Financial Inclusion in ASEAN Presentation for the ASEAN Working Group on Financial Inclusion Kuala Lumpur, Malaysia, January 21, 2016 Jose De Luna Martinez World Bank Group
Contents I. Financial inclusion around the world II. Financial inclusion in ASEAN - Ownership of accounts - Use of accounts - Payments - Savings, credit, and financial resilience III. Final remarks
Global Findex measures financial inclusion in a systematic and comparable manner Methodology Global Findex (2014 ) Survey based on face-to-face and phone interviews (150,000 people). Respondents were randomly selected. Data is weighted to ensure a nationally representative sample for each economy. Key Definitions Adults age 15+ Account: percentage of respondents who report having an account at a bank or another financial institution or report personally using a mobile money service in the past 12 months.
Financial inclusion around the world Ownership of accounts, saving, and borrowing
Global Findex reveals that between 2011 and 2014, 700 million adults worldwide became account holders Source: Global Findex database. (p.p.) percentage points. Selected World Financial Inclusion Indicators (% of adults age 15+) Indicator 2011 2014 Change (p.p.) Ownership of account 50.6 61.5 10.9 With debit card 30.5 40.0 9.5 With credit card 14.9 17.6 2.7 Saved at a financial institution 22.6 27.4 3.8 Borrowed from a financial institution 9.1 10.7 1.6 The number of adults without an account dropped by 20% to 2 billion in 2014. The increase in account ownership was driven by the growth in account penetration of developing economies and innovations in technology, particularly mobile money.
Despite the progress that has been achieved in the past, there are still disparities among regions Adults with an account (%) in 2014 Change 2014/2011 (p.p.) 14 8 4 12 3 14 10 World 62 Source: Global Findex database. p.p. percentage points.
Source: Global Findex database. In 2014, 56% of adults around the world reported having saved Adults saving any money in 2014 (%) 71 71 2014 World 56 60 2011 38 41 30 36 But only 27% of adults saved at a financial institution
According to Findex, 42% of adults reported that they borrowed money in the past 12 months Adults borrowing from any source in the past year (% of adults) World 42 Source: Global Findex database. But only 11% of adults borrowed through a financial institution
Financial inclusion in ASEAN Ownership, education, gender, income, and rural
In ASEAN, 50% of adults reported having an account in 2014 Adults with an account (%) ASEAN 50 Source: Global Findex database. Lao PDR data is 2011. 2011 2014 The share of adults with an account increased by 8 percentage points, from 42% in 2011 to 50% in 2014.
In ASEAN as a group, there is practically no gender gap in account ownership Female and male adults with an account (%) in 2014 Female Male ASEAN Source: Global Findex database. Lao PDR data is 2011. In ASEAN, 49% of men and 48% of women reported having an account
In ASEAN, account penetration among poorest 40% is 38% Adults in poorest 40% of households with an account (%) Without account With account ASEAN 38 Source: Global Findex database. Lao PDR data is 2011. The gap between the richest 60% and the poorest 40% is 15 percentage points.
36% of adults in rural areas reported having an account Adults in rural areas with account (%) ASEAN 36 Source: Global Findex database. Lao PDR data is 2011. Account penetration in rural areas in high income OECD economies is 2.6 times ASEAN s.
Use of account Deposits, withdrawals, debit card, and credit card
In ASEAN in 2014, 56% of adults with an account at a financial institution reported making at least one deposit Frequency of deposits by account holder Adults with an account by number of deposits in a typical month (%) None 1-2 3 or more Source: Global Findex database. Lao PDR data is 2011. Note: The categories do not sum to 100% because of don t know and refuse answers. The difference with high income OECD economies is 28 percentage points.
