Most Americans become engrained in the banking system at a young age—opening a savings account is a right of passage. Today 62% of the world’s population has a bank account, that’s up from 51% in 2011.
Still, there are around two billion people in the world who don’t have access to the global banking system. These “unbanked” people are overwhelmingly from undeveloped or developing countries and usually live well below the poverty line. They also tend to be women.
This information comes from the World Bank’s “Global Findix” which collects data on financial inclusion around the world. “Having an account or a safe place to save allows you to have savings to invest in new businesses, to pay for education and to manage unexpected shocks and risks,” explains Dr. Leora Klapper, lead economist of development research for the World Bank.
Bank accounts are critical to reducing poverty, says Dr. Klapper. “Having my paycheck deposited directly into my account is a convenience but for millions of women around the world it’s a game changer.”
Dr. Klapper has been working with female factory-workers in Bangladesh who are paid in cash. "Moving them from cash to payments directly into their account can give them the privacy and control over their money,” she says. Studies show that giving women control over their money has a positive impact on budget and household spending decisions. Paying women directly into an account has been linked to greater spending on nutritional food, for example.
A big game changer for the unbanked is the rise in mobile banking. Now those living in rural areas, away from bank branches, can participate in the system. While only 1% of adults worldwide use a mobile money account, 12% of adults in Sub-Saharan Africa do.
“In Zambia normally a woman would have to miss work and lose wages to take two buses across town to pay their children’s school fees—if they don’t have time to go till the third of the month, their children can’t go to school for two days,” says Dr. Klapper. “And so having this mobile money account and having the ability to make payments by phone will add tremendous benefits to the poor around the world.”
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