately, that’s no longer a problem – thanks to the mobile phone revolution and new regulations that make it easier for people to open and use an account.

Eroll’s customers now pay bills and send and receive remittances through a mobile money account they access via mobile phones. Eroll’s SuperStore has become something of a bank for islanders using these mobile accounts, allowing them to send and receive cash at the store.

“My husband sends (me) money twice a month, on the 15th and 30th,” Yolanda, a customer, explains.

Hundreds of millions of others like Yolanda are opening new accounts through their phone or at a bank or similar institution. It’s part of a financial revolution that’s sweeping the developing world. Since 2011, 245 million more people in East Asia and the Pacific have become part of the formal financial system by opening an account.

The World Bank has just released our much-anticipated second edition of the Global Findex, the world’s only comprehensive gauge of global progress on “financial inclusion”—how people save, borrow, make payments, and manage risk. The data give us insight into account ownership around the world, and how people are using – or not using – those accounts.

The Global Findex offers good news. As of 2014, 62 percent of adults around the world had access to a bank account. Put another way, the number of people who are “unbanked” has tumbled to 2.0 billion from 2.5 billion in 2011, when the Global Findex was first released.

The Global Findex offers insights into how we can continue this progress by giving more people access to financial services.

The private sector and governments can play a huge role. Some 400 million people, or 20 percent of the unbanked, currently receive wages as well as government transfers such as social benefits in cash.

During our research for the Global Findex, we visited a factory in Bangladesh that paid wages by pulling a giant, cash-filled truck up to the factory and distributing the cash to  workers. If wages from private companies were delivered electronically through an account, 280 million more people would have automatic access to accounts.

Similarly, 160 million people would gain a bank account if all government transfers now paid in cash were moved to electronic payments.

Other opportunities abound. Currently, about 270 million adults send and receive money in cash. An additional 100 million send money via over-the-counter transactions such as through Western Union.

Creating products that facilitate transfers between individuals without the insecurity of cash would connect these people to the formal financial system. Such electronic payments would be especially valuable in Sub-Saharan Africa, where 22 percent of people send or receive funds to family or friends living within the country (what we call “domestic remittances”) in cash. Another 12 percent send or receive funds over-the-counter using a money transfer operator like Western Union—which must be withdrawn as cash and held in some other way. Sending domestic remittances through an account offers recipients a safe place to store money for day-to-day purchase or save for longer-term goals.

Of course, just providing access to accounts will not spur everyone to send and receive money through them. Financial service providers must respond to consumer needs. In developing economies, 355 million people with an account continue to send and receive domestic remittances through cash or over-the-counter transactions – even though many of them could use their accounts for this purpose. Existing accounts can be adjusted to lower the cost and increase the convenience of sending and receiving money.

In low- and middle-income economies, more than 1.3 billion account holders continue to pay their utility bills in cash, and more than 500 million account holders pay their children’s school fees in cash. Moving these payments to accounts would both increase convenience for customers and increase account use.

The data point to great opportunities for the financial inclusion community to increase both access and use of financial services. With these steps, the world can significantly accelerate progress toward financial inclusion.

Leora Klapper is a Lead Economist in the Finance and Private Sector Research Team of the Development Research Group at the World Bank. The Global Findex was developed by the Finance and Private Sector Development Team of the Development Research Group at the World Bank, collected by Gallup World Poll, and funded by the Bill and Melinda Gates Foundation.

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