> Posted by Darrell M. West, John Villasenor, Robin J. Lewis

On August 4, the Brookings Financial and Digital Inclusion Project (FDIP) team held a public event to officially launch the second annual FDIP report. The report aims to assess country commitment to and progress toward financial inclusion across economically, politically, and geographically diverse countries. The 2016 report highlights recent developments across the financial inclusion landscapes of the 21 countries featured in the 2015 FDIP Report and provides detailed summaries examining the financial inclusion ecosystems of five new countries: the Dominican Republic, Egypt, El Salvador, Haiti, and Vietnam.

Together, the FDIP reports serve as a complementary resource to existing financial inclusion literature by providing detailed, annual snapshots of the financial inclusion environment in a diverse array of countries and by measuring country commitment to financial inclusion at the policy and regulatory levels, as well as the robustness of countries’ digital infrastructure and actual adoption of selected traditional and digital financial services.

The 2016 FDIP Report found that many countries across the geographic and economic spectrum are making progress toward financial inclusion. However, key data gaps, regulatory constraints, and capability limitations with respect to usage of formal financial services pose challenges for the acceleration of financial inclusion. Thus, to advance the availability and adoption of affordable, quality financial services, the 2016 FDIP Report highlights four priority action areas for the international financial inclusion community: identifying quantifiable financial inclusion targets; collecting, analyzing, and sharing data germane to countries’ financial and digital ecosystems; advancing enabling regulatory environments for traditional and digital financial services; and enhancing financial capability among consumers.

In order to identify areas of strength and opportunities for growth with respect to the financial and digital ecosystems of our 26 focus countries, the FDIP team produced an interactive scorecard assessing each country on four dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of selected traditional and digital financial services. The 2016 scorecard metrics feature several enhancements that enabled the FDIP team to hone in on the usage and quality dimensions of financial inclusion among underserved populations.

Findings for the scorecard were based on data collected from publicly available sources, as well as extensive engagement with representatives of national regulatory bodies, private sector entities, civil society organizations, international financial institutions, and other financial inclusion experts. More information on the FDIP scorecard metrics is available in the “Methodology” section of the 2016 FDIP Report.

In addition to broadening the geographic diversity of the FDIP focus countries and enhancing the scorecard metrics, the 2016 report devotes particular attention to the unique challenges facing women, refugees, and under-resourced migrants with respect to accessing and utilizing formal financial services. While none of these groups is monolithic, and individual customers’ preferences and cultural contexts should of course inform the implementation of any financial inclusion initiatives, the FDIP team provides several recommendations in the 2016 report to serve as a framework for promoting financial inclusion among these populations.

For example, to address the 9 percentage point gap in formal financial account ownership among men and women in the developing world, the 2016 FDIP Report’s recommendations include enhancing sex-disaggregated data collection and analysis; identifying specific targets and strategies for advancing women’s financial inclusion; cultivating public and private sector “champions” of women’s financial inclusion; promoting the development and implementation of digital identity programs that reduce financial access barriers; leveraging digital channels to promote access to formal financial services (e.g., deploying mobile phone-based government-to-person payments); and ensuring products are convenient for women to access and use.

The record-high level of forced displacement is another highly salient issue for the global financial inclusion community, as refugees and migrants often face barriers (e.g., language differences and identification requirements) that impede their ability to access and utilize secure, quality formal financial services. To offer a sense of the scale of this phenomenon, according to the United Nations High Commissioner for Refugees, in 2015 an estimated 12.4 million people were newly displaced due to conflict or persecution. Turkey, one of the FDIP focus countries, had the largest number of refugees of any country in the world as of 2015, with 2.5 million people.

The 2016 FDIP Report provides a number of recommendations to ensure that the design and delivery of financial services is conducive to the needs of non-native customers, particularly those who are at the margins of (or outside of) the formal financial system. These recommendations include providing agents at financial access points who speak a language familiar to non-native customers; hiring women as agents; developing policies and programs that target the needs of youth, given that over half of the world’s forcibly displaced people are children; and facilitating access to digital identity mechanisms among non-native populations.

For more information on the 2016 FDIP report and interactive, please visit the 2016 FDIP webpage and watch the 2016 report launch. Comments and feedback regarding FDIP are welcomed at FDIPComments@brookings.edu.

Have you read?

In the Hands of Women: A Reflection on the Gender Gap in Financial Inclusion

Global Microscope 2015: Progress on the Financial Inclusion Front

Arifu: Digital Delivery of Nudges and Information in Kenya