And 50% of adults with an account at a financial institution reported making at least one withdrawal per month Frequency of withdrawals by account holder Adults with an account by number of withdrawals in a typical month (%) None 1-2 3 or more Source: Global Findex database. Lao PDR data is 2011. Note: The categories do not sum to 100% because of don t know and refuse answers. Among ASEAN countries there is a broad range between 8% and 82% of adults reporting withdrawals in a typical month
In ASEAN, 53% of adults with an account at a financial institution reported using an ATM to withdraw money Adults with a financial institution account by most common mode of withdrawal used (%) Source: Global Findex database. OECD data is 2011. Note: The categories do not sum to 100% because of don t know and refuse answers. Other includes bank agent and retail stores. And 34% of adults with account used a bank teller to make withdrawals ATM Bank teller Other
In ASEAN, 30% of adults reported having a debit card Adults with a debit card (as % of all adults) Adults that used debit card (as % of all adults) ASEAN 30 ASEAN 15 Source: Global Findex database. Lao PDR data is 2011. However, only half of the people with a debit card made use of it in the last 12 months
In ASEAN, 9% of the people has a credit card Adults with a credit card (as % of all adults) Adults that used credit card (as % of all adults) ASEAN 9 ASEAN 8 Source: Global Findex database. Lao PDR data is 2011. And 90% of them used it in the last 12 months
Payments Wages, government transfers, utility bills, remittances, and use of internet
In ASEAN, 71% of adults reported receiving their wages in cash Adults receiving wage payments by method Source: Global Findex database. In cash Into an account The ratio of ASEAN to high-income OECD economies of people receiving wages in cash is 6 times
In ASEAN, 69% of adults that reported receiving government transfers did so in cash Adults that receive government transfers in cash (% of adults receiving government transfers) ASEAN 69 Source: Global Findex database. However, some countries are moving towards cashless government transfers schemes
In ASEAN, 89% of adults reported paying utility bills in cash Utility payments Adults paying utility bills in cash in 2014 (as % of all adults) Source: Global Findex database. ASEAN 89 The ratio of adults paying bills in cash in ASEAN to high-income OECD economies is 3 times
In ASEAN, 61% of adults that sent remittances used cash and 33% used informal channels to do their transactions How adults sent remittances? (%) In cash Money transfer operator Financial institution Mobile phone Source: Global Findex database. Note: Respondents could report using more than one method.
In ASEAN, most adults received remittances in cash Means to receive remittances (%) In cash Money transfer operator Financial institution Mobile phone Source: Global Findex database. Note: Respondents could report using more than one method.
In ASEAN, 8% of adults reported using internet to make payments Use of internet to make payments Adults who used internet to pay bills or buy things (% of all adults) Use of internet No use of internet Source: Global Findex database.
Saving, credit and financial resilience Saving, borrowing, mortgage, and emergency funds
In ASEAN, a large number of adults still save their money at home or at informal groups Adults saving any money (%) Financial institution Semiformal Other Source: Global Findex database and UNCDF.
In ASEAN, family and friends are the main source of funds for adults borrowing Sources of borrowing used by adults in ASEAN (% of total borrowers) Other Family & friends Semiformal Financial institution Source: Global Findex database and UNCDF. Note: Respondents could report borrowing from more than one source.
The main source for emergency funds is family or friends Adults able to raise emergency funds by main source (%) Informal Family or friends Savings Work loan Other Financial institution Source: Global Findex database. Note: Other includes other sources and don t know and refuse answers.
Final remarks Conclusions, ASEAN FI goals, and WB s role
Conclusions Between 2011 and 2014, ASEAN has achieved a substantial increase in financial inclusion. However, 264 million (59%) of adults 15+ in ASEAN still remained unbanked. With the expansion of the middle-income class in ASEAN, the demand for access to finance and credit is expected to continue to grow. Many countries in ASEAN have a large opportunity for increasing financial inclusion. For households in ASEAN, cash still constitutes the main means for executing financial transactions (payment of wages, government transfers, payment of bills, receiving and sending remittances). A large number of adults with accounts at financial institutions still prefer to conduct and settle their transactions in cash.
Conclusions Use of debit and credit cards is relatively low across ASEAN when compared to other regions in the world. In ASEAN, a large number of adults that save money still do not use financial institutions. A large number of adults in ASEAN see their relatives and employers as the main source of borrowing, not financial institutions. Digital financial inclusion remains limited in ASEAN. Overall, there is a need to scale up the usage of accounts for adults with accounts at financial institutions. There are large opportunities for advancing financial inclusion by paying wages and disbursing government transfers through financial institutions.
ASEAN potential goal for account ownership in 2020: Findex trend 67% or optimistic scenario 75% Adults with an account (%) 2020 75 67 Optimistic scenario Findex trend 2014 50 Baseline Source: Global Findex database and World Bank staff estimates. Gap between 60% richest and 40% poorest less than 5 pp (baseline 15 pp)
% of adults with an account Financial inclusion remains a challenge for ASEAN Account ownership and savings in ASEAN % of adults that saved at a financial institution Source: Global Findex database and World Bank staff estimates.
How can the WBG help? Financing Loans/grants Credits Guarantees Risk management products New graphic: Client bicycle spokes? Amend regulations Formulate national strategies Develop financial products Technical assistance Analytical services and advisory Diagnostic assessment Practical knowledge Data
Thank you! Contact information Jose De Luna Martinez, Jdelunamartinez@worldbank.org
Annexes
Globally, 76% of adults reported that it would be possible to come up with an amount equivalent to 5% of the GNI per capita Adults by reported likelihood of being able to raise emergency funds in 2014 (%) Very possible Somewhat possible Not very possible Not at all possible Source: Global Findex database. Note: The categories do not sum to 100% because of don t know and refuse answers. In OECD countries, 83% of adults reported that it would be possible to come up with these funds, while in developing countries 74% did
The relative age group gap in ASEAN is very small, less than 1 percentage point Account penetration by age group (%) Age 15-24 Age 25+ ASEAN Source: Global Findex database. Lao PDR data is 2011. 47% of adults age 25+ and 46% of adults age 15-24 reported having an account in a financial institution
Account ownership among adults with primary education is 30% Account ownership for adults with primary education (%) ASEAN 30 Source: Global Findex database. Lao PDR data is 2011. Singapore and high-income OECD economies did not report data on accounts for adults with primary education.
The main reason for saving in ASEAN is for old age, followed by for education Reasons for saving Adults saving for specified purpose in the past year (% of savers) For education For business For old age Source: Global Findex database. Note: Respondents could report saving for more than one purpose.
In ASEAN, the main reason for borrowing is for health or medical purposes Purpose of borrowing (% of borrowers) For education For health or medical purposes For business Source: Global Findex database. Note: Respondents could report borrowing for more than one purpose.
Only 5% of adults access their accounts with a mobile phone Use of mobile phones to access financial institution accounts Adults with a financial institution account with use of mobile phone access in 2014 (as % of all adults) Used mobile phone to access account Did not use mobile phone to access account Source: Global Findex database. In high-income OECD economies 21% of adults access their accounts using a mobile phone
In ASEAN, 99% of adults who received agriculture payments did so in cash Agricultural payment recipients Adults receiving cash payments for agricultural products (% of recipients) Source: Global Findex database. In high-income OECD economies no adult reported receiving cash payments for agricultural activities
In ASEAN, 10% of adults reported having an outstanding mortgage Adults with an outstanding mortgage (%) Mortgage No mortgage Source: Global Findex database. Data for Lao PDR is 2011.
In ASEAN, 87% of adults reported paying school fees in cash Adults paying school fees in cash in the past (%) ASEAN 87 Source: Global Findex database.
ASEAN potential goal for saving at a financial institution in 2020: Findex trend 36% or optimistic scenario 43% Saving at a financial institution (% of adults) 2020 43 36 Optimistic scenario Findex trend 2014 24 Baseline Source: Global Findex database and World Bank staff estimates.
ASEAN potential goal for borrowing from a financial institution in 2020: Findex trend 25% or optimistic scenario 32% Borrowed from a financial institution (% of adults) 2020 32 25 Optimistic scenario Findex trend 2014 17 Baseline Source: Global Findex database and World Bank staff estimates.