The World Bank is reporting an increase in the use of digital payment systems in Latin America and the Caribbean amid the global expansion of formal financial services.
According to the Global Findex 2021 database, the expansion of financial inclusion created new economic opportunities, narrowed the gender gap in account ownership and built resilience at the household level to better manage financial shocks.
“The share of adults who made a utility payment from an account for the first time after the outbreak of the COVID-19 was especially high in many economies in Latin America and the Caribbean. On average, 15 per cent of adults in the region did so – almost twice the developing economy average,” said the document.
As of 2021, 76 per cent of adults globally now have an account at a bank, other financial institution or with a mobile money provider, up from 68 per cent in 2017 and 51 per cent in 2011.
“The pandemic has also led to an increased use of digital payments. In low and middle-income economies (excluding China), over 40 per cent of adults who made merchant in-store or online payments using a card, phone, or the internet did so for the first time since the start of the pandemic. The same was true for more than a third of adults in all low and middle-income economies who paid a utility bill directly from a formal account,” said the document.
“Two-thirds of adults worldwide now make or receive a digital payment, while the share in developing economies grew from 35 per cent in 2014 to 57 per cent in 2021. In developing economies, 71 per cent have an account at a bank, other financial institution, or with a mobile money provider, up from 63 per cent in 2017 and 42 per cent in 2011,” it added.
World Bank Group President David Malpass said the digital revolution “has catalyzed increases in the access and use of financial services across the world, transforming ways in which people make and receive payments, borrow, and save”.
He said, however, there were still some priority areas for countries to consider.
“Creating an enabling policy environment, promoting the digitalization of payments and further broadening access to formal accounts and financial services among women and the poor, are some of the policy priorities to mitigate the reversals in development from the ongoing overlapping crises,” said Malpass.
The document indicated that while there have been improvements in Latin America and the Caribbean with women having an account, this demographic was seven percentage points less likely than in the case of men.
It also noted that while globally 36 per cent of unbanked adults said that financial services were too expensive, this was almost twice as high (60 per cent) in Latin America and the Caribbean.
Distrust of the financial system was also identified as a barrier, with this being a greater barrier for people in Europe, Central Asia and Latin America and the Caribbean, where about a third of unbanked adults indicated that they did not have an account because they distrusted the banking system.
In relation to the number of women being able to access emergency funds compared to men, the 225-page document indicated: “Gender differences in financial resilience are largest in Latin America and the Caribbean, where the resilience gender gap is 16 percentage points. That is, 39 per cent of women say they can reliably access emergency money, compared to 56 per cent men.
“One reason women may struggle to access emergency money is that their most popular source of funds in an emergency is family, which can be unreliable,” it added. (MM)
