Developing nations open more banking access over developed ones

MANILA, Philippines - Access to formal finance in developing countries has grown in the past year, with overall bank accounts expanding albeit loans and deposit accounts dropped.

Based on a report released by the Consultative Group to Assist the Poor (CGAP) and the World Bank Group, 65 deposit accounts were added per 1,000 adults in 2009, representing a 4.3 percent average growth in the number of deposit accounts.

The report, known as Financial Access 2010, covered financial regulators in more than 140 countries during the turbulent period between 2008 and 2009.

Globally, one bank branch, five automated teller machines (ATMs), and 167 point-of-sale (POS) terminals were added per 100,000 adults in 2009.

For the first time, the number of ATMs exceeded the number of bank branches in low-income countries. But low- and middle-income countries still lag behind high-income countries in terms of physical outreach.

“New technologies, such as mobile payments and Internet banking, are likely to further reinforce this shifting picture of financial inclusion,” Oya Pinar Ardic, author of the report, said.

The report noted that the fact that people were using basic deposit services more, even as world financial markets were experiencing high volatility, confirms how essential these services are to help families manage through risky and uncertain periods.

It also presents the first comparable global data on lending to small and medium enterprises (SMEs), estimated at $10 trillion in 2009.

Financial Access 2010 shows that regulators are often hampered by a lack of resources or enforcement powers to implement policies for financial inclusion. Nonetheless, it shows promising trends, including the expansion of retail infrastructure and use of new technologies to deliver financial services cost effectively.

The CGAP is an independent policy and research center dedicated to advancing financial access for the world’s poor. Housed at the World Bank, CGAP provides market intelligence, promotes standards, develops innovative solutions, and offers advisory services to governments, microfinance providers, donors, and investors.

The World Bank Group is composed of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID).