Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

June 2021
LESSONS FOR THE FUTURE
ACCESS 2020
2020

UNIVERSAL FINANCIAL
Table of Contents
Acronyms.............................................................................................................................................. iv
Acknowledgements......................................................................................................................... v
Executive Summary......................................................................................................................... vi

1 Introduction................................................................................................................................... 8

2 UFA-Linked Activities by the World Bank........................................................................ 13

2.1 UFA Operational Tools....................................................................................................... 14
2.1.1 Monitoring and Evaluation........................................................................................ 14
2.1.2 Supply-side data and survey tools............................................................................. 17
2.1.3 Diagnostics................................................................................................................. 18
2.1.4 Project design and preparation................................................................................. 19
2.2 Engagement with Development Partners
and International Agenda on Financial Inclusion............................................................. 22
2.2.1 UNSGSA.................................................................................................................... 22
2.2.2 G20 and the Global Partnership for Financial Inclusion........................................... 23
2.2.3 Fintech: The Bali Fintech Agenda and PAFI Fintech Report........................................ 23
2.3 World Bank’s Programmatic Trust Funds Supporting the UFA2020 Initiative................ 24
2.3.1 Financial Inclusion Global Initiative (FIGI)................................................................. 24
2.3.2 Financial Inclusion Support Framework (FISF)........................................................... 25
2.3.3 Harnessing Innovation for Financial Inclusion (HiFi).................................................. 26
2.3.4 Remittances and Payments Program (RPP)................................................................. 26
2.4 UFA-Linked Special Initiatives across the World Bank...................................................... 27
2.4.1 IDA 18 Targets and IBRD Capital Increase Policy Commitments............................... 27
2.4.2 ID4D............................................................................................................................ 28
2.4.3 G2Px........................................................................................................................... 28

3 Taking stock of progress in priority areas of the PAFI framework....................... 30

3.1 Public and private sector commitment............................................................................... 30
3.1.1 Monitoring and Evaluation (M&E)............................................................................. 33
3.1.2 Sex-disaggregated data.............................................................................................. 35
3.1.3 Leveraging Geospatial Technology............................................................................. 36
3.2 Legal and regulatory framework............................................................................. 37
3.2.1 Financial integrity........................................................................................................ 38
3.2.2 Consumer protection laws and regulations................................................................ 40
3.2.3 Payments oversight...................................................................................................... 43
3.2.4 Protection of customer funds....................................................................................... 44
3.2.5 Regulatory neutrality and proportionality................................................................... 45
3.3 Financial and ICT infrastructure................................................................................ 46
3.3.1 Payments infrastructure................................................................................................ 46
3.3.2 Communications infrastructure and mobile phone penetration.................................. 48
 3.3.3 Digital ID..................................................................................................................... 50
3.4 Transaction account and payment product design............................................................ 52
3.4.1 Basic accounts............................................................................................................. 53
3.4.2 E-Money ..................................................................................................................... 54
3.4.3 Product design and distribution regulation................................................................. 54
3.4.4 Designing financial products that meet women’s needs.............................................. 55
3.4.5 From access to usage................................................................................................... 56
3.5 Readily available access points and networks................................................................... 59
3.5.1 Agent Networks........................................................................................................... 59
3.5.2 The role of postal networks in improving financial access........................................... 62
3.6 Financial capability / literacy and consumer awareness................................................... 65
3.6.1 National Financial Education Strategies & Action Plans............................................. 67
3.7 Leveraging large volume and recurrent payment streams................................................ 68
3.7.1 World Bank’s work on digitalization of G2P payments .............................................. 70
3.7.2 International Remittances............................................................................................. 77
3.7.3 Digitalization of Salaries.............................................................................................. 78

4 Future directions for the World Bank in

supporting financial inclusion globally.................................................................................... 80
References............................................................................................................................................. 85
Acronyms
BIS Bank for International Settlements
CDD Customer due diligence
CGAP Consultative Group to Assist the Poor
CPMI Committee for Payments and Market Infrastructures
DFS Digital financial services
EU European Union
FICP Financial Inclusion and Consumer Protection
G20 Group of Twenty
G2P Government-to-Person
GPFI Global Partnership for Financial Inclusion
GPSS Global Payment Systems Survey
IFC International Finance Corporation
KYC Know your customer
NFIS National financial inclusion strategy
NRPS National retail payments strategy
PAFI Payment aspects of financial inclusion
UFA Universal Financial Access
WB World Bank
WBG World Bank Group
WEF World Economic Forum
Acknowledgements
This report is a product of the Financial Inclusion, Infrastructure and Access team in the World Bank’s
Finance, Competitiveness and Innovation Global Practice. The report was drafted under the guidance of
Mahesh Uttamchandani, by a team led by Oya Ardic, which included Hemant Baijal, Holti Banka,
Nenad Bosiljcic, Buddy Buruku, Maria Teresa Chimienti, Edlira Dashi, Dorothee Delort, Helen Gradstein,
Sheirin Iravantchi, Margaret Miller, Fredes Montes, Harish Natarajan, Guillermo Galicia Rabadan, and
Caitlin Stanford.

The team is grateful for the substantive inputs provided by the peer reviewers Momina Aijazuddin
(Principal Investment Officer, CFGMF), Douglas Pearce (Practice Manager, EAEF2), and Greta Bull
(Director, EFICG).
Executive Summary
During the 2013 Annual Meetings of the World Bank and the IMF, the World Bank Group announced an
ambitious vision on Universal Financial Access (UFA). The vision was that adults worldwide would be able to
have access to an account or an electronic instrument to safely store money, send payments and receive
deposits as the basic building block to manage their financial lives by 2020, thanks to new technologies,
transformative business models and ambitious reforms. The World Bank Group reiterated its commitment
during the 2015 Spring Meetings, along with the announcement of the commitments made by the private
sector to UFA, including banks and non-bank financial service providers from around the world.

This report aims to present lessons for the future, focusing on the portion of the UFA initiative that was led by
the World Bank’s Finance, Competitiveness and Innovation (FCI) Global Practice. The World Bank’s activities
led by FCI focused on (i) global policy work including activities to promote UFA and financial inclusion in the
global development agenda, for example, through development partners, the G20, and standard-setting
bodies (SSBs), (ii) development of various toolkits and knowledge products which can be used for policy
guidance and implementation, (iii) data collection to inform policy making and measure progress, and (iv)
structuring and delivering technical assistance and lending operations at country-level to implement policies
and reforms to improve UFA.

The report is intended as a stock-taking exercise for UFA - identifying what was done and what worked, while
exploring the potential to generalize some of the lessons for a wider application within the institution and for
the sector more broadly. In addition, this report was written at a time when the latest iteration of Global Findex
data was delayed due to the difficulties in setting up field work in a comparable way during the COVID-19
pandemic. As the Global Findex database has been the main monitoring tool for UFA, the report has not been
able to discuss specific quantitative progress. Whenever feasible, the report made use of alternative data
sources.

The report makes the following recommendations for the future work on financial inclusion:

• Informed policymaking is crucial. Different types of data can serve for different needs. For example,
demand-side data and supply-side data have their own uses. Efforts to collect data on financial
inclusion should continue.
• Sex-disaggregated data has been a successful tool to motivate action, with effects beyond financial
inclusion, and this focus should be continued.
• Efforts towards women’s financial inclusion should be continued to close the gender gap.
• More work is needed in fragile countries.
• Continued focus on improving account usage is needed. This can be done by furthering the work
on targeted product design, new use cases, and leveraging the recurrent payment streams.
• It is critical to ensure that the recent uptake of digital payments and inclusion of underserved
segments due to the COVID-19 pandemic is sustained in the long run.
• Social protection and financial inclusion are complementary and there are many examples of
coordination and collaboration between social protection and finance teams, leveraging government
payments for sustainable access to finance.
• One key sector for increased collaboration is agriculture given the high percent of the unbanked
living in rural areas and who depend on agriculture for their livelihoods and food security.

The UFA initiative catalyzed donors, international development agencies, and governments to push for
coordinated action for financial inclusion. In the meantime, the COVID-19 outbreak underlined the
importance of widespread access to and usage of digital payments and other digital financial services. While
the UFA initiative acted as a catalyst for many reforms globally, there is still more to be done, requiring
coordinated efforts.
 8

1
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

INTRODUCTION

Financial inclusion – access to and use of financial services offered by regulated financial service providers
in a responsible and sustainable way to help manage financial lives – plays a critical role in inclusive
economic and social development.1 Basic transaction accounts and payment services have been shown to
reduce poverty and help shift labor to higher value-added activities.2 People with mobile money and formal
savings are better able to weather economic shocks.³ Financial inclusion thus helps countries to reach the twin
goals of boosting shared prosperity through sustainable growth and ending extreme poverty.

Over the past decade, digital financial services (DFS) have grown rapidly, facilitating convenient access to
financial products and services in an affordable way by disadvantaged groups that were previously
financially excluded. Last year, COVID-19 further accelerated these trends due to lockdowns which made
digital payments crucial for keeping the economy running. In many instances, authorities waived or reduced
fees on digital transactions and enabled digital onboarding for low-value and lower-risk accounts.

The Universal Financial Access (UFA) 2020 initiative was launched by the World Bank Group at the 2013
Annual Meetings to accelerate progress on financial inclusion. The International Finance Corporation (IFC)
led the private sector outreach and partnership activities which were launched during the Spring Meetings of
2015 and grew over the course of UFA2020 to include 34 firms and organizations.4 Each partner made a
public commitment to increase financial inclusion by expanding their product offerings for consumers who
were not yet using formal finance, estimated at more than 2 billion globally in 2011 when the first Global
Findex data were collected. UFA2020 leveraged digital technology and the combined strength of the public
and private sector arms of the World Bank Group, and private sector partners, to work toward this bold goal
(Box 1).

1
Overviews of the research on the development impact of financial inclusion can be found in: Storchi et al. (2020); Demirgüç-Kunt
et al. (2018); and Karlan et al. (2016).
2
Suri and Jack, 2016.
3
Steinert et al. 2018; Janzen and Carter, 2013.
4
Global partners for the initiative, which included all types of financial service providers like banks, fintechs, technology platforms,
and microfinance institutions (MFIs). See more here: [Link] The IFC supported peer-to-peer
learning across the partners with regular meetings and events.
 BOX 1 - The Universal Financial Access 2020 Goal:

(i) Global: By 2020, adults globally have access to an account or electronic instrument 9
to store money, send and receive payments as the basic building block to manage their
financial lives.

INTRODUCTION
(ii) World Bank Group: The World Bank Group will help enable 1 billion previously
unbanked adults to be reached with transaction accounts.

Financial access is a stepping stone for broader financial inclusion which entails a wider, more tailored
range of financial services being used, that are provided in a responsible manner.

The World Bank Group (WBG) President announced the vision of Universal Financial Access (UFA) by
2020 in the 2013 Annual Meetings of the IMF and the World Bank: “… by 2020, adults globally have
access to an account or electronic instrument to store money, send and receive payments as the basic
building block to manage their financial lives…” Since then, the WBG has designed a framework for
UFA, built partnerships, and scaled up its operations to ensure progress towards UFA.

When the UFA vision was first announced, the latest figures of the time based on the 2011 Global
Findex database suggested that half the world’s adults, or 2.5 billion adults, were unbanked. There has
been great progress since. According to the latest data from the 2017 Global Findex database, there
have been an estimated 1.2 billion new accountholders during the period, and slightly less than one
third of the world’s adults (or 1.7 billion) were financially excluded as of 2017.

The emphasis of UFA2020 in terms of project design and implementation has always been on both access to
transaction accounts as a gateway to financial products and services offered by regulated financial service
providers and to their usage by and value to marginalized populations (Figure 1). In this broader inclusion
perspective, customer-oriented product innovation, financial capability, strong consumer protection, better
financial infrastructure, more and interoperable access points and enabling regulation have been the key
points defining WBG engagements.

Figure 1. UFA: Transaction accounts as a gateway to financial inclusion

 In this regard, the underlying framework for the WBG’s UFA2020 engagements is the Payment Aspects of
Financial Inclusion (PAFI) Framework, developed jointly by the Committee for Payments and Market
Infrastructures (CPMI) and the WBG.5 The PAFI approach is based on the premise that all individuals and
businesses should be able to have access to and use at least one transaction account operated by a
10 regulated payment service provider to (i) perform most, if not all, of their payment needs; (ii) safely store some
value; and (iii) serve as a gateway to other financial services.
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

The PAFI approach has three critical enablers: (1) Public and private sector commitment; (2) Legal and
regulatory framework; and (3) Financial and ICT infrastructures.; and four catalytic pillars/drivers of access
and usage: (4) transaction account and product design; (5) readily available access points; (6) awareness
and financial literacy; and (7) leveraging large-volume recurrent payment streams (Figure 2).
Figure 2. The PAFI Framework

Source: CPMI and WBG (2016)

The foundations/critical enablers of the PAFI Framework are specifically important for the access to and
usage of transaction accounts. The catalytic pillars are based on the foundations and they drive access and
usage. Box 2 describes the PAFI guiding principles

5
CPMI and WBG (2016)
 BOX 2 - The PAFI Guiding Principles

• Guiding Principle 1: Public and Private Sector Commitment: Commitment from public and private 11
sector organizations to broaden financial inclusion is explicit, strong and sustained over time.
• Guiding Principle 2: Legal and Regulatory Framework: The legal and regulatory framework

INTRODUCTION
underpins financial inclusion by effectively addressing all relevant risks and by protecting consumers,
while at the same time fostering innovation and competition.
• Guiding Principle 3: Financial and ICT Infrastructures: Robust, safe, efficient and widely reachable
financial and ICT infrastructures are effective for the provision of transaction accounts services, and also
support the provision of broader financial services.
• Guiding Principle 4: Transaction account and payment product design: The transaction account
and payment product offerings effectively meet a broad range of transaction needs of the target
population, at little or no cost.
• Guiding Principle 5: Readily available access points: The usefulness of transaction accounts is
augmented with a broad network of access points that also achieves wide geographical coverage, and
by offering a variety of interoperable access channels.
• Guiding Principle 6: Awareness and financial literacy: Individuals gain knowledge, through
awareness and financial literacy efforts, of the benefits of adopting transaction accounts, how to use
those accounts effectively for payment and store-of-value purposes, and how to access other financial
services.
• Guiding Principle 7: Large-volume, recurrent payment streams: Large-volume and recurrent
payment streams, including remittances, are leveraged to advance financial inclusion objectives,
namely by increasing the number of transaction accounts and stimulating the frequent usage of these
accounts.

During the implementation of UFA2020 (from 2013 to 2020), the World Bank Group worked in dozens of
countries in every region of the world on advisory, operations and/or training and outreach activities which
contributed to the UFA2020 goals. Increased attention to financial inclusion across country work in the
financial sector was a benefit of UFA2020 which was not limited to any one region or group of countries.
Senior management commitment to UFA2020 led to increased space to raise the topic of financial inclusion
in country dialogues with senior officials and in World Bank Group documents such as Systematic Country
Diagnostics (SCDs) and Country Partnership Frameworks (CPFs).

While UFA2020 was an initiative that was global in scope, it was grounded in country-led programs with a
focus on 25 countries that together represented approximately 75 percent of financially excluded adults
when the initiative was launched.6 These countries can be seen on the map below (Figure 4).7 Working
intensively in a more limited number of countries over a sustained period was intended to focus efforts on
markets where achieving progress would translate into large numbers of consumers becoming financially
included. At the same time, the UFA focus countries included smaller nations including some vulnerable and
post-conflict countries where financial inclusion was seen as a central element of providing assistance and
creating conditions for growth.

