The top six trends in financial inclusion data and measurement

Charles Marwa

DSC_0720

Members of AFI’s Financial Inclusion Data Working Group participate in a meeting 5-7 April 2016 in San Salvador.

Good data illuminate our world. It can make invisible markets visible. This is why the application of data to promote evidence-based financial inclusion policy is vital.

I believe everyone in attendance at the Alliance for Financial Inclusion’s (AFI) 13th meeting of the Financial Inclusion Data Working Group (FIDWG) in San Salvador on 5-7 April 2016 would agree with this notion.

Coming out of that meeting, I have identified six important trends in financial inclusion data and measurement on the horizon. All have the potential to radically influence how members of AFI, along with our partners and stakeholders, approach our work toward effectively delivering financial services to the unbanked.

These trends are based on the recognition that there have been several significant changes on the financial inclusion landscape already influencing data and measurement. Notably, a recent survey of all AFI members revealed data and measurement of financial inclusion is a key priority topic for regulators and policymakers. The study also indicated AFI members were very satisfied with the developments made in financial inclusion data and measurement in 2015.  Additionally, an extensive study undertaken by AFI in cooperation with the Cyrus Vance Center for International Justice, as well as leading international law firms Linklaters LLP and White & Case LLP, revealed approximately one-third (36 percent) of the 51 members surveyed so far have undertaken a demand-side survey within the last three years.

These two studies seem to indicate a high interest by AFI members in the topic of financial inclusion data and measurement, and a big opportunity for growth in the future. AFI data also show there is a high interest in devising national financial inclusion strategies, which often tend to be data driven or have data as a central pillar.

Many members have incorporated data into their Maya Declaration targets, as well.

Six key trends in financial inclusion data and measurement

There will be increased focus on the quality of financial services

There has been much focus on improving access to financial services in the recent past, and these efforts are starting to pay dividends. The World Bank’s 2014 Findex report illustrates 62 percent of adults worldwide have an account at a bank or another type of financial institution, or with a mobile money provider. The same report outlines 13-percent growth in account penetration in developing economies between 2011 and 2014.

It appears this momentum will continue, and policymakers are poised to increasingly ask for data on the quality of financial services offered. Driven by this demand, FIDWG will soon publish a guideline set of indicators to measure the quality of financial services. Already about a dozen AFI members report using quality indicators to measure financial inclusion, including, Thailand, Mexico and Bangladesh.

Increased interest in sex-disaggregated data

In line with the growth in access, focus on understanding specific segments of the population will increase. There will be demand and a push toward disaggregating data by specific groups; most prominently by gender, which is the basic variable to segment the population. There is a gap in the availability of sex-disaggregated supply-side data at both the global and national levels. Good data is needed to properly diagnose the state of financial inclusion for women, to understand their financial inclusion behavior and needs in order to design appropriate policies and financial services. Good data is also important for later evaluating the impact of these policies.

FIDWG formed a sub-group to focus on raising awareness on the value of sex-disaggregated data and developing best practice in collecting and using sex-disaggregated data for financial inclusion policymaking.

DSC_0723

FIDWG members listen to opening remarks on 5 April 2016 at the working group’s 13th meeting held in San Salvador.

Developing national data frameworks

There is an increased appreciation of developing comprehensive national data frameworks to support financial inclusion strategies. Such frameworks also outline clear roles and responsibilities for the multiple stakeholders involved in collecting, analysis and use of financial inclusion data. Technology is increasingly available and affordable to enable such complex data systems. There has been increased demand for support, both technical and financial, in developing and managing such systems—something I anticipate will continue.

Technology availability and cost will enable GIS mapping for financial inclusion to spread

Geo-spatial mapping provides a visual display of otherwise bland financial inclusion statistical data creating a potent and easy-to-understand overview of a country’s financial inclusion landscape. The use of GIS mapping is being driven by the need to understand unreached groups and reveals unseen markets. The availability of comprehensive sub-national data makes geo-spatial mapping all the more possible. It is an intelligent investment that leads to smarter policies and better product development by the market. As we move forward, the cost of not investing in geo-spatial mapping is becoming too high—especially when the alternative is choosing to remain in the dark.

The use of financial inclusion indices to quantify the state of financial inclusion of a country will become more commonplace

As more data become available, countries will be looking for easier ways to explain that data. Interest in indices will grow as a means to capture information on several dimensions and distill it into a single number.

In fact, in an effort to track financial inclusion progress in the countries of the AFI network, FIDWG members created the “Financial Inclusion Index” to capture many different aspects of financial inclusion, and condense it down to one number. The index was prepared, in part, because in September 2013 AFI members agreed to strengthen the effectiveness of their Maya Declaration Commitments by defining measurable national goals and tracking their progress using AFI’s Core Set of Financial Inclusion Indicators, developed by FIDWG.

Qualitative data collection

It has been a trend and growing practice among countries to undertake national surveys in recent years. Approximately 70 percent of FIDWG’s members reported their institutions were in various stages of conducting national financial inclusion demand-side surveys, up from 20 percent two years ago, according to surveys of FIDWG members.

While most of these have been quantitative studies, there has been an increased interest in qualitative data collection to understand specific population segments, explore ‘unknown unknowns’, and for better and more specific design of financial service products to reach the last 2 billion unbanked citizens worldwide. Qualitative studies have been successfully completed in Burundi, Senegal, Colombia and Tanzania, among others, and there is a growing demand for enhancing these knowledge and skills within FIDWG.

dia01 AFI_7

Opening remarks at the FIDWG meeting 5 April 2016 in San Salvador.

Moving forward

These trends, if they continue, are positive developments in data and measurement for financial inclusion. Data is going to remain a priority focus area for financial inclusion in the coming few years. We will see the use of data stretch and expand to cover all sizes, shapes and social groups.

High satisfaction with the topic area and high demand for it in the future, coupled with the fact that few institutions have taken the opportunity to implement it, signifies there will be a great chance to expand the role of data and measurement for financial inclusion in the near future.

If you think I missed a key trend, leave a comment below.

ABOUT THE AUTHOR
Charles Marwa is the Senior Monitoring and Evaluation Specialist at the Alliance for Financial Inclusion.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s