Although the global financial technology (Fintech) market continues to grow, the number of unbanked people is not keeping up pace. This is particularly the case in countries like Nigeria, which is in the list of seven countries that account for half of the 1.7 billion unbanked individuals worldwide in 2017.
China, India, Indonesia, Mexico, and Pakistan make up the rest of the seven countries, according to The Global Findex Database 2017, Measuring Financial Inclusion and the Fintech Revolution which was released by the World Bank in the last week of April, 2018.
An ‘unbanked individual’ is a term used to refer to adults who do not have access to the services of a bank or similar financial organisation.
“A growing body of research reveals many potential development benefits from financial inclusion – especially from the use of digital financial services, including mobile money services, payments cards, and other financial technology (or fintech) applications,” the report explained.
People who are unbanked may rely on alternative financial services like check cashing, payday lenders, and pawn shops. Top of the reasons why some people are not banked include distrust of financial system or institutions; unemployment; illiteracy; inconvenience; bank fees; lack of services and blacklisted.
The report also showed that women represent 56 percent of all unbanked adults. Poverty also takes a major share of why people are unbanked.
Unbanked population vary depending on the economic growth of a country. The Global Findex Database disclosed that in higher-income countries like the US, UK, Canada, Switzerland, Germany to name only a few, 94 percent of adults own a bank account whereas in developing countries just 63 percent of the same population have it.
“Globally, half of unbanked adults come from the poorest 40 percent of households within their economy, the other half from the richest 60 percent,” the report stated. There is also a distinction in the pattern of unbanked population with regards to individual economies.
“In those where half or more of adults are unbanked, the unbanked are as likely to come from a poorer household as from a wealthier one. In economies where only about 20-30 percent of adults are unbanked, however, the unbanked are much more likely to be poor,” it added.
515 million adults worldwide opened an account at a financial institution or through a mobile money provider between 2014 and 2017. In essence, 69 percent of adults now have an account, up from 62 percent in 2014 and 51 percent in 2011.
As at 2016, according to another report by EFInA, only 36.9 million (38.3 percent) adults in Nigeria had access to a bank account. That finding also revealed that 40.1 million Nigerian adults, representing 41.6 percent of the adult population, were financially excluded.
Nevertheless, the advent of fintech is helping scale up adoption rate for bank services. For instance, the proportion of individuals globally who send or receive digital payments increased from 42 percent to 52 percent; this figure is 76 percent for those who have a bank account.
Sub-Saharan Africa saw a 21 percent growth in the proportion of individuals with a mobile money account, with bank account ownership only rising by 4 percent.