6
WBG UFA Team Internal Briefing for President Jim Kim. “Financial Inclusion: Roadmap to Reaching Universal Financial Access by
2020”. September 2014.
7
The 25 UFA Focus Countries are Bangladesh, Brazil, China, Colombia, Cote d'Ivoire, Democratic Republic of Congo, Egypt,
Ethiopia, India, Indonesia, Kenya, Mexico, Morocco, Mozambique, Myanmar, Nigeria, Pakistan, Peru, Philippines, Rwanda, South
Africa, Vietnam, Tanzania, Turkey, and Zambia
 Figure 3. UFA 2020 Focus Countries

12
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

Source: World Bank, Global Findex 2011

This report has two main objectives – a stocktaking of what has been accomplished through Universal
Financial Access (UFA) 2020 and a discussion of lessons for future work to continue progress.
Sections II and III address the stocktaking. Section II focuses on the internal WB processes that have been put
in place, while Section III uses the PAFI Framework to structure the work that has been done by the World
Bank and its partners, including the national authorities, to further UFA. We discuss implementation progress
using the PAFI framework as an organizing principle.

Global Findex data, the source of the headline indicator for measuring progress for UFA2020, for 2020 is
not available for a quantitative review at the time of writing. Therefore, the report relies on other sources of
data from the World Bank and country sources where possible, combined with a qualitative review of policy
reforms and project activities. This review does not attempt to directly link outcomes (such as changes that
would have been noted through Global Findex data) with World Bank engagements, but rather provides a
view of the actions taken in the priority countries which supported the UFA2020 objectives.

Section IV discusses potential areas for future work and investment based on gaps and learnings from the
UFA2020 initiative. COVID-19 has underlined the importance of digitalization of payments as well as other
financial services. At the same time, it also emphasized the need for further interventions in this area. More
specifically, based on the World Bank’s work in the last decade, in particular as part of the UFA initiative,
digitalization of salary payments, utility bill payments, merchant payments and government payments are
crucial first steps in broader digital payments adoption and usage. In this regard, areas to explore further
include focusing on data collection, importance of gender, fragile states and agricultural segments are
important for informed policy making to fill the gaps.
 2 13

UFA-LINKED ACTIVITIES BY THE WORLD BANK

UFA-LINKED ACTIVITIES
BY THE WORLD BANK

One of the unique aspects of UFA2020 was the “whole World Bank Group” approach which was central to
the design and implementation of the initiative, leveraging the strengths of the institution. In this framework, the
World Bank took the lead on strengthening policy and regulatory frameworks through country engagements
with national authorities as the Finance, Competitiveness and Innovations (FCI) Global Practice (GP). At the
same time, other GPs of the World Bank contributed to the achievement of the UFA2020 goal. For example,
the Social Protection, Jobs and Labor (SPJ) GP through digitalization of government-to-person payments (and
specifically social safety net payments), G2Px and ID4D Programs on digitalization of government-to-person
payments and the provision of basic identity, Gender CCSA on women’s financial inclusion, and DEC on data
and research to name a few. In addition, parallel to FCI GP, IFC’s Financial Institutions Group co-led the
UFA2020 initiative and led the WBG’s private sector engagements in this regard. Figure 3 plots the case of
Pakistan, as of 2017, as an example as complementary WBG initiatives for UFA2020 were implemented
together with the national authorities and the private sector.

Figure 4. UWBG UFA-related work in Pakistan in 2017

Measurement Tools/Diagnostics/Policy Advice

Development of National Financial Inclusion Strategy under the first RAS in SAR:
Technical Notes, Strategy Drafting, Private Sector Consultations.
Also a Financial Consumer Protection/Literacy Diagnostic, National Risk Assessment Support

INFORMS INFORMS

Payments and Financial WBG Operations

Inclusion Strategies F&M GP Finance Access & Infrastruc- LEADS
ture (pipeline)
Reforms covering payments, ID/G2P COMPLEMENTS IFC Investments in financial sector
TO
transfers, MSME Finance, consumer Social Safety Net Projects (SP&L GP)
protection, financial literacy...

REINFORCES
HELPS EFFECTS OF
IMPLEMENT

Technical Assitance and Capacity Building

Financial Inclusion Support Framework (FISF) Country Support Program
 This section provides information on the World Bank’s UFA-linked activities.8 These activities are grouped into
four. The first set of activities are described in Section 2.1 UFA Operational Tools. The World Bank has devel-
oped, re-organized and re-purposed several tools for the purposes of UFA and designing projects for UFA.
This section summarizes these tools. In addition, the World Bank and IFC UFA teams have been working with
14 several development partners including the G20, its Global Partnership for Financial Inclusion (GPFI), the
United Nation Secretary General’s Special Advocate (UNSGSA) for Inclusive Finance for Development,
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

Better than Cash Alliance, and IMF. These are summarized under Section 2.2. The World Bank has also
engaged with several donors to fundraise for UFA-linked activities, specifically for technical assistance and for
knowledge production. These programmatic trust funds are in Section 2.3. Lastly, the World Bank has set-up
some special initiatives, linked to UFA among other corporate goals. These are discussed in section 2.4.

2.1 UFA OPERATIONAL TOOLS

The UFA Team worked on several internal tools to facilitate teams working on related projects design their
projects, develop their project development objectives, add to their project’s results frameworks. Section 2.1.1
describes the UFA monitoring and evaluation framework, which contributed to UFA country diagnostics, PAFI
country assessments, the PAFI Radar (Box 9), and the overall FCI framework for financial inclusion results
indicators. The UFA monitoring and evaluation framework also led to the FCI Global Practice to re-structure
and re-organize its data work on financial inclusion via the Global Payment Systems Survey, Global Financial
Inclusion and Consumer Protection Survey, and Remittance Prices Worldwide database. These survey tools
are summarized in Section 2.1.2. Section 2.1.3 discusses country diagnostics. Lastly, Section 2.1.4 describes
the parts of the UFA Toolkit on project design.

2.1.1 Monitoring and Evaluation

Progress towards UFA2020 has been measured at two levels: (i) global monitoring, and (ii) WBG
engagement-level progress monitoring toward the target of enabling reach to 1 billion previously unbanked
adults.

The main tool for global monitoring purposes is the World Bank’s Global Findex database. This database is
based on individual-level data collected from about 150 countries in a consistent and comparable way as
an add-on module to the Gallup World Poll. Global Findex provides a rich dataset on account ownership by
individuals, along with payment, savings and credit services, and usage of accounts, which can be
disaggregated by gender, age, education level, income group, and urban/rural.9

Measurement of progress is required for the number of new accountholders. Improvements in enablers (i.e.
legal/regulatory environment, infrastructure, political commitment, and financial capability) and drivers (i.e.
access points, innovative products and delivery channels, digitizing G2P payments) of access to financial
services are needed to ensure new accountholders, and these were also tracked. In addition to Global
Findex, other databases by the WBG and the IMF are used for global monitoring purposes, which, used
together, provide a full picture from both demand-side and supply-side perspectives. Relevant surveys for
monitoring progress on enablers and drivers of universal financial access, which provide data that is
comparable across countries and over time, include the Global Payment Systems Survey (GPSS) by the
World Bank, the Global Financial Inclusion and Consumer Protection (FICP) Survey by the World Bank, and
the Financial Access Survey (FAS) by the IMF.10 Other databases that have relevant information for global
monitoring include Remittance Prices Worldwide (RPW), Enterprise Surveys on firms’ access to financial
services and Doing Business on credit infrastructure, all managed by the World Bank.11

8
IFC has been working with a network of UFA Partners, made up of several financial service providers. This workstream will be
covered by the UFA note IFC has been preparing.
9
[Link]
10
GPSS: [Link] Global FICP:
[Link] IMF FAS: [Link]
11
RPW: [Link] Enterprise Surveys: [Link]
Doing Business: [Link]
The UFA team has developed tools to identify opportunities and track progress at the global level using a
combination of indicators from these data sets. These tools can also be used to inform operations by
identifying gaps and priority reform measures.
15
BOX 3 - UFA Opportunities Dashboard

UFA-LINKED ACTIVITIES BY THE WORLD BANK

The UFA Team developed a dashboard for internal use, which enabled diagnosing and identifying
opportunities for UFA-related work at country-level. The dashboard was based on data from Global
Findex to estimate the total opportunity (in terms of the number of adults that can be reached) due to
specific potential UFA-related actions such as drafting and implementing an NFIS, digitalizing G2P
transfers into accounts, and opening of the regulatory environment and market. This last category took into
account several reforms, for example, tiered KYC regulations, ID regulations, promotion of basic accounts,
Islamic finance, financial consumer protection, financial literacy, payment infrastructure, agent banking
regulations, mobile money regulations, etc. These were published on the UFA Data Portal.12

21.4

70.6

8.5 Million Adults 3.2 Million Adults 28.1 Million Adults % drafting/implementing
NFIS
By drafting and implementing By digitizing government to By opening up the market
a National Financial Inclusion person (G2P) cash transfers and legal/regulatory % digitalizing G2P cash
Strategy (NFIS) environment transfers
% opening up market and
legal/regulatory environment

*This is a sample country from the UFA Portal: [Link]

The methodology for monitoring WBG progress is based on the existing engagements by the WBG during
the 2013-2020 period, which corresponds to the period between the date of announcement and the end
date for the goal. The methodology depends on the type of engagement: (1) WB Advisory Services and
Analytic (ASA) engagements and Development Policy Operations (DPOs), (2) WB financing engagements
(for example investment project financing, and program for results financing), and (3) IFC Investment Services
(IS) and Advisory Services (AS).

All three methodologies use a similar two-phase approach: estimation of expected reach (to unbanked adults
via transaction accounts) at engagement level at the start of the engagement, and measurement of actual
progress (in terms of reach to unbanked adults via transaction accounts) during implementation and at
completion of each engagement.13 Additionally, all three methodologies share the five key principles
identified as follows:

I. Measure transaction accounts/accountholders: Indicator definitions are harmonized to the

extent possible to enable a unified message.
II. Measure reach to the previously unbanked: measure “first-time access.” When this is not feasible to
measure directly, use Global Findex to estimate.
III. Avoid double counting across the WBG. Double counting across the WB and IFC is inevitable as
our work will have similar target groups for certain engagements.

12
[Link]
13
Depending on the type of engagement, post-completion monitoring of actual progress may also be necessary as the effects of
policy reforms are expected to occur with a lag.
 IV. Set baseline at the time of announcement (October 2013) or project effectiveness dates for
projects approved after October 2013. Count incremental reach.
V. Expected reach and actual progress will be announced during the IMF-WB Spring Meetings.14
16
BOX 4 - UFA Projections Model
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

• Combines Demand and Project Level Data

• Compiles Lending and technical assistance projects and maps projects to impact areas.
• Quantifies targets for each project depending on impact and intervention area using
demand side data.
• Will track estimated actual reach as compared to estimated targets to inform
success and project progress moving forward.
• Can be used by TTLs to develop project level targets and indicators.

Distance High Cost No Docs No Trust Religon G2P NFIS

Project 1 YES
Project 2 YES
Project 3 YES YES YES
Project 4 YES YES YES
Project 5 YES
Country-level ASA Total YES YES YES YES YES YES

Aim: to estimate the number of financially excluded adults that can be reached by the existing financing
and advisory engagements at the country level.
Financing projects: baselines, targets incorporated in project-level results frameworks, but not for
technical assistance engagements.

Challenges:
(i) isolating the effect of a policy intervention
(ii) isolating the contribution of the WB to the final outcome
(iii) monitoring the effects throughout the engagements (and post-completion): indicators not
collected frequently, if at all

Basics:
- Classify reforms into 3 groups:
1. opening up the regulatory space and market
2. digitizing government payments
3. financial inclusion strategies
- Use and modify Global Findex data to avoid multiple counting
- Map projects to Global Findex data for different types of reforms

Type of projects for UFA 2020 commitments

• Includes all technical assistance and financing projects that work toward improving access
to transactions accounts across GPs
• Excludes some FCI GP projects more relevant for the broader Financial Inclusion agenda,
e.g., access to credit or insurance
• Includes approved projects only
• Baseline/Start date: 2013

These projections are published at country level on the UFA Data Portal.

14
During the 2018 Spring Meetings, with the launch of the 2017 Global Findex data, an interim progress update was made. The
next and final progress update will be done once the new (2021) Global Findex data becomes available. Progress for World
Bank’s technical assistance and development policy lending engagements can be measured every three years when the full Global
Findex micro dataset becomes available, using the methodology the UFA team developed by associating barriers to account
ownership with reforms implemented by development policy lendings and development policy lendings. Investment project
financing operations have specific indicators and targets embedded in their results frameworks.
The World Bank Group has also built a data portal for the purposes of monitoring progress towards UFA,
which includes global, regional and country level indicators relevant for UFA. The data portal identifies the
opportunities as of 2015 that could potentially be realized through UFA-related reforms and provides a tool
for monitoring progress using elements from the Opportunities Dashboard (Box 3) and the UFA Projections
Model (Box 4).15
17

UFA-LINKED ACTIVITIES BY THE WORLD BANK

2.1.2 Supply-side data and survey tools
The FCI GP has been systematically collecting supply-side data from regulators and providers for over a
decade. These are summarized in Table 1. Some of these surveys have been modified based on the UFA
initiative and the PAFI Framework to measure progress specific to the enabling environment.

Table 1. WBG UFA-related work in Pakistan in 2017

Global Payment Systems Survey GPSS

Objec�ves • To collect informa�on on the status of payment and se�lement systems worldwide,
covering several aspects from legal and regulatory environment, large value / retail
infrastructure, innova�ons in retail payments, payment system oversight
arrangements, etc.
• To be leveraged for supply-side measure of transac�on accounts
• To allow authori�es / policy makers to make meaningful cross-country comparison
and assess progress in payment system development
• To facilitate dissemina�on of best prac�ces
Coverage 120-150 countries
Frequency Biannual (main module)
Global Financial Inclusion and Consumer Protection Survey (Global FICP)
Objec�ves • To collect data on key areas of consumer protec�on (including ins�tu�onal
arrangements, legal framework, fair treatment, disclosure, responsible lending,
dispute resolu�on and recourse), financial capability, and other areas relevant to
responsible financial access.
• To build on and reflect complementary efforts including the High-level Principles on
Financial Consumer Protec�on endorsed by the G20 and the World Bank Good
Prac�ces for Financial Consumer Protec�on (including forthcoming update)
Coverage 100+ countries
Frequency Biannual (main module)
Remittance Prices Worldwide (RPW)
Objec�ves • To provide the most extensive global dataset on the cost of remi�ance services
• To monitor the evolu�on of costs to remi�ers and beneficiaries of sending and
receiving money in major selected corridors. RPW is used by global fora such as the
G8 and the G20, as well as the UN SDGs, as an official reference indicator of
interna�onal remi�ance costs and used to measure progress towards for global
remi�ance service cost reduc�on objec�ves.
• RPW is also widely used by governments, mul�lateral organiza�ons, the private
sector, and academics
Coverage 367 corridors worldwide, from 48 remi�ance sending countries to 105 receiving
countries, represen�ng around 80-85% of total remi�ances to developing countries
Frequency Updated on a quarterly basis

15
[Link]
 2.1.3 Diagnostics
The UFA Toolkit has several elements that can be utilized for performing country-level diagnostics to identify
gaps and opportunities for the purposes of furthering the UFA goal. The UFA Traffic Lights System, described
18 in Box 5, provides an easy-to-understand description of the gaps in the UFA Framework in a country by using
publicly available data. This is also comparable with the earlier tools presented in Boxes 3 and 4 on
opportunities and projections.
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

Combined together, the Opportunities Dashboard, the Projections Model and the UFA Traffic Lights tool
enabled the UFA team to draft UFA country action plans for the 25 focus countries and additional countries
as needed (Box 6). The UFA Country Action Plans used information on existing and recently completed
projects in a country to further point to gaps in World Bank TA or financing operations, which could
potentially be filled by new ASA or lending, and provided guidance to FCI regional teams on planning for
future engagements in furthering UFA.

