As the world adapts to evolving payment technologies that are removing cash from the transactional process, a new report by the World Bank examined the phenomenon of “unbanked” individuals the world over. This “unbanked” group is made up of those who are not connected to a financial institution. On a worldwide average, 62 percent of adults have bank accounts – only a few countries such as Norway, Sweden, Denmark and New Zealand boast 100 percent banking adoption rates.
Studies show that when people participate in the financial system, they are better able to start and expand businesses, invest in education, manage risk, and absorb financial shocks. Access to accounts and to savings and payment mechanisms increases savings, empowers women, and boosts productive investment and consumption. Access to credit also has positive effects on consumption—as well as on employment status and income and on some aspects of mental health and outlook.
Mobile and alternative payment systems have contributed to a tremendous reduction in the numbers of unbanked citizens worldwide. Access to financial services also allows businesses to flourish without interrupting their productivity or cash flow in order to pay employees or settle accounts in cash.