BOX 5 - UFA Traffic Lights

The UFA Team developed a structured and consistent framework to diagnose and measure interim
progress in line with UFA/PAFI Framework, which was labelled as the “UFA Traffic Lights System.” This
framework was developed to inform the WBG institutional UFA strategy and country-level engagements.

The UFA Traffic Lights System used data from several databases, including: Global Findex, Global
Payment Systems Survey, Global Financial Inclusion and Consumer Protection Survey, IMF Financial
Access Survey, EIU Microscope, World Bank NFIS Database, and others. This framework constitutes an
earlier and simpler version of the PAFI Radar (see Box 9).
As with other parts of the UFA Toolkit, the UFA Traffic Lights System was based on the “UFA/PAFI
House,” which allowed for it to be easily reflected in country-level Action Sheets, in dialogue with
country counterparts, informs WBG engagements and national financial inclusion priorities.

Foundations Drivers
1 2 3 4 5 6 7
Strengthen Build Legal & Ramp Up Design Increase Improve Achieve
Political Regulatory Financial/ICT products to access awareness Scale
Commitment Environment Infrastructure meet end points and financial
users' needs literacy

Country A
Country B
Country C
Country D
 BOX 6 - Country Action Plans

• Combines Demand, Supply, Environmental and Project Level Data 19

• Synthesizes relevant WBG diagnostics
• Aggregates technical assistance, lending and other project information, insights, progress

UFA-LINKED ACTIVITIES BY THE WORLD BANK

and goals.
• Provides a country overview for WBG country teams that includes country context,
recent projects, ongoing initiatives, current events, current opportunities, estimated WBG
impact, project results, etc.
• Identifies priority interventions and Key Risks for further operations.

2.1.4 Project design and preparation

The UFA Team drafted an internal note on Operationalizing UFA2020. This note included several project
design aspects that could help World Bank project teams in formulating relevant components and actions in
their operations.

This guidance note covered the following World Bank instruments:

• Development policy financing: where political will, or policy, legal, or regulatory reforms are
identified as the principal access/inclusion constraints to be addressed.
• Program for results (P4R): hold potential for harnessing the drivers for UFA/PAFI, for example
related to access points/networks, government to person payments, product design and roll-out,
and uptake of financial services.
• Investment project financing with disbursement-linked indicators: (DLIs) enable a standard lending
instrument to be linked to results, and offer the advantage of including components in the operation
for technical assistance/capacity-building, financial infrastructure (systems, processes), and/or
capacity-building for regulators and supervisors
• Components to make technical expertise available, or to build systems and capacity, can be
highly complementary. These can be important as components of investment loans, improving
their impact and increasing the likelihood of achieving the project objectives. This can cover
systems and infrastructure, oversight capacity, design and implementation of policy or regulatory
reforms, and capacity to implement reforms. Technical assistance and policy dialogue can also
be provided through non-lending projects, which are sequenced to complement financial
projects (including as part of broad Programmatic Approaches).
 Tables 2 and 3 summarize the approach developed by the UFA team.

20 Table 2. Ways to include UFA/PAFI Enablers in Lending Operations

COMPONENTS FOR
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

ENABLERS INDICATORS RESULTS-BASED TA/CAPACITY POLICY FINANCING

FINANCING BUILDING
Strengthen % adults with an Access to Components could be Policy triggers can
Political account financing could added for technical cover:
Commitment NFIS launched be based on: assistance, in particular - Key indicators
- Launching the to draft the strategy established and
national financial document, tracked via
inclusion strategy implementation of the country-owned data
certain components of
Launching the the strategy, capacity - Strategically
M&E system building for monitoring important programs
and evaluation established

Build Legal % adults with an Access to - Technical Assistance Policy triggers can
and account financing could to strengthen cover:
Regulatory # legal/ regulatory be based on supervisory capacity - Restructuring
Environment reforms adoption of a - Technical Assistance state-owned banks to
launched/adopted certain type of to improve legal improve efficiency
legal framework frameworks for - Legal framework for
(possibly in parts) payment infrastructures, e-banking and
which is the focus financial consumer mobile financial
of the project protection, etc. services
- Strengthening
supervisory capacity

Enhance # transaction accounts Access to Components could be Policy triggers can

Financial, ICT # financial access financing could added for technical cover:
and Data points broken down be based on assistance, in particular - Launching of a
Infrastructure by branches, ATMs, adoption of the for national payments
POS, etc. underlying legal - Payment systems strategy
NRPS launched frameworks - ICT infrastructure - Launching of a
# cashless retail - Infrastructure credit registry
transactions per investment
capita
Table 3. Ways to include UFA/PAFI Drivers in Lending Operations

RESULTS-BASED COMPONENTS FOR POLICY

DRIVERS INDICATORS TA/CAPACITY FINANCING
FINANCING
BUILDING 21
Expand % adults with Access to financing - Components Policy triggers can
Access to transaction account could be based on: could be added cover:

UFA-LINKED ACTIVITIES BY THE WORLD BANK

and Usage % adults using a - # accounts opened for technical - Introduction of tiered
of transaction account - # accounts opened assistance, in KYC requirements
Transaction >3 times a month for women, in particular to - Introduction of “no
Accounts # financial services disadvantaged areas, providers. frills” savings
etc. accounts
offered through - Frequency of use of - Commitment to shift
transaction account accounts social transfers or
- Number of services wages to accounts
offered through - Introduction of
accounts digital ID platforms
Expand % adults with an Access to financing - Payment systems Policy triggers can
Access to and account could be based on: - ICT infrastructure cover:
Usage of % G2P payments - % OR # G2P - Infrastructure - Payment
Transaction disbursed payments disbursed investment infrastructure reforms
Accounts electronically electronically - Interoperability (of
(through
# cashless retail - # accounts opened card networks, POS,
Cashless G2P
Payment payments per capita for G2P recipients etc.)
Mechanisms - volume of cashless - Commitment to shift
payments processed social transfers or
wages to accounts

Expand % adults with an Access to - Payment systems Policy triggers can

Readily account financing could - ICT infrastructure cover:
Available be based on: - Infrastructure - Regulations to allow
investment use of agents
Access # of financial access - Lowest cost per - Reframing role of
Points points per 100,000 access point state-owned banks,
adults OR per km2 OR opened Can be used in a e.g., extending bank
similar way to a license (or agent
per administrative - Interoperability P4R model, with
area, broken down by of access points model) to post
DLIs office/network
type [branches, ATMs, - Legal framework for
POS terminals, etc.] e-banking and
mobile financial
services
Strengthen % adults with an Access to financing could - Components Policy triggers can
Financial account be based on: could be added cover:
Capability % of adults that are - Improvements in for technical - Launching a
financially financial assistance, in
literacy/capability survey financial literacy
capable/literate scores
particular to FIs to strategy
Frequency of use of - Increases in uptake implement - Implementation of a
accounts and/or usage of financial literacy
Savings (deposit) programs financial education
accounts program
levels - Increased savings rates
- Launching a financial
capability strategy or
program

Pathway to Indicators related to Access to financing Activities to ensure Policy triggers can
Diverse Set access and use of could be based on that tailored range cover supervisory
of Financial range of financial range of products of products and and oversight
services available, capacity, policy &
Services services offered, and on regulatory measures
access/use of specific inc. deposits,
insurance, credit, to address product
products and services development
pensions constraints, use of
data, etc.
 2.2 ENGAGEMENT WITH DEVELOPMENT PARTNERS AND
INTERNATIONAL AGENDA ON FINANCIAL INCLUSION
22 The World Bank Group has engaged with various development partners for furthering the international agenda
on financial inclusion. As part of these efforts, the UFA team as a whole, and the FCI team in particular, have
collaborated with several development institutions, contributed to the work of the G20 via the Global Partnership
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

for Financial Inclusion (GPFI) and played a convening role in organizing several key events. The IFC UFA team
has been instrumental in gathering key private sector players around the UFA initiative.

2.2.1 UNSGSA
In her capacity as the UN Secretary General’s Special Advocate (UNSGSA) for Inclusive Finance for
Development, HM Queen Maxima of the Netherlands has been a true champion of the financial inclusion
agenda globally and a great supporter of the UFA 2020 initiative.

In collaboration with the office of the UNSGSA, the World Bank Group UFA team has organized several
events to draw interest in UFA 2020 at its earlier stages. Later on, with active participation of HM Queen
Maxima and the World Bank Group President Jim Kim, several joint country visits were organized to discuss
financial inclusion at a high level with various policy makers to induce change. These discussions were usually
centered around important financial inclusion events in countries, for example, the launch of the National
Financial Inclusion Strategy in Pakistan in 2016.
2.2.2 G20 and the Global Partnership for Financial Inclusion
The World Bank, via the FCI GP, has been an implementing partner for the Global Partnership for Financial
Inclusion (GPFI) of the G20. Through this role, the World Bank has been influential in leveraging the GPFI in
promoting the UFA goal and its importance. In particular, the G20 Financial Inclusion Indicators, the G20 23
High-Level Principles for Digital Financial Inclusion, and the G20 Emerging Policy Approaches for Digital
Financial Inclusion have become important guidance notes in this area.16

UFA-LINKED ACTIVITIES BY THE WORLD BANK

2.2.3 Fintech: The Bali Fintech Agenda and PAFI Fintech Report
The World Bank has been investigating the application of new technologies to financial services (hereinafter
“fintech”) and their role in the pursuit of greater financial inclusion, also in cooperation with other institutions.
Fintech presents both opportunities and challenges for financial inclusion that have to be taken into account
when designing policy approaches and regulation on fintech. This investigation has resulted in actionable
guidance, such as the 2018 IMF-World Bank Bali Fintech Agenda and the 2020 report on the Payment
aspects of financial inclusion (PAFI) in the fintech era published by the World Bank and the Committee on
Payments and Market Infrastructures (CPMI).17

The IMF-World Bank Bali Fintech Agenda is a set of 12 policy elements aimed at helping member countries
to harness the benefits and opportunities of financial technology for the provision of financial services while
at the same time managing the inherent risks. The Agenda proposes a framework that countries should
consider in their own domestic policy discussions and aims to guide staff from the two institutions in their own
work and dialogue with national authorities. The 12 policy elements were distilled from members’ own
experiences and cover topics ranging from enabling fintech through appropriate regulation, to ensuring
competition and safeguarding the stability, integrity, and resilience of the financial sector and infrastructure,
and promoting international cooperation.

From a payments perspective, together with CPMI, the World Bank reiterated and enhanced the guidance
developed in the 2016 PAFI report by integrating recent fintech developments. The report analyses
opportunities and challenges of fintech across the “foundations” and “key enablers” of access to, and use of,
transaction accounts and payment products identified in PAFI. On this basis, it provides fintech-focused key
actions to meet the objective of the PAFI guiding principles. The report concludes that fintech offers
opportunities to underpin the drivers of access to and usage of transaction accounts but is not without
challenges: if risks are not properly managed, they can undermine financial inclusion outcomes. Stronger
emphasis should be placed, inter alia, on enhancing international and cross-sectoral coordination between
authorities; clarifying the applicability of existing regulatory and oversight requirements and addressing any
gaps that may arise; and fostering the resilience and availability of payment and ICT infrastructures.

16
GPFI (2016a, 2016b and 2017).
17
IMF and World Bank (2018) and CPMI and the WBG (2020a)
 2.3 WORLD BANK’S PROGRAMMATIC TRUST FUNDS
SUPPORTING THE UFA2020 INITIATIVE
24 The World Bank also engaged in specific fund-raising activities for the purposes of furthering its work on the
UFA initiative. Below is a summary of these trust-funded programs.
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

2.3.1 Financial Inclusion Global Initiative (FIGI):

The Financial Inclusion Global Initiative (FIGI) is a program implemented in partnership by the World Bank
Group (WBG), the Committee on Payments and Market Infrastructure (CPMI), and the International
Telecommunications Union (ITU) funded by the Bill & Melinda Gates Foundation to support and accelerate
the implementation of country-led reform actions to meet national financial inclusion targets, and ultimately the
global ‘Universal Financial Access 2020’ goal.

FIGI funds national implementations in three countries—China, Egypt and Mexico.

In Egypt, for instance, FIGI supported policymakers to issue new consumer protection regulations, establish a
financial consumer protection supervision unit and start implementing a financial ombudsman scheme. The
program also supported the CBE to establish and operationalize its oversight function and oversight unit, and
informed the issuance of several legislative pieces to facilitate increased access to and uptake of digital
financial services.

In Mexico, FIGI supported the authorities to develop secondary FinTech regulations to enable innovation for
financial inclusion and, as an emergency response to COVID-19, supported policymakers to develop new
regulations on Digital ID which helped to quickly include more vulnerable consumers in the formal financial
sector. FIGI also supported the authorities to launch a new financial inclusion policy (PNIF) in March 2020
which brought together buy-in and recommendations across multiple sectors to advance cross-cutting
financial inclusion issues around Digital ID and digital payments for rural consumers, among other aspects.
The program also supported the development of CoDi, Mexico’s new mobile payments platform, to facilitate
instantaneous and low- or zero-cost digital payments between individuals and businesses / governments.

FIGI also supports working groups to tackle three sets of outstanding challenges for reaching universal
financial access: (1) electronic payments acceptance, (2) digital ID for financial services, and (3) security.
Guidance has been used by
policymakers to enhance electronic
payments within their jurisdictions,
improve cyber-resilience and establish
new e-KYC reforms.

Lastly, FIGI hosts three symposia to

gather national authorities, the private
sector, and the engaged public on
relevant topics and to share emerging
insights from the working groups and
country programs. The Symposia
distill lessons learned and core
guidance from across the FIGI
program.
2.3.2 Financial Inclusion Support Framework (FISF):
The Financial Inclusion Support Framework (FISF) was a flagship global technical assistance program with the
objective of accelerating and increasing the effectiveness of reforms and other country-led actions to achieve
national financial inclusion goals. Launched in April 2013 and welcomed by the G20 Finance Ministers and 25
the Alliance for Financial Inclusion, FISF was designed to help scale up and leverage the WBG’s policy
dialogue, analytical work, and financing for financial inclusion. FISF had support of $25 million from the

UFA-LINKED ACTIVITIES BY THE WORLD BANK

Netherlands Ministry of Foreign Affairs, and $6.7 million from the Bill & Melinda Gates Foundation.
FISF-supported activities aimed to help catalyze private sector financing, knowledge and innovation, to spur
the usage of a broad range of financial services – payments, savings, insurance, credit – by low-income
individuals and micro, small and medium enterprises (MSMEs), who were un- or under-banked. The program
had two components, Country Support Programs (CSPs) and Knowledge.
The CSPs were structured as three- to four-year technical assistance programs organized under four thematic
areas:
1. National financial inclusion strategy, and monitoring and evaluation;
2. Financial infrastructure, such as payments and credit reporting systems
3. Diversified financial services for individuals and enterprises; and
4. Financial consumer protection and financial capability.
Technical assistance provided under the CSPs built on and contributed to public and private sector
commitment to financial inclusion. CSPs supported the design and implementation of key policy and
regulatory reforms, financial infrastructure development, and the increased effectiveness of programs in
strategic areas, such as Government-to-Person payments, and helped improve the financial capability of key
population segments. CSPs were launched in Rwanda, Indonesia, and Mozambique in 2014, in Ethiopia and
Zambia in 2015, and in Pakistan, Cote d’Ivoire, and Vietnam in 2016 - all UFA focus countries. All CSPs
concluded by June 2020, and generated significant outcomes in establishing national strategic priorities,
supporting reforms of key regulations and policies, expanding targeted financial inclusion initiatives,
strengthening key institutions, and expanding data and analytics for financial inclusion.
FISF’s Knowledge component supported analysis, synthesis, and knowledge sharing in key underserved
areas, from the financial inclusion of women and individuals engaged in agriculture, digital inclusion
acceleration, leveraging digital payments to provide access to a broader set of financial services, to
addressing consumer risks in digital finance. The program harvested learnings from the CSPs through its
implementation knowledge and learning series. FISF’s knowledge activities concluded in June 2021.
 2.3.3 Harnessing Innovation for Financial Inclusion (HiFi)
HiFi is a 12-year program aimed at scaling up financial inclusion in developing countries on a sustainable
basis, by harnessing technology and innovation. HiFi is implemented via Finance, Competitiveness &
26 Innovation Global Practice (FCI GP), the Consultative Group to Assist the Poor (CGAP), the International
Finance Corporation (IFC) and the Alliance for Financial Inclusion (AFI). HiFi is solely UK-Government funded,
and operates across Africa, the Middle East and Asia.
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

HiFi is focused on providing access to a broad range of financial services to people who do not have any or
adequate access. This includes branchless banking, modernization of government and retail payments, and
improving the affordability and accessibility of remittances flows. Digital finance is transforming how poor
people in developing countries access and use financial products and services. HiFi’s work on enabling digital
financial services (DFS) has played a critical role in the global public and private sector response to the
economic and social consequences of the COVID-19 pandemic. DFS has encouraged and increased the use
of mobile money to transact remotely, transfer of funds to vulnerable populations and avoidance of risks
associated with cash transactions.

FCI GP has programs in Bangladesh, Ethiopia, Kyrgyz Republic, West Bank and Gaza, Democratic Republic
of Congo (DRC), and the Southern African Development Community (SADC) region funded by HiFi to: 1)
digitalize government payments, 2) enhance remittances markets; and 3) enhance the safety, reliability and
efficiency of national payments systems.

The HiFi Program has published an e-book on the impact of its country work to date, which include lessons
related to the UFA initiative.18

2.3.4 Remittances and Payments Program (RPP)

The RPP, funded by the Swiss State Secretariat for Economic Affairs (SECO) and executed by the World
Bank since 2015, is designed to increase the efficiency of retail payments in four countries of the Western
Balkans (Albania, Serbia, Bosnia and Herzegovina, Kosovo) and Ukraine, with a specific focus on
international remittances. The Program is based on the international standards and best practices in this
space, such as those set by the World Bank – CPMI General Principles for International Remittance Services
and the Payment Aspects of Financial Inclusion (PAFI) report.

The RPP has been providing technical assistance to central banks in the five countries mentioned above in
facilitating the adoption of the latest EU and global retail payments reforms and enhancing the use of modern
payment instruments and remittance products responding to user’s needs. The main objective of the Program
is to ensure the development of safe and efficient payment systems required for facilitating remittances in five
countries. This has been achieved through a gradual and cross-sectoral technical assistance in the fields of:

1. Legal and regulatory framework, by supporting countries in transposing several pivotal EU

directives (Payment Services Directive 2, Payment Account Directive, E-money Directive, etc.),
which allows a more competitive and proportional payment ecosystem,

2. Payment infrastructure, by assisting countries in developing a complete, inclusive and modern

upgrades, based on the Principles for Financial Market Infrastructures (PFMIs), which will allow
more interoperability and interlinkage of various payment instruments and products,

3. Oversight and supervision of payment systems and instruments, by supporting a sound policy
frameworks and cooperation arrangements against latest standards,

4. Payments - and remittances-related research, analytics and assessments, for example, by

conducting household surveys with remittance beneficiaries in RPP program countries, implementing

18
World Bank Group (2019). Capturing our impact: Harnessing innovation for financial inclusion.
 Retail Payments Cost Study in program countries, several assessments on retail payments and
markets for international remittances,

5. Financial literacy of remittance users and improved product design for remittance service
providers, by using Project Greenback methodology to promote knowledge of remittance
27
products among beneficiaries and interact with the remittance service providers with the

UFA-LINKED ACTIVITIES BY THE WORLD BANK

objective to encourage demand-driven best practices, whereby inspiring reforms with the
relevant public authorities.

In addition, RPP has been supporting a knowledge management and data collection agenda in relation to
remittances and Project Greenback. RPP has been one of the main funding sources of the World Bank’s
Remittance Prices Worldwide database. In addition, the RPP team has been working on a series of knowledge
products on Project Greenback to make the lessons learned publicly available.

2.4 UFA-LINKED SPECIAL INITIATIVES ACROSS THE WORLD BANK

2.4.1 IDA 18 Targets and IBRD Capital Increase Policy Commitments

For the 18th replenishment of IDA resources, the executive directors requested the inclusion of financial
inclusion related action items in line with the UFA goal. More specifically: “Participants requested that at least
10 IDA18 financing operations and Advisory Services and Analytics (ASA) for financial inclusion address
gaps in men’s and women’s access to and use of financial services and at least 10 Financial Inclusion
strategies in IDA countries provide sex-disaggregate reporting and put in place actions to target specifically
women's financial inclusion.”19

2021, the IDA 18 Retrospective Report noted that throughout the IDA 18 period, 14 operations were
approved to address the gender gap in access
to and use of financial services in Afghanistan,
Burkina Faso, Burundi, Cabo Verde, Djibouti,
Ghana (two operations), Kenya, Madagascar,
Mozambique, Pakistan, Sao Tome and Principe,
Sierra Leone, and Somalia. In addition, 10
financial inclusion strategies were developed
which identifies actions for women’s financial
inclusion including in Afghanistan, Ethiopia,
Liberia, Mozambique, Nigeria, Pakistan,
Rwanda, and Zambia.

In a similar vein to the IDA 18th replenishment,

in the 2018 Proposal for t he World Bank
Group Capital Increase, the World Bank
committed to “… an increase in the share of
IBRD operations with financial sector components that include specific actions to close gender gaps in access
to and use of financial services from 55 to 60 percent by FY23, again with ambition maintained or increasing
to FY30.”20

19
IDA (2017). Report from the Executive Directors of the International Development Association to the Board of Governors:
Additions to IDA Resources 18th Replenishment. Towards 2030: Investing in Growth, Resilience and Opportunity, p. viii.
20
World Bank Group (2018), Sustainable Financing for Sustainable Development: World Bank Group Capital Package Proposal.
Report to the Governors at 2018 Spring Meetings, p. 20.
 2.4.2 ID4D
The World Bank’s Identity for Development Initiative (ID4D) is a collaborative effort to support countries
to implement digital ID systems and achieve the Sustainable Development Target 16.9: “By 2030,
28 provide legal identity for all, including birth registration.” World Bank Global Practices for social
protection, governance, health, financial inclusion, gender, and legal issues have joined together to
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

support this initiative.21 Through ID4D, the World Bank has supported ID efforts in over 40 countries.22
According to the ID4D Global Dataset, 46 percent of those without an ID live in Sub-Saharan Africa,
signaling an opportunity for the region. There is an important gender gap in access to identification as
well: 1 in 2 women in low-income countries does not have an ID.23 The World Bank Group and partners,
through the ID4D effort and related workstreams, has galvanized global attention and resources around
the issue of ID acceptance.24 The World Bank has collected a large amount of data and produced
knowledge products, as well as offering financial and technical assistance to client governments that are
working to improve and expand their national and digital ID systems.25

2.4.3 G2Px
More recently, the World Bank, through different global practices as well as a cross-sectoral initiative, has
developed work to advance G2P digitalization. The G2Px program is a cornerstone of the World Bank’s work
in digitalizing large value payment streams and has many synergies with UFA2020. The objective of the
G2Px program is to go beyond efficiency gains for individual programs to focus on the beneficiary
experience while driving financial inclusion and women’s economic access and empowerment. Government
fiscal savings also remains a critical priority. In this initiative, the Bank is working to establish a framework,
develop best practices and provide upstream technical assistance to radically improve G2P payments
globally.26

The G2Px initiative encompasses different global practices and units from the World Bank: Social Protection
and Job (SPJ) – design, advisory and financing of social protection policies and programs, and a systematic
collection of data on payments delivery; Finance, Competitiveness and Innovation (FCI) – design, advisory
and financing of payments infrastructure and broader financial inclusion programs, Government payments
digitalization advisory services and implementation support; Digital Development (DD) – design and
financing of digital government policies and platforms; Governance – design and financing of public
financial management programs; Gender – design on women’s inclusion and empowerment; and CGAP –
develop G2P case studies and tools and provide advisory services and implementation support.

21
[Link]
22
[Link]
23
[Link]
24
See, for example, the case of Mexico: [Link]
25
[Link]
26
[Link]
 UFA-LINKED ACTIVITIES BY THE WORLD BANK
29
30

3 TAKING STOCK OF
PROGRESS IN PRIORITY AREAS
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

OF THE PAFI FRAMEWORK

This section highlights progress and lessons learned in the 25 UFA2020 focus countries, with a focus on
World Bank initiatives and the related work they helped catalyze. The section also includes a few examples
from countries that were not among the UFA2020 focus countries when they provide particularly illustrative
examples. The PAFI framework provides a helpful conceptual framework for discussing work of the World
Bank related to not only payments but also the enabling policy and political will issues that are required for
financial inclusion. The report discusses progress loosely organized around the PAFI framework:

• The first part of this section addresses World Bank engagement with the critical enablers of
public and private sector commitment including monitoring and evaluation, legal and regulatory
framework, and financial and ICT infrastructures, including developing national payment systems.
• The second part of this section discusses World Bank work and country progress in the
catalytic pillars: product design, access points, awareness and financial literacy, and leveraging
large-volume recurrent payment streams.

The report also discusses women’s financial inclusion throughout.

3.1 PUBLIC AND PRIVATE SECTOR COMMITMENT

Key lessons on public and private sector commitment:

• Political will, high-level commitment, and involvement of all relevant stakeholders matter for
the success of strategies for financial access and inclusion such as NFIS or NRPS.
• Agencies responsible for implementing the NFIS should be clearly identified and have
specific targets to ensure accountability and action in NFIS tasks.
• Allowing for an overall mid-term review of strategic documents with the aim of revising the
action plan and M&E frameworks to fit with the new realities in the financial sector due to the
fast pace of technological progress may be useful.
• Mandating collection of gender-disaggregated data can have cascading effects to collect
better data in general, and in engaging public and private sector to focus on gender equity
beyond financial services access.

Over the past decade, financial inclusion has gained prominence within both the public and the private
sector. This has been further underscored by multilateral organizations such as the World Bank launching
initiatives that have put financial inclusion at the center of development initiatives and also provided support
to governments working to increase financial access and usage. In addition to direct implementers such as
development partners and governments, the participation of a varied group of partners is critical to long term
success and sustainability. One of the most prominent tools that has been used by governments to both signal
and galvanize commitment to financial inclusion has been the development and implementation of a national
financial inclusion strategy (NFIS). By 2017, 34 jurisdictions reported having an NFIS in place to the Global 31
FICP Survey of the World Bank, and another 29 jurisdictions noted developing an NFIS.27 As of 2020 the

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

World Bank had directly supported over 25 countries to develop an NFIS and undertaken financial inclusion
related diagnostics in over 25 more nations. As it relates to UFA2020, 13 out of the 25 UFA countries
received World Bank support in the development and/or implementation of their NFIS.28 Furthermore, the
World Bank Group maintains a NFIS resource center which provides valuable guidance for public authorities
as well as private sector partners, World Bank task teams and other multilaterals and donors working on this
topic.

One of the key resources developed by the World Bank is a NFIS Toolkit29 which provides detailed guidance
on approaching the NFIS process, from stakeholder coordination to strategy design, implementation, and
evaluation. The Toolkit includes detailed operational tips as well as country examples from over 20 countries.
The toolkit is informed by the World Bank Group’s experience as a technical partner in the development and
implementation of NFIS in a diverse range of country contexts.

Public and private sector commitment reflects a shared objective to “broaden financial inclusion (which) is
explicit, strong and sustained over time.”30 High-level sponsorship or ownership is necessary for the success
of any financial inclusion project, and it is not uncommon to find the executive office of the President, Prime
Minister, Minister for Finance, or Central Bank Governor of any given country leading the initiative. This
sponsorship at very senior levels ensures accountability at the highest levels of government and assures the
government’s commitment and support. Examples of UFA focus countries that have taken this approach when
formulating their NFIS are Mozambique, Peru, Tanzania and Zambia.31

It is not just the public sector that has to show commitment to financial inclusion to increase but the private
sector as well. Indeed, in a lot of countries, the private sector has recognized the role they have to play and
responded by developing products and services catered to the otherwise financially excluded or
underserved. The private sector is of course also driven by opportunities to make profit and taping into the
mass market and digital channels is one way to do that. What more, NFIS customarily include targets for
account ownership, which cannot be achieved solely through policy measures but rather must galvanize
providers, so they also contribute to these goals.

In addition to NFIS, successful implementation of retail payments strategies are also drivers of access to and
usage of transaction accounts. Retail payments strategies provide a roadmap to the regulators for
modernizing the retail payments infrastructure and related legal framework, and for considering options on
product design, financial literacy, and digitalization of payments (e.g., government-to-person payments,
salary payments, etc.), with the ultimate goal of increasing access to and usage of transaction accounts. The
World Bank has provided technical assistance to tens of countries in developing and implementing retail
payments strategies.

27
World Bank (2017). Global Financial Inclusion and Consumer Protection Survey.
28
World Bank Operations Portal and FCI GP staff elaborations
29
World Bank (2018). Developing and Operationalizing a National Financial Inclusion Strategy.
30
CPMI and World Bank Group (2020). According to the PAFI Radar framework, the signals of success are: the presence of
an NFIS, a national payments or financial inclusion council, a retail payments strategy and/or account ownership over 90%.
All but one of the 25 UFA countries, by virtue of having one of the strategies/councils mentioned above, score very highly on
public sector commitment. In fact, most are at or above the score of both the observed top performing and the benchmark
sample countries.
31
Mozambique: Republic of Mozambique, National Financial Inclusion Strategy 2016-2022; Peru: Perú Ministerio de
Economia y Finanzas (2015). Estrategia Nacional de Inclusión Financiera: Perú; Tanzania: Alliance for Financial Inclusion
(2018). Tanzania: National Financial Inclusion Framework 2018-2022; Zambia: Ministry of Finance (2017). Republic of
Zambia: National Financial Inclusion Strategy 2017-2022.
 Box 7 – Mozambique: Mid-Term Review of the National Financial Inclusion Strategy

32 In July 2016, Mozambique launched its National Financial Inclusion Strategy. The NFIS development in
Mozambique was led by Banco de Moçambique (BdM) in collaboration with Mozambican
stakeholders, and under the co-leadership of the Insurance Supervision Institute of Mozambique (ISSM),
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

with technical assistance by the World Bank. The Mozambican NFIS had an ambitious action plan.

One interesting feature of the NFIS Action Plan was that it included a mid-term review. BdM, as the lead
of NFIS, decided to organize the mid-term review in a similar but shorter manner as the development
process of an NFIS: identifying gaps and areas for improvement, holding stakeholder workshops to
discuss potential actions, and re-designing the action plan accordingly.

In July 2019, the BdM organized stakeholder consultations for the mid-term review with technical
assistance by the World Bank. As a result of these consultations, Mozambique National Financial
Inclusion Strategy, 2016-2020 Mid-Term Review report was written, which included revisions to the
action plan and the M&E framework, as well as identifying “quick wins.”

In order to support the strategic choices for the national payments system and the implementation of
payments initiatives in a country, it is critical to have coordination and collaboration among all payments
system stakeholders. Such coordination and collaboration have become even more important because of the
increasing pace of innovations and their use in the payments sector, and the new business models and the
opportunities and risks they bring in.

A national payments council is a vehicle for enabling coordination and collaboration in the national
payments system. Coupled with a strategic approach to modernizing and developing the national payments
system, a national payments council can be a critical forum for discussion of the evolving needs for the
country. While the mandate of national payments councils can (and do) go beyond retail payments, digital
payments or financial inclusion, they are nonetheless an important enabler and a mechanism that brings the
public and the private sector stakeholders together for discussion of UFA-related initiatives.
 Box 8 – National Retail Payments Strategy and National Payments System Committee in
Albania
33
The National Payment System Committee (NPSC) in Albania was established by a regulation in 2014.
The purpose of the NPSC is to “contribute to increasing the security, stability and efficiency of the

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

national payment system in Albania, in accordance with the legal obligation of the Bank of Albania to
promote the normal functioning of the payment system.”32 The NPSC consists of the Bank of Albania,
representatives of relevant ministries, Financial Supervisory Authority, Albanian Association of Banks,
and executive-level representatives from non-banks that carry out activities such as transfers, payments
and/or e-money as well as infrastructure operators and other operators licensed under the Payments
System Law.

The Bank of Albania (BoA), with technical assistance from the World Bank, undertook several technical
assessments related to retail payments in the last few years. As a result of these assessments, the BoA
has developed and launched the National Retail Payments Strategy (NRPS) for Albania in 2017
covering the period 2018 – 2023. The Albanian NRPS provides strategic guidance for expanding
access to transaction accounts and accelerating the usage of electronic payments.

3.1.1 Monitoring and Evaluation (M&E)

Integral to any commitment or strategy is a framework for M&E. The measurement of progress toward
financial inclusion objectives and/or commitments as set out in an NFIS or a retail payments strategy or a
commitment made publicly requires a comprehensive M&E system that is well-resourced, well-coordinated
and widely accepted by a range of stakeholders that are involved in achieving these objectives or
commitments. Such an M&E framework can be a powerful tool for identifying gaps and obstacles, allocating
resources efficiently and demonstrating results of policy reforms.
The World Bank’s technical assistance in this
area has focused on building data
infrastructures, national level results
frameworks, key performance indicators and
targets aligned with policy objectives, tracking
systems and reporting mechanisms for action
plans, evaluation of key action items in terms
of efficiency and impact. In addition, the PAFI
Task Force was re-convened in 2018 to
produce tools to facilitate uniform and
consistent application of the PAFI guiding
principles, including developing a PAFI Results
Framework to help the users of the PAFI
Framework monitor progress towards the PAFI
goal of universal access to and frequent usage
of transaction accounts. The PAFI Task Force
developed the PAFI Application Tools Report33
for this purpose. Box 6 provides details on the
PAFI Results Framework.

32
[Link]
33
State of Industry Report, GSMA, 2020
 Box 9 – The PAFI Results Framework

34 The PAFI Results Framework aims to provide the users of PAFI guidance to compile indicators relevant
for their reform actions and policies to track progress. The PAFI Results Framework includes a set of
indicators for each PAFI Guiding Principle and corresponding data sources that collect data from a
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

broad range of countries and over time, which can enable monitoring progress against benchmarks

GP1: Public and private sector

commitment
1.00

GP7: Large-volume, recurrent GP2: Legal and regulatory

payment streams framework
0.98 0.97

GP6: Awareness and

financial literacy GP3: Financial and ICT
Infrastructures
1.00 0.86

0.89 0.99
GP5: Readily available GP4: Transaction account and
access point payment product design

Observed Top Performing Country Benchmark Sample Country A

In addition, the PAFI Results Framework also provides a tool called the “PAFI Radar” which can be
used to visualize progress in all areas of the “PAFI House” simultaneously. The figure depicts an
example, Country A, on a PAFI Radar.

*Please see CPMI and WBG (2021b) for further details.

 Box 10 – Advancing Data for Financial Inclusion and M&E in Ethiopia

An important element of public sector commitment is government monitoring and evaluation (M&E) of 35
the relevant policies, including which granular data are collected. One UFA country worth focusing on
to extract M&E lessons is Ethiopia, particularly because the World Bank supported them in the

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

development of their NFIS. According to Global Findex data, in 2017, the percentage of Ethiopian
adults with an account rose to 35%, up from 22% in 2014. Despite these gains, the gender gap jumped
to 12 percentage points in 2017, with 41% of men had an account compared to 29% of women.
Given the aggressive NFIS target to increase account ownership from 22% in 2014 to 60% and the
need to address persistent access gaps displayed by vulnerable groups, the Ethiopian government saw
the value in collecting access data more regularly than the three-year interval the Global Findex would
allow. They also saw the value of augmenting their own data collection capacity and as such sought
additional World Bank support as part of the NFIS development process to leverage the Ethiopia
Socioeconomic Survey (ESS) to collect additional data.

The ESS is conducted by the Ethiopian Central Statistics Agency (CSA) every two years in collaboration
with the World Bank Living Standards and Measurement Study (LSMS) team and now includes
additional indicators around account access, barriers to access, savings, loans, informal finance,
insurance, financial capability, and consumer protection. It provides the NBE with a full range of
financial inclusion indicators that helps them track and evaluate the progress of Ethiopia’s NFIS over
time. The fourth wave of the ESS has evolved to include additional indicators around financial
capability to complement Ethiopia’s upcoming National Financial Education Strategy and to measure
the impact and progress of financial capability over time. A similar approach was also taken in Jordan
and Belize, which could signal a welcome change in how countries are supported to develop,
implement, and monitor their national strategies for inclusion. This approach signals not only a highly
committed government but is also a pathway for fostering a government more capable of identifying
problems and taking urgent action to reduce exclusion.

3.1.2 Sex-disaggregated data

One of the areas that regulators are increasingly monitoring is data around women. Sex-disaggregated data
help dispel myths about women as less than viable customers and allow regulators as well as financial institu-
tions to adapt their strategies to the needs of the market. Increasingly, regulators are becoming aware of the
value of and requiring that providers collect gender-disaggregated data in order to shed light on the extent of
the gender gap, and also to monitor progress against initiatives to reduce this gap.34

Why is it important to collect gender-disaggregated data on financial inclusion? For example, according to
the most recent Global Findex data (2017), 69 percent of adults in Turkey own an account at a regulated
institution. At the same time, there is a large gender gap in account ownership: 83 percent of men as opposed
to only 54 percent of women had accounts in 2017. There are two main reasons documented so far in the
literature for such a large gender gap. The first is more habitual and cultural. Many Turkish women note that
they are able to access an account owned by a family member and hence they do not need to have one them-
selves. The second reason, and perhaps more structural, is women’s labor force participation. Only 16
percent of women report participating in the labor force. Ninety-seven percent of women that are wage-em-
ployed or self-employed report having and using an account.35 However, only 23 percent of the women out
of the labor force report having an account. Eighty-nine percent of the unbanked women report not participat-
ing in the labor force.36

34
[Link]
35
Legislation in Turkey mandates wage payments (public or private) into accounts.
36
For further details on the gender gap, see Klapper, L. and Singh, S. (2015). and Demırgüç-Kunt, A. And C. Pazarbaşıoğlu (2018).
 Box 11 – Sex-Disaggregated Data and Financial Inclusion in Pakistan

36 In 2020, the State Bank of Pakistan (SBP) unveiled a policy to ensure women’s equal access to financial
services. Citing Global Findex data, this policy move was in response to the fact that formal financial
account ownership for adults went from 13 percent to 21 percent in 2017, but once disaggregated by
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

gender this revealed a dire situation for women’s inclusion. Specifically, while men’s levels of formal
account ownership went from 21 percent to 34.6 percent during the same period, for women this
number went from 4.8 percent to 7 percent.37 The World Bank provided technical assistance to SBP in
expanding data collection by gender, which has allowed for better allocation of resources to tackle
access gaps and thereby led to material outcomes that may not otherwise have been achieved,
including more representation of women in regulatory leadership in the country. As of now, the
following sex-disaggregated data is collected by SBP:

• Human resource data (all financial institutions)

• Unique account ownership (all financial institutions)
• SME finance data (borrowers & outstanding portfolio, applications received/rejected)
• Housing finance data (borrowers & outstanding portfolio)
• Microfinance data (borrowers, disbursements & outstanding portfolio)
• Branchless banking (account ownership)

3.1.3 Leveraging Geospatial Technology

One tool that the World Bank has leveraged in countries such as Mozambique, Ethiopia and Pakistan is
geospatial technology to map financial access points. In these countries, as part of their engagement with
the World Bank, the geospatial technology allowed for regulators to achieve one or more of the following
developments: make evidence-based policy, infuse supervisory tools to monitor compliance, monitor and
evaluate a national registry for financial access points, and develop a national, public web-based tool to
inform the public about financial inclusion developments.38 These positive outcomes have highlighted to
regulators the opportunities in driving financial inclusion that can be realized through more accurate
location mapping of financial access points.

Box 12 – Leveraging Geospatial Technology in Pakistan for

Mapping Financial Access Points

As part of the NFIS implementation efforts in Pakistan, the World Bank provided technical assistance to
SBP in conducting a geospatial mapping of all access points. Geospatial technology can allow policy
makers to paint a fuller picture of the factors limiting financial access and help them design appropriate
solutions. In Pakistan, the authorities sought to improve financial connectivity through strategic
expansion of access points. The geospatial mapping of access points allowed for the identification of
priority areas for expanding access networks.39

37
World Bank Global Findex Database, 2014 and 2017.
38
Financial Inclusion Support Framework, 2020, ’Leveraging Geospatial Technology for Financial Inclusion.
39
World Bank (2020g).
3.2 LEGAL AND REGULATORY FRAMEWORK

Key lessons learned, legal and regulatory framework:

37
• The existence of simplified customer due diligence (CDD), e-KYC and remote account

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

opening in the regulatory frameworks can play an important role in facilitating broader use of
digital payments via transaction accounts. However, evidence suggests that existing
simplifications in CDD are mostly in the form of allowing simplified transaction monitoring
rather than acceptance of non-standard ID docs or non-face-to-face CDD, which are more
important from the perspective of financial inclusion.

• As consumers of new financial products delivered via innovative technology and new
business models may be relatively less financially and digitally literate and such delivery
channels may be more prone to cyber risks, such products create further challenges and more
responsibility for regulators regarding financial consumer protection, payments oversight and
safeguarding customer funds.

• Regulations that support a level playing field and allow non-banks to operate in a safe
manner are more conducive to thriving ecosystems.

The legal and regulatory frameworks constitute a significant component of the enabling environment for
universal access to and usage of transaction accounts, as well as for financial inclusion. The PAFI Framework
includes a number of specific aspects of legislation that can help enable UFA. For example, regulatory
neutrality and proportionality are crucial to ensure a balanced regulatory framework which includes banks
and non-banks, manages risks, and is fair for all stakeholders including end-users and providers. A regulatory
framework that is neutral and proportional would be neutral to all types of providers and instruments but
proportional to risks they carry and would be forward-looking regarding new business models.

A second aspect underlined in the PAFI Framework in this regard is the importance of risk management, and
how regulators require providers to address a variety of risks such as operational, business, fraud, cyber,
reputational and liquidity risks. For example, while enabling a wider reach for financial service providers at
low cost, the use of third parties as agents creates additional risks, e.g., in terms of AML/CFT and other, and
brings on additional responsibilities to the providers for managing these risks.

Protection of customer funds is another aspect that the PAFI framework emphasizes for a sound legal and
regulatory framework as an enabler of the safe storage property of the transaction accounts underlying the
UFA goal. For the safe storage property, regulation needs to put in place mechanisms to protect customer
funds in the event of misuse by or bankruptcy of the provider.

The PAFI Framework also emphasizes financial consumer protection as a key component of the enabling legal
and regulatory framework. Transparency and disclosure, data privacy, dispute resolution, liability for
unauthorized transactions, and protections and due process in case of potential seizure of a customer’s funds
are the specific areas of attention regarding financial consumer protection for transaction accounts.

Lastly, the framework stresses the importance of financial integrity. The PAFI framework stresses the
importance of having the right balance between financial integrity and financial inclusion, ensuring that the
financial system is protected from money laundering and terrorist financing risks, but at the same time, there is
sufficient flexibility to bring the financially excluded and underserved groups to the regulated financial system.
 Figure 5. Coverage of legal provisions (Source: World Bank Global Payment Systems Survey, 2018)

By Income By Region

38 me me
As
ia
Ca
rib
be
an
ica CD ort
Afr
ica
nco nco al f r E i fic
le I le I ntr & A O a c
st &
N
me dd dd me Ce rica ran me &P ia
al nco Mi Mi nco e& me ha nco sia Ea As
ob hI per er I rop t i nA b - Sa hI stA d dle uth
Gl Hig Low Low g i
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

Up E u La S u H i Ea M So

Consumer protection for 86% 93% 77% 89% 85% 94% 68% 91% 94% 92% 75% 75%
retail payment services 100/116 37/40 27/35 25/28 11/13 16/17 15/22 20/22 29/31 11/12 6/8 3/4

Fair and competitive 86% 88% 80% 93% 83% 100% 68% 95% 91% 82% 82% 50%
practices in the provision 99/115 36/41 28/35 25/27 10/22 17/17 15/22 20/21 29/32 9/11 7/8 2/4
of payment services

Electronic Money 85% 88% 77% 93% 77% 83% 59% 91% 94% 92% 100% 80%
(or e-money) 102/120 100/116 27/35 28/30 10/13 15/18 13/22 20/22 31/33 11/12 8/8 4/5

Regulation allows 79% 71% 83% 85% 83% 83% 64% 95% 81% 64% 86% 75%
agent-based models 191/115 100/116 29/35 23/27 10/12 15/18 14/22 20/21 26/32 7/11 6/7 3/4

Regulation allows non-bank direct 77% 81% 71% 76% 83% 76% 59% 86% 85% 83% 75% 50%
provisionof payment services 91/118 100/116 25/35 22/29 10/12 13/17 13/22 19/22 28/33 10/12 6/8 2/4
and holding consumer funds

Each box shows the percentage of answers among the juristictions in a group. 0% 20% 40% 60% 80% 100%
The number of responding jurisdictions may differ across options. A jurisdictions may have chosen multiples options

The latest Global Payment Systems Survey (GPSS) by the World Bank in 2018 collected data from central
banks and other relevant regulators around the world on the coverage of legal provisions on specific issues
related to payment systems. Figure 5 summarizes these findings globally and across income groups and
regions. More than three-quarters of the responding jurisdictions confirmed coverage of legal provisions for
e-money, agent-based models, provision of payment services by non-banks, fair and competitive practices in
the provision of payment services, and consumer protection for payment services.40

Box 13 – Legal Barriers to Women’s Financial Access

Reducing legal barriers to women’s financial access is another priority area for legal and regulatory
progress. A flagship Bank report on Women Business and the Law found that women face a number of
legal barriers that have implications for financial access, including challenges with obtaining
identification, owning assets, and needing a male guardian to perform financial operations in some
countries. Legal infrastructure to limit outright discrimination in offering financial services is also limited
globally. In 2017, 65 percent of 124 jurisdictions surveyed had laws prohibiting discrimination against
certain populations in finance, while only 44 percent of low-income jurisdictions did.41 Such laws can
be enforced through regulatory examinations that are part of the supervision process, through audits,
or through complaints and the legal system. According to CGAP, countries including South Africa, India,
and the United Kingdom cite financial services ombudsmen as helping to combat discrimination in
finance, including discrimination against women and ethnic and minority groups.42

3.2.1 Financial Integrity

OAs regards to financial integrity in relation to financial inclusion and the PAFI framework, the important
points to consider include the existence of simplified customer due diligence (CDD), e-KYC and remote
account opening in the regulatory frameworks and whether the private sector uses new technologies for risk
management and compliance.

40
World Bank (2020a).
41
World Bank Group (2018)
42
Izaguirre (2020)
Figure 6. Existence of simplified CDD for commercial banks in the regulatory frameworks
(World Bank Global FICP Survey, 2017)

Simplified CDD - Commercial Banks (World Bank Global FICP Survey, 2017)
39

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

100%

100%
80%

80%
60%

61%
57%

56%

55%
53%

50%
48%
50%

47%
47%
46%

45%
40%
44%

44%

43%

41%
40%

40%
39%

36%

36%
33%
32%

30%
30%

29%
28%

20%
24%

23%
22%
22%
18%
17%

14%
14%

6%
6%

11%
10%
10%

0%

9%
0%
Upper Middle income

Lower Middle income

All

High Income

Low income

ECA

EAP

LAC

MENA

South Asia

SSA
Estabilished Simplifications to CDD Acceptance of non-standard ID docs Non face-to-face CDD Allowing simplified transaction monitoring

The World Bank’s Global FICP Survey in 2017 collected data on the existence of simplified CDD in the
regulatory frameworks. Figure 6 depicts this for commercial banks. While almost half the jurisdictions in 2017
had some form of simplified CDD for commercial banks, many of these take the form of allowing simplified
transaction monitoring rather than acceptance of non-standard ID docs or non-face-to-face CDD, which are
more important from the perspective of financial inclusion.

CGAP (2019) notes that several countries adopted different frameworks for a risk-based approach to CDD,
with differences based on the extent of providers’ discretion in making key decisions in, for example, identifying
the low-risk products and services or which procedures to simplify.43 The note describes examples of regulatory
approaches from different countries which have more discretionary compared to more prescriptive
approaches. In addition, the note also mentions two additional points that regulations need to address:
institutional vs. functional regulation and agent based and remote CDD. Regarding the former, in jurisdictions
where simplified CDD applies to specific types of accounts that can be provided only by a designated type of
entities, institutional approach to simplified CDD may work well. Otherwise, end users may end up being
subject to different requirements to purchase the same product from different types of institutions. Regarding
the latter, agent based and remote CDD can facilitate reaching out to remote areas in a cost-efficient way, and
to improve financial inclusion. In addition, when face-to-face account opening is not possible, for example in
the case of COVID-19 lockdowns, remote CDD can be very important, especially considering developments
in technology, including electronic onboarding and digital ID.

43
CGAP (2019)
 Box 14 – Remote KYC with virtual ID verification in Bangladesh

Bangladesh Financial Intelligence Unit (BFIU) issued e-KYC guidelines in early 2020, with technical
40 assistance by the World Bank, which permit financial institutions to open a customer account by filling in
a digital form, taking a photo, and authenticating the person’s identification data. The ability to open
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

accounts from a smartphone brings convenience to customers.

BFIU e-KYC guidelines leverage the digital national ID system in Bangladesh. In Bangladesh, there is a
national identification database operated by the Bangladesh Electoral Commission that covers over 90
million adults (population over 18). While the National Identity Document (NID) was created for the
purpose of establishing the voting population of Bangladesh, currently it is the identity system that covers
the larger population in Bangladesh. The database does not include resident foreigners, minors or
refugees. The information collected in this database through a one-time enrolment includes 4
fingerprints, first, middle and last names, parents’ names, date of birth and address.

3.2.2 Consumer protection laws and regulations

Increasingly financial products that serve the bottom of the pyramid, because of the use of technology, put this
very segment at higher risk of exposure to abuse. As a result, regulators must remain hypervigilant to the various
financial consumer protection (FCP) challenges that could arise and develop a consumer protection framework
that speaks directly to that reality.

The World Bank’s ‘Good Practices for Financial Consumer Protection (2017)’ takes an activity-based
approach, providing guidance with an aim to create a level playing field and comprehensive protection for
consumers regardless of the type of provider with which they engage. In many countries, financial sector laws
may take an institutional approach—that is, they cover specific types of providers (such as banks, finance
companies, MFIs). As a result, some types of providers may not be covered by financial consumer protection
provisions (though they may still fall under a general consumer protection law, if one exists). According to the
Good Practices, in such instances, regulators should make concerted efforts to ensure that the multiple laws
addressing financial consumer protection are comprehensive enough to cover all financial services providers,
as well as all relevant consumer protection issues. Efforts should also be made to harmonize their provisions to
the extent possible to avoid gaps, conflicts, ambiguities, or an uneven playing field.

As detailed in the Good Practices report, at a minimum, the FCP regulatory framework of a country should
include i. Transparency and disclosure requirements; ii. Fair treatment and business conduct (including: 1.
Protection and availability of customer funds; 2. Authorization, authentication, and data security requirements;
3. Liability for errors, fraud, and unauthorized transactions; and 4. Operational reliability); iii. Data protection
and privacy; and iv. Dispute resolution mechanisms.
 Box 15 – Country Examples on Financial Consumer Protection Frameworks

A number of countries have developed innovative policy solutions to improve consumer protection. 41
South Africa: In 2018, South Africa implemented the Financial Sector Regulation Act (FSR Act). A

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

new conduct regulator (Financial Sector Conduct Authority) was also established and has full scope of
jurisdiction over the financial sector. The FSR Act allows for new financial products and services to be
designated through regulation, which will bring the new products and services under regulation from
both a customer protection and prudential perspective. The FSCA has jurisdiction over retail banks, a
sector that had been under-regulated from a market conduct perspective. To inform the FSCA’s
supervision of bank conduct, and setting of conduct standards, a multifaceted approach will be taken.
This includes engaging with government, the central bank and the Prudential Authority to coordinate
work where there is shared interest. Focus areas include governance frameworks, fintech innovations
affecting banks and conduct-related aspects of payment services.44

Egypt: As part of the Financial Inclusion Global Initiative, the World Bank has been providing technical
assistance to authorities in Egypt since 2017 in the area of financial consumer protection among others,
with the objective of improving digital financial inclusion in Egypt. At that time, neither the Central Bank
of Egypt (CBE), the supervisor of banks and payment service providers (PSPs), nor the Financial
Regulatory Authority (FRA), the supervisor of non-banks, had explicit regulations for financial consumer
protection. In 2019, both the CBE and FRA issued their respective regulations on this topic, providing
clarification for providers of financial services, in a harmonized way, regarding disclosure requirements,
fair treatment, complaints handling, dispute resolution, and recourse. The CBE has established a
dedicated department for FCP and has been building capacity for market conduct supervision. They
have also started building an ombudsman scheme. The CBE has also prepared guidelines for banks on
disclosure, including key fact statements that must be provided to disclose the key specifications of
credit products.

Recent developments in the financial sector, specifically the increased use of technology, new business models
and innovations can have a positive impact on financial inclusion as they can provide more convenient and
affordable means of reaching the financially excluded groups that are traditionally more difficult to reach. At
the same time, however, these new business models involve new and different types of risks, some of which
may not yet have been recognized. This, together with the types of consumers these new services may reach
(e.g., relatively less financially and digitally literate), create further challenges for regulators regarding
financial consumer protection.

A recent policy paper by the World Bank45 aims to identify these new consumer risks due to four types of
fintech products, including e-money (and digital microcredit, P2P lending, and investment-based
crowdfunding). The paper also provides examples of emerging regulatory frameworks that aim to address
these risks

44
OECD (2019)
45
World Bank (2021d).
 Box 16 – Data Protection and Privacy

The increased digitalization of financial services coupled with technological innovation allows the
42 collection and further processing of vast amounts of personal information which contributes to shape the
way in which financial products and services are being designed and delivered. This practice can bring
benefits to Financial Service providers (FSPs) and ultimately to consumers by increasing potential
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

number of users and convenience while reducing cost of service. These innovations are especially
relevant for developing and emerging economies leading them to embrace digital financial inclusion
strategies with all its potential for economic growth.46 One of the key aspects that has significantly
contributed to the explosion of convenience services, far reaching and accessible to a larger number of
individuals and legal entities is the extensive exploitation of data. Using personal information, banks and
other financial services providers can design products and services tailored to both served and unserved
consumers, including by:
1. Designing “consumer centric” digital financial products and services for the unbanked.
2. Creating credit scores for consumers without a formal credit history.
3. Enabling digital ID systems and complementary data to meet “Know Your Customer” (KYC) and
CDD requirements as well as develop e-KYC solutions.
4. Pricing financial products to reflect the risk profile of individual consumers and be fairer as a result.
5. Minimizing the risk of fraud.
6. Enabling the provision of payment services by payment initiation service providers (PISPs) under
open banking schemes.

However, the collection, processing and further distribution of personal information is also subject to risks
that can result in unintended consequences for consumers. These negative consequences vary from
identity theft and other fraud related consequences to unfair discrimination and financial exclusion. In
addition to discriminating in approving or denying credit applications, alternative data could also
provide a basis for the practice of charging consumers’ different prices for the same product, without
reference to cost considerations or risk.
Inadequate data protection practices, standards and rules can result in consumers experiencing
financial harm, loss of privacy and reduced trust. A well designed legal and regulatory framework on
data protection and cyber resilience can prevent or reduce risks associated with unauthorized access,
data misuse, data loss and data corruption practices. In the absence of International Standards on Data
Protection, there are several internationally agreed frameworks that provide guidance on protection of
personal data and privacy. Key frameworks on data protection include the Council of Europe47, the
Organization for Economic Co-operation and Development (OECD)48, the International Conference on
Data Protection and Privacy Commissioners (ICDPPC)49 and Asia-Pacific Economic Cooperation
(APEC). More recently the General Data Protection Regulation in the EU has become a de facto
standard and many jurisdictions are adopting compatible frameworks. While data protection legislation
needs to be tailored to the specific needs of the country enacting it, each country must take into account
various business models in its economy, state of technological advancement, social and political values
and legal systems.
In sum, guidance on data protection and privacy aims at providing consumers more control over their
data as well as enabling the flow of information in a safe and secure manner. Some key considerations
to achieve such goals include the following: (i) lawful processing, (ii) transparency, (iii) enable
consumer’s rights such as accessing correct and deleted data as well as blocking certain users from
accessing the data and more recently the right to data portability, (iv) keeping consumer’s personal
information confidential and secure, (v) set high data quality standards to maintain accuracy, reliability
of data as well as integrity of databases, (vi) establish accountability of data controllers and data
processors and (vii) when consent is necessary, develop adequate mechanisms for consumers to
provide and revoke informed consent.

46
Costa et al. (2015).
46
The European Council comprises 47 members and issued in 1981 the Convention 108 Convention for the Protection of Individuals
with regard to Automatic Processing of Personal Data which was ratified by 51 countries.
[Link]
46
The OECD issued Guidelines on the Protection of Privacy and Transborder Flows of Personal Data, in 1980 and were revised in 2013.
46
Notably the Madrid Resolution adopted in 2009.
[Link]
 Box 17 Open banking and new fintech rules in Mexico

Mexico has made significant progress with regulation supporting open banking by creating an enabling
technology environment for more interoperability and partnerships in the financial sector. As part of FIGI 43
Mexico, The World Bank and Mexican authorities have focused on facilitating innovative technology
through improving ICT infrastructure for digital financial services, among other activities.50 The CNBV

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

issued its Fintech Law in 2018, which focused on creating a regulatory sandbox and regulating new
players like crowdfunding and e-money institutions. In March 2020, Mexican authorities issued
secondary regulations that followed the Fintech law. Articles 76 and 77 include pioneering provisions
for open banking. This regulation sets technical and security standards for APIs and helps create
governance around public data like financial service access points. The regulation specifies open
banking regime details for clearinghouses and credit bureaus, and the CNBV expects to issue guidance
on customer transaction data in 2021.51 This is a good example of how regulatory foundations can
create favorable conditions for innovations in payment infrastructure and technology. As of early 2021,
more fintech companies are obtaining licenses to operate, and anecdotal evidence suggests more
partnerships showing that these regulations are having real impact in the market.52 The World Bank has
also been partnering with Mexico to test pilot interventions in ID innovation.

3.2.3 Payments oversight

Payment systems provide channels through which funds are transferred among financial institutions to
discharge the payment obligations arising in the financial markets and across the wider economy. They
include the infrastructures for the transfer, clearing and settlement of funds and securities, and in general
consist of integrated networks, technological platforms, institutional and market arrangements, and legal and
regulatory frameworks to support their functioning. Payment systems also include networks, platforms and
providers for the delivery of retail payment services to individuals and small enterprises and play a key role
today in bringing the unserved and underserved segments into the regulated financial sector.

In this regard, payment systems are a vital part of the financial sector and the economy. However, they do
involve significant risks. They can also be a channel for, or a source of shocks to the financial system.
Inefficient, unreliable, or unsafe payment systems may lead to loss of public confidence. Therefore, payments
oversight is a key mandate for central banks.

Box 18 – Establishing Payments Oversight Function: The Case of Egypt

Egypt has recently approved a new Banking Law (October 2020). The Banking Law in Egypt is the main
piece of legislation that establishes the standards in the banking sector and provides the CBE its
mandates in regulating and supervising the sector.

The new Banking Law promotes financial inclusion and encourages the usage of digital financial
services, giving the CBE the explicit responsibility, for the first time, for: (i) the oversight of payment
systems, payment service providers and associated licensing requirements; (ii) financial consumer protec-
tion supervision of banks and payment service providers including competition protection and an
Ombudsman scheme; and (iii) Fintech and ‘Regtech’. It also includes clauses for the establishment and
the functioning of the National Council for Payments, aiming to promote the use of electronic payment
methods with a view of financial inclusion.

Accordingly, the CBE has been working on establishing the payments oversight function with technical
assistance from the World Bank as part of the Financial Inclusion Global Initiative. A robust oversight
policy framework is imperative for fostering sound risk management practices by the PSPs and PSOs.

50
World Bank Group (2020b)
51
(Plaitakis and Staschen 2020; Deloitte 2020)
52
Internal discussions with World Bank Task Team Leaders
 3.2.4 Protection of customer funds
The PAFI report is very clear that transaction accounts are for safely storing value in addition to being used
for payments purposes. The report discusses extensively the protection of customer funds, and more
44 specifically, under Guiding Principle 2, the PAFI report advocates for safe accounts through consideration of
deposit insurance or functionally equivalent mechanisms, as well as through preventive measures (e.g.,
supervision), to achieve the desired safety. Under Guiding Principle 4, it is stated that “PSPs [payment service
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

providers] offer transaction accounts with functionalities that, at a minimum, make it possible to electronically
send and receive payments at little or no cost, and to store value safely”.

Recent focus on innovations and use of technology in the provision of financial services seem to have shifted
the focus away from the safety of accounts, not necessarily purposefully. At the same time, it has been
observed in practice that a number of digital savings providers in developing economies are not covered by
deposit insurance or other functionally equivalent mechanisms, and risks may be aggravated in those
economies with weak financial sectors.

According to the data from the World Bank’s 2017 Global Financial Inclusion and Consumer Protection
(FICP) Survey,53 71 countries out of the 124 respondents reported that “non-bank e-money issuers” (NBEIs)
are regulated/ supervised. The survey then asked whether and how the customer funds are safeguarded:

• Most jurisdictions require that customer e-money funds be kept with prudentially regulated
financial institutions:

- 65 responding jurisdictions (92 percent of those with NBEIs) have established

requirements that some or all of a customer’s e-money funds be separated from the
operating funds of the e-money issuer and placed in a prudentially regulated financial
institution.
- The most common approach (reported by 61 jurisdictions out of 71 or 86 percent) is a
requirement that 100 percent of customer e-money funds be kept in an account at a
prudentially regulated financial service provider (FSP) (which may include the central bank).
- Among these 61 jurisdictions, 15 jurisdictions specify that customer e-money funds must
be spread across accounts at more than one prudentially regulated financial institution.
Four jurisdictions (6 percent) report that a fraction of customer e-money funds (i.e., less
than 100 percent) must be kept in one or more prudentially regulated FSP (which may
include the central bank).

53
World Bank (2017). Global Financial Inclusion and Consumer Protection Survey: 2017 Report
 • Trust accounts are the most commonly reported type of fund required to safeguard customer
e-money funds:

- In almost all responding jurisdictions that have requirements for the safeguarding of customer
e-money funds (i.e. 65 respondents, as above), the type of account in which customer e-money 45
funds must be deposited is also specified in law or regulation.
- In 43 percent of relevant responding jurisdictions, a trust account must be used to safeguard funds.

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

- In 23 percent of relevant responding jurisdictions, a “regular” account can be used
- In 22 percent of relevant responding jurisdictions, an escrow account must be used.
- In 6 percent of relevant responding jurisdictions, an account at the central bank must be used.

Box 19 - Country examples on protection of customer funds

Ghana: (E-money provided by banks or licensed nonbank e-money issuers.) Funds must be invested in
cash held at universal banks or other assets permitted by Bank of Ghana and not commingled. Float may
not exceed 15% of bank’s net worth. Once deposit insurance is implemented, funds should be eligible.

India: (E-money only provided by banks, including banks with lower prudential requirements, i.e. narrow
banks – payment banks.) At least 75 percent of customer funds must be invested in short-term govern-
ment securities and up to 25 percent of customer funds may be held in commercial banks. Direct cover-
age by deposit insurance.

USA: Funds held in a pooled account are eligible for deposit insurance on a pass-through basis if all of
the following apply:
• The e-money issuer has identified the account as a custodial account, with funds held on
behalf of the underlying customers;
• The issuer, bank, or another third party maintains records identifying each beneficial owner
and the amount owed to each; AND
• The underlying customers legally own the funds in question.

Nigeria:
• MMOs must hold funds equal to 100% of the value of outstanding mobile money liabilities
in settlement accounts held with deposit money banks.
• These funds must be held in Nominee Accounts in the name of the MMO’s customers. Funds
may only be debited for settlement of customer obligations, and these funds may not be used
as collateral in credit agreements. Nominee Accounts are structured in a manner that guards
against attachment by creditors in the event of the MMO’s or any Trustee’s insolvency.
• The NDIC has issued a framework under which customer funds held by MMOs in nominee
accounts are eligible for pass-through deposit insurance of up to NGN 500,000 per MMO
customer per deposit money bank.
• MMOs must be fully compliant with all NDIC-related insurance reporting requirements for
pass-through deposit insurance for mobile money accounts.

3.2.5 Regulatory neutrality and proportionality

Regulatory neutrality and proportionality in the context of the PAFI Framework emphasizes the inclusion of
both banks and non-banks in the provision of transaction accounts in a fair and balanced way. This means
that associated risks must be identified and managed accordingly. At the same time, the regulatory framework
would be neutral to different types of providers and instruments and would be forward-looking regarding new
business models.

In this regard, the payments oversight sub-section above touched upon the aspects of risk management to a
certain extent. At the same time, from a financial integrity perspective, in a similar manner, ML/TF risks must
be identified and managed to ensure a balanced and fair regulatory framework. In managing risks, for
monitoring and for compliance purposes, it is possible to use relevant new technologies that enable less costly
and more efficient ways of risk management.
 The regulatory framework should also ensure competition in the payments sector and at the same time be
open to new business models and promote innovation.
46 In addition, given the increasing importance of non-banks in the provision of payment services, policy issues
arise in the context of granting access to ACH and RTGS systems to non-banks. At least, ensuring indirect
access to such systems by non-banks is key to the widespread use of digital payments. In any case, access
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

criteria identified should be objective, risk-based and transparent to ensure the safety, security and integrity of
the payments system.

3.3 FINANCIAL AND ICT INFRASTRUCTURE

Key lessons learned, financial, payments, ID, and ICT infrastructure

• Fast payments can replicate the convenience of instant settlement in electronic transactions.
• Managing cyber risks in the financial sector has become a critical policy objective.
Cyber-attacks are a source of reputation risk and they reduce the trust in the financia sector.
• While mobile money has changed the way in which transactions are made in several
countries, phone sharing rates are still high in many places, making it difficult to have separate
personal accounts.
• There are over 1 billion people in the world without any document to prove their IDs.
This is a barrier for them to access many services, including the financial sector.
• The use of digital IDs, while not required, can help expand access to financial services.

3.3.1 Payments infrastructure

Infrastructure that supports fast and reliable payments is key to developing well-functioning and inclusive
financial ecosystems. Payment systems and financial market infrastructures (FMIs) that work well promote
economic efficiency and consumer confidence in digital payments, supporting greater adoption of
transaction accounts. Globally, most retail payments are still made in cash, and the inability to make quick
and reliable payments from stored value accounts limits their utility.54 Strong payments infrastructure also
helps bring transparency and efficiency to domestic and international remittance markets, which can be a
driver for opening accounts.

Appropriate and effective regulation and policy helps overcome coordination failures to support the
development of such payments systems. This includes accommodating different players like merchants and
payment acceptors in proportional regulatory frameworks, in some cases allowing them to participate in
payment services like remittances, bill collection, and other payment processing.55
Key payments infrastructures include:

• An interbank system for retail electronic funds transfers (e.g., an Automated Clearing House
(ACH)).
• A payment card processing platform or platforms (e.g., payments switch).
• A fast payments system
• A large-value interbank settlement system (e.g., a RTGS); and
• A robust communications infrastructure; and an effective and efficient identification
infrastructure.

54
According to World Bank (2016a), $19 trillion out of $34 trillion in P2B, B2P and B2B payments to immediate suppliers by micro, small,
and medium retailers were made in cash and paper-based methods.
55
CPMI and WBG (2016), CPMI and WBG (2020b)
The World Bank’s longstanding support for creating well-functioning national retail payment systems
continued and strengthened during the UFA2020 project period. The Bank was instrumental in expanding
Real-Time Gross Settlement (RTGS) and ACHs from just a few countries in the 1990s to near universal
presence in 2021. Continuing this work, the World Bank offered financial and technical assistance to client
governments in all areas of payment infrastructure strategy and implementation, from technical standards, to 47
oversight, to accommodating the latest fintech innovations like open APIs and distributed ledger technology

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

during UFA2020.56

There is a clear correlation between robust payments infrastructure with the features mentioned above and
higher volume of digital payments. Alongside evolution in payments infrastructure globally over the past 30
years, the number of cashless transactions per capita per year rose to 88.3 in 2017, which represents a 25
percent increase over the indicator observed in the previous iteration in 2015 (World Bank Group 2020a).
The World Bank estimates that its efforts around payment efficiency and transparency, paired with
country-level interventions reduced the cost of remittances significantly, contributing to an estimated total
saving of $145 billion.57 Additionally, 43 percent of countries responding to the 2018 Global Payments
Systems Survey (GPSS) reported that a fast payments systems (FPS), or systems that allow instant access to
funds58, are already operational in their jurisdictions, the majority of these in high-income economies. Many
other respondents indicated that implementation of this type of system or service is planned in the next three
years.

Successful examples of country implementation include:

• In the first three years of introducing mobile money interoperability in Tanzania, transactions
grew by 16 percent. The Bank of Tanzania (BoT) supported a thriving payments ecosystem by
enacting the National Payments Systems Act in 2015 and the Electronic Money Issuer
Guidelines. The NPS Act improved transparency and the homogeneity of the system by issuing
mobile financial service provider licenses, establishing clear requirements and procedures
applicable to all of them and imposing penalties for non-compliance.59
• Mexico has also shown a high level of public sector commitment with the introduction of a
number of policies to support financial access such as the Central Bank optimizing the inter-bank
payment system, Sistema de Pagos Electrónicos Interbancarios (SPEI) for low-value payments,
and accepting the inclusion of non-bank providers, thus facilitating an interoperable platform
that is compatible with mobile money payments. As of 2015 half of SPEI participants were
non-banks.60

[Link] Fast Payments and Financial Inclusion

In the digital age when information and services are accessed in real time, there has been a growing demand
from individuals and businesses to also have instant access to funds by the receiver (payee) of a payment
transaction. The pressure to have instant access to funds, coupled with technological advancements and
standardization of financial messaging, have resulted in the emergence of so-called fast payments (also
known as instant, immediate, or real-time payments). Fast payments are supported by 24/7/365 payment
system availability and characterized by the instant crediting of the payee’s account. Data indicates that fast
payments are being embraced by jurisdictions across the board by geography, income status, and National
Payment System development. The implementation rate of fast payment systems mimics that of RTGS systems,
the backbone of national payment system infrastructures.

Fast payments have also been a driver for greater access to and usage of digital payments, due to
characteristics such as:

56
[Link]
57
[Link]
58
Natarajan et al., (2021)
59
Pazarbasioglu (2020)
60
GSMA 2015.
 • Instant settlement finality for both the payee and the payer, and the availability of final funds
to the payee or beneficiary occurs in real time.
• New access channels and transaction-initiation methods such as QR codes have been
introduced.
48 • Payments made with the help of such aliases as phone numbers, email address, for example,
have increased user convenience.
• New payment-transaction flows are introduced through use cases such as request to pay,
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

welfare Membership to fast payment system is broader, and non-banks can also participate as
both direct and indirect participants, leading to interoperability, a wider variety of services and
products (including more customization), and more affordable pricing. payments, and
installment payments (particularly highlighted during the COVID-19 pandemic).

Fast payments have been viewed as an option for the facilitation of cross-border payments, as well. Given the
inefficiencies of the current correspondent banking model, several international bodies, including the G20
and the FSB, have called for the exploration of new models and technologies that could be used to facilitate
fast and cost efficient cross-border payments and remittances. In this context initial experiments of countries,
bilaterally or multilaterally, linking their domestic payment systems, have shown that fast payments can play
an important role.

Box 20 - World Bank Fast Payments Policy Toolkit – Overview

The World Bank has been monitoring closely the development of fast payment systems by central banks
and private actors across the world. In its role of guiding and supporting countries’ development of
payments and market infrastructure, it has studied implementations of fast payment systems across the
world, resulting in a policy toolkit on the implementation of fast payment systems. The toolkit has been
designed to guide countries and regions on the likely alternatives and models that could inform their
policy and implementation choices as they embark on their own fast payment journeys.

The toolkit (to be published soon), has several components which are synthesized in a main report that
is informed by primary and secondary research, including interviews with more than 60 stakeholders
(regulators, system operators, private sector players) from around the world. It covers aspects such as:
rationale for implementation, implementation experience, typology of implementation, technical design
and key features, legal/regulatory and governance issues, clearing and settlement mechanisms, among
other. A high-level preview report announcing the work was published earlier in 2021 on the World
Bank website.61

Other components of the toolkit include 16 focus notes which cover different technical aspects
pertaining to fast payments as well as 16 case studies/jurisdictions that have implemented fast payment
systems. The jurisdictions have been chosen based on several criteria in order to result in a diverse set of
economies. The case studies provide insight into the implementation journey and lay out different
technical aspects pertaining to the system, informed by primary interviews conducted with system
operators, overseers and private sector players.

3.3.2 Communications infrastructure and mobile phone penetration

Robust communications and internet infrastructure are a foundation issue in many countries that is beyond the
control of the financial sector. Nonetheless, challenges with mobile network coverage and internet
access—especially in rural areas—impede payments reliability and financial inclusion. For example, 2015
surveys found that 38 percent of mobile money users in Tanzania, 39 percent in Ghana, 52 percent in Kenya,
and 59 percent in Uganda had experienced downtime while trying to carry out a mobile money
transaction.62 Although mobile phone ownership is on the rise globally—women are 6.6 percentage points
less likely than men to own a mobile phone.63 The Economist Intelligence Unit’s Inclusive Internet Index 2020
finds a 34.5 percentage point gender gap in access to the internet in the least-developed countries.

61
World Bank (2021a).
62
Kantar Intermedia (2016), McKee, Kaffenberger, and Zimmerman (2015).
63
GSMA (2020)
Phone sharing is another prevalent phenomenon in many emerging markets. For example, in 2018 Pew
Research estimated that 7 percent of Filipinos, 13 percent of Indians, and 17 percent of Venezuelans
shared a mobile phone. The most common reason given is not being able to afford a phone, although
gender dynamics also influence phone sharing. In India 20 percent of women share a phone compared
with 5 percent of men. Phone sharing makes it difficult for all individuals to acquire a mobile money account 49
of their own.64

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

Box 21 – Managing Cyber Risks
Mobile financial services have been a significant driver of financial inclusion over the past few years,
with an ever-increasing number of e-money accounts, mobile access to traditional bank accounts, and
electronic transactions. But the digitalization of the financial sector increases the risk of cyberattacks.
Attacks on information and communication technology systems (cyberattacks) are rising globally, and
financial services continue to be the most targeted industry. Financial services are vulnerable to a wide
range of attacks (attacks of critical financial market infrastructures such as payment systems, attacks of
financial services providers such as banks or e-money issuers) and to a wide range of attackers, from
lone hackers to sophisticated organizations and nation-state cyber warfare units.

The financial sector’s reliance on data increases the vulnerability and the complexities of cybersecurity.
The rise in fraud, system outages and data breaches in developing countries is eroding consumer trust in
mobile financial services. Cyber-attacks also threaten the digital financial services industry with
potentially irreparable reputational damage that could, in turn, lead to loss of market share and weaken
incentives to innovate. For these reasons, cybercrime poses a real threat to financial inclusion.

COVID-19 has exacerbated the cyber risk, cyber threats (ransomware attacks, phishing, etc) have
spiked, and the potential for operational risk events caused by people, failed processes and systems has
increased as a result of greater reliance on virtual working arrangements and increased digitalization.
Even though many threat actors pivoted their campaigns toward organizations involved in fighting the
COVID-19 pandemic during 2020, for the fifth year in a row, the finance and insurance industry was
the most-attacked industry.

Mitigating cyber risk in the financial sector is therefore a critical public policy objective, especially for
countries working on financial inclusion. Financial institutions have obvious individual incentives to invest
in protection, but without regulation and public policy intervention, they will tend to underinvest from the
perspective of the broader financial system interest (they will not take into account the impact of their
failure or a broader attack on the system as a whole). There is a clear role for authorities, and especially
for central banks as critical entities and operators of systemic financial infrastructures, but also
regulators, supervisors and overseers of their national financial sector, to support industry initiatives and
if needed to take the lead to catalyze enhancements in the cyber resilience of the financial sector.
Cybersecurity regulation and supervision play an important role in strengthening resilience and
delivering public policy objectives by setting consistent minimum standards to be used by financial
institutions.

Good progress has been made to strengthen cybersecurity regulatory requirements, but fragmentation
within and across borders still causes inefficiencies, and some jurisdictions may be left behind. Industry
and regulators are enhancing their capabilities to take action after a detected cybersecurity incident and
to restore impaired systems or services. They also need to consider the end-user dimension, to increase
their awareness and help the adoption of good cyber hygiene practices. Beyond the individual
approach, for the provider and the user, the next challenge is to catalyze initiatives at industry-level, to
build capacity, to enhance intelligence and information sharing, testing, market-wide cyber crisis
exercising and to design and implement a cyber security strategy for the financial sector. This requires a
high level of cooperation, at the national level, with other authorities involved in cyber security, with
financial sector stakeholders, but also international cooperation, as demonstrated through the work of
the Group of Seven (G7), Financial Stability Board (FSB), Committee on Payments and Market
Infrastructure–International Organization of Securities Commissions (CPMI-IOSCO), Basel Committee
on Banking Supervision.

64
Silver et al., (2019)
 3.3.3 Digital ID
Financial service providers must be able to identify their customers in order to conduct customer due
diligence and to comply with international standards around know your customer (KYC) and anti-money
50 laundering and terrorist financing (AML/CFT).65 At the same time, the 2017 Global Findex survey found
that a lack of identification was a barrier to opening an account for 26 percent of unbanked people in
developing countries. In 2016, the G20 endorsed the High-Level Principles for Digital Financial Inclusion
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

which specifically asked that “Governments worldwide acknowledge the importance of identity as a
fundamental necessity for daily life. For approximately 1.1 billion people, the majority of them living in Asia
and Africa, the inability to prove their identity prevents them from accessing basic services, enjoying their
full rights, and participating in the formal economy”.66

Figure 7. Document type needed for account opening, World Bank, Global FICP Survey, 2017

% of responding jurisdictions that require documentation type top open an account at a Commercial Bank

100

90%
80
75%
69%
60

40 44%
35%
32%

20 22%

0 Government Any form Proof of Proof of Proof of Proof of other

Issued ID of ID nationality or address income employment documentation
legal status in requirements
country must be met to
open an account

As seen in Figure 7, in many jurisdictions, proof of identity, employment, residence, and income are
required— documentation that many low-income people do not have. The World Bank has specified the
following properties of legal digital IDs:

• Have a legal basis and hence be recognized by the government;

• Be unique to that individual; and
• Exist in a digital format.

Having a digital ID system is a benefit that can further financial inclusion, although the digital component
is not required.

The World Bank, in its capacity as an implementing partner of the Global Partnership for Financial
Inclusion (GPFI), drafted the G20 Digital Identity Onboarding report, which demonstrates how ID systems
can enhance financial access and recommends policy approaches for governments to ensure ID systems
work well for the financial sector.68

65
FATF (2012-2020).
66
GPFI (2016). pp.19.
67
World Bank Group (2018).
68
World Bank Group (2018a)
The Financial Inclusion Global Initiative (FIGI), a joint initiative of the WBG, Committee on Payments and
Market Infrastructure (CPMI), and the International Telecommunications Union (ITU) convened working
groups on key topics including digital ID. The FIGI Digital ID Working Group has been working on a Digital
ID Toolkit. This Digital ID Toolkit will focus on the policy considerations of digital ID and financial inclusion
building on the 2012 FATF Guidance on Financial Inclusion, the G20 Digital Onboarding Report, the 51
Digital ID Guidance of FATF, Principles for Identification for Sustainable Development, enhancing

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

cross-border payments: building blocks of a global roadmap69 and country experiences on ID needs and
digital ID implementation where available.

In addition to the benefits of a unified national ID system for opening access to new users, reducing identity
theft and financial fraud was another benefit that policymakers in Mexico recognized. Identity theft has
been common in Mexico in the past, harming consumers and making it difficult for providers to authenticate
customers, in turn leading to stricter ID rules that work against inclusion. According to Mexican consumer
protection agency CONDUCEF, financial fraud and identity theft is on the rise: in 2017 complaints about
financial fraud increased by 42 percent.70 With technical assistance from the World Bank, Mexico
conducted an analysis of the existing ID system on which the drafting of a new law on national ID systems
was based. Prior to this law, identification data was stored in disparate databases that only larger banks
had access to. The new law mandates adoption of a completely new form of digital ID and AML/CFT
procedures which also pushes for consolidation of databases with the aim of fraud prevention.71

There is also evidence that improving ID systems saves governments money through reducing leakage in
government payments.72 The Nigerian government used biometric identification to reduce leakage in
payments to civil servants. In 2015 the Central Bank of Nigeria required that all civil servants enroll with
their unique Bank Verification Numbers (BVN), operated by the Nigeria Inter-Bank Settlement System
(NIBSS) in order to receive salary payments. This effort resulted in the removal of over 40,000 “ghost”
workers, saving the taxpayers the equivalent of USD $74 million.73

69
FATF (2012); World Bank Group (2018); FATF (2020); CPMI (2020); World Bank (2021c).
70
CONDUCEF (2017)
71
Information from Mexican CNBV, new regulations forthcoming.
72
Muralidharan et al. (2016) studied the impact of biometrically authenticated "Smartcards" on beneficiaries of employment
(NREGS) and pension programs in Andhra Pradesh, India. They used a large-scale experiment randomizing the rollout of
Smartcards over 157 subdistricts and 19 million people. They found that smartcards delivered a faster, more predictable, and
less corrupt payments process that was cost effective.
73
World Bank Group (2018). G2P payments are discussed in more detail in Section 2.7.1.
 3.4 TRANSACTION ACCOUNT AND PAYMENT PRODUCT DESIGN

Key lessons learned, transaction account and payment product design

52
• Though the onus of getting product design right falls primarily on the providers, there is an
increasing role for regulators in improving financial product design and distribution to better
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

address financial exclusion. This is to ensure that sub-optimal product design does not pose
additional risk to consumers.
• Majority of jurisdictions have provision of basic accounts as a regulation. However, the
content of these regulations vary across jurisdictions.
• There are several examples of providers using human centered design to develop products
that successfully identify customer pain points, and then develop products which address the
same. This has in several contexts led to products being more appropriate for vulnerable
populations.
• E-money products can facilitate access for the hard-to-reach groups and are covered by legal
provisions in a variety of countries, however, they are usually for limited purposes. In this regard,
an understanding of the most beneficial use cases and designing the products accordingly can
help increase usage.
• Given that they tend to be underserved and more excluded as compared to men, designing
financial products for women - or simply avoiding gender neutral approaches to product
development by using gender segmentation during the research and design phase – is critical.
• Design must also be coupled with proactive efforts to avoid account dormancy. This includes
ensuring that the products are easy to use, affordable, trusted, and contribute to an ecosystem
of financial service usage such as merchant payments.
• In order to enhance the usage of transaction accounts further, building an enabling merchant
acceptance ecosystem is key.
• Fintech offers opportunities to underpin the drivers of access to and usage of transaction
accounts but is not without challenges.

The features and design of a transaction account and associated payment services determine whether that
account meets the needs of and adds value to actual or potential customers. The unbanked and underbanked
may have different needs for financial services compared to those that are included financially. In general,
unbanked and underbanked segments are characterized as those groups with lower and more variable
incomes, do not trust the regulated financial institutions, may have challenges with financial and digital
literacy, and may be living in isolated communities. Thus, product design for the unbanked and underbanked
needs to take all these factors into account.74 One of the most critical success factors of a financial product is
its appropriateness or ‘quality.’ Quality can be defined as affordability, convenience, product fit, safety,
dignity of treatment, and client protection. Other definitions include transparency, suitability, and client value
and are often overlapping.

Quality financial products can drive uptake and usage by the unserved and underserved into the formal
financial sector. Poor quality products, conversely, can have the opposite effect, actually harming vulnerable
consumers. The World Bank’s Global Financial Development Report 2014 notes that product design features
can affect both the extent and the impact of use by individuals. In light of how important features are to the
success of any given financial service, it is surprising how many products fail to reach the required standard.
The onus of getting this right falls primarily on the shoulders of the financial service providers (FSPs). Many
FSPs still have a lot to learn about how to develop products that the unserved and underserved will be drawn
to.75 In addition to providers themselves, there is also an increasing role for regulators in improving financial
product design and distribution to better address financial exclusion.

While financial inclusion is inextricably linked to the proliferation of transaction accounts, over time the
increase in the number of accounts has exposed an additional challenge which is related to product design:
high rates of dormancy. In 2017, about 25 percent of account holders in the developing world have not

74
CPMI and World Bank Group (2016).
75
World Bank (2018).
used their accounts for a single deposit or withdrawal in the past year.76 Furthermore, in low-income countries
dormancy was at 16 percent of accounts on average.77 Among the several possible reasons for low activity
rates, product design and distribution would certainly be an important one.

3.4.1 Basic accounts 53

Basic accounts are typically mandated by legislation provided by banks and/or non-banks, focusing mostly

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

on payment services with low- or no-cost and no-frill features. In some countries, salary accounts have similar
properties to basic accounts.

Given their characteristics, basic accounts can be instrumental in expanding access and usage. While the
latest GPSS survey reports that the majority of jurisdictions have provision of basic accounts as a regulatory
requirement (69 percent, Figure 8), the PAFI Report (CPMI and WBG, 2016) noted that among the 19
jurisdictions surveyed for this purpose at the time, the majority reported basic account schemes as market-led
initiatives. While basic accounts are not widely required in low-income economies, wherever they exist, tiered
KYC requirements are tailored to facilitate their opening.

Whenever they are regulated, regulation for basic accounts include provisions on consumer protection.
However, conditions on financial capability are not as widespread. In addition, in less than half the
responding jurisdictions, regulations allow for basic accounts to be provided by non-banks, except for South
Asia. Regarding capping fees, types of transactions, amounts and balances, the majority of responding
jurisdictions do not seem to have such requirements. Again, South Asia is an exception.

Figure 8. Basic account regulations (Source: World Bank Global Payment Systems Survey, 2018)
By Income By Region

n a
ea fric
me me ia ribb
As Ca ica D rt A
Inco Inco ral & fr EC ac
ific No
me dle dle ent rica nA eO &P
&
Mi
d d me &C ara m ast ia
al nco er Mi nco e me ah nco sia le E As
ob hI p er I op i nA b- S hI st A dd uth
Gl Hig Up Low Low Eur Lat Su Hig Ea Mi So

There is a regulatory requirement to 69% 74% 70% 67% 58% 60% 65% 63% 83% 64% 75% 60%
provide basic payment account 75/108 29/39 21/30 18/27 7/12 9/15 13/20 12/19 25/30 7/11 6/8 3/5

Tiered KYC/COD requirements exist 71% 54% 68% 88% 92% 29% 85% 94% 56% 64% 100% 100%
which are tailored to facilitate the 71/100 19/35 19/28 22/25 11/12 4/14 17/20 16/17 14/25 7/11 8/8 5/5
opening of basic payment accounts

Provision of basic payment 78% 87% 65% 81% 75% 56% 75% 74% 93% 73% 88% 80%
accounts is regulated 85/109 34/39 20/31 22/27 9/12 9/16 15/20 14/19 28/30 8/11 7/8 4/5

Regulation allows KYC/COD to be 72% 52% 69% 85% 100% 50% 72% 100% 59% 70% 88% 60%
performed by agents of financial 68/95 16/31 18/26 22/26 12/12 7/14 13/18 18/18 13/22 7/10 7/8 3/5
institutions or e-money issuers
Regulation includes consumer protections 84% 83% 78% 88% 92% 64% 72% 94% 93% 90% 75% 100%
(e.g., dispute resolution, disclosure) 85/101 30/36 21/27 23/26 11/12 9/14 13/18 17/18 26/28 9/10 6/8 5/5

Regulation includes financial capability/literacy

responsabilities for providers (e.g., to support 55% 46% 46% 68% 80% 57% 53% 82% 38% 40% 57% 80%
53/96 16/35 12/26 17/25 8/10 8/14 9/17 14/27 10/26 4/10 4/7 4/5
customers awareness and skills to effectively use the product)

Regulation includes parameters for 50% 62% 39% 54% 33% 21% 47% 56% 75% 18% 75% 20%
payment trasnsactions fees/conditions 52/103 23/37 11/28 14/26 4/12 3/14 9/19 10/18 21/28 2/11 6/8 1/5
(e.g.,fee caps, no fees, etc.)
There are restrictions on the 45% 41% 29% 62% 64% 29% 33% 50% 50% 45% 63% 60%
types of payment trasnsactions 46/102 15/37 8/28 16/26 7/11 4/14 6/18 9/18 14/28 5/11 5/8 3/5
that can be performed
Provisions allow for basic payment 43% 20% 42% 62% 75% 7% 28% 72% 23% 70% 75% 100%
accounts in the form of e-money 191/115 100/116 29/35 16/26 9/12 1/14 5/18 20/21 6/26 7/10 6/8 5/5
to be issued by non--bank
Regulations include parameters for 35% 17% 33% 62% 33% 7% 37% 56% 23% 27% 63% 60%
minimum balance requirements (allow 35/101 6/36 9/27 16/26 4/12 1/14 7/19 10/18 6/26 3/11 5/8 3/5
for having a zero balance)

Regulations requires that basic payment 32% 19% 29% 46% 50% 0% 47% 56% 22% 18% 63% 20%
accounts be opened free of charge 33/102 7/36 8/28 12/26 6/12 0/14 9/19 10/18 6/27 2/11 5/8 1/5

Regulations include limits on volume 32% 8% 32% 50% 67% 7% 42% 61% 7% 27% 50% 80%
or value of cash withdrawals 33/102 3/36 9/28 13/26 8/12 1/14 8/19 11/18 2/17 3/11 4/8 4/5

Regulations apply limits 30% 11% 30% 58% 27% 7% 39% 41% 15% 27% 50% 80%
on account balance 30/100 4/36 8/27 15/26 3/11 1/14 7/18 7/17 4/27 3/11 4/8 4/5

Each box shows the percentage of answers among the juristictions in a group. 0% 20% 40% 60% 80% 100%
The number of responding jurisdictions may differ across options. A jurisdictions may have chosen multiples options

76
World Bank Global Findex Database, 2017
77
Bull (2018).
 3.4.2 E-Money
An e-money account is a “prepaid instrument based on e-money that can be offered by banks and other
authorized deposit-taking financial institutions, as well as by non-deposit-taking payment service providers
54 such as mobile network operators. Such accounts include prepaid accounts.” With the innovations in the
payments sector, e-money products have started to become more common in the last few years. E-money
accounts can be instrumental in providing access to a transaction account to the unbanked and underbanked,
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

due to their low-cost structure or low CDD requirements.78 At the same time, they can play a critical role in
providing access to people in rural and hard-to-reach areas. However, and perhaps because of these
properties, e-money accounts usually are limited-purpose accounts.

While legal provisions cover e-money in 85 percent of the responding jurisdictions to the 2018 GPSS (Figure
9), the usage of e-money in general seems limited to cash-in, cash-out, P2P domestic transfers and bill
payments in the majority of countries. International remittances and public salary payments are not available
with e-money products in more than half the jurisdictions.

Figure 9. Types of transactions using e-money products

3.4.3 Product design and distribution regulation

Transaction account and payment product design are primarily the work of private sector, driven by their
ambition to maximize uptake and profit. But given the vulnerability of the unserved and underserved,
regulators are increasingly entrenching financial product design and distribution (PDD) best practice into
regulation. This is referred to as product design and distribution regulation and defined as the obligations
of FSPs’ oversight and governance arrangements for the design and distribution of retail financial products
(i.e., deposit, credit, and payment products). The main reason is to ensure financial consumer protection for
vulnerable customers who are also usually financially illiterate. Such rules and regulations are expected to
increase the trust in the financial system over the long term by reducing the number of customers who are
sold products that do not match their financial needs. Several jurisdictions have introduced financial
product design and distribution rules to ensure that sub-optimal product design does not pose additional
risk to consumers. The following jurisdictions are noted for the comprehensiveness of their framework:
Australia, the EU, Hong Kong, South Africa, the UK. These types of obligations from the regulator are,
however, still nascent.79

78
Glossary of the PAFI Report, CPMI and WBG (2016), p.65
79
World Bank (2018b)
3.4.4 Designing financial products that meet women’s needs
Many FSPs fail to capture or retain women customers because their products are only superficially tailored
towards the needs of this segment. In general, as the needs of women tend to be different from men, FSPs
should avoid gender-neutral approaches, adopt gender segmentation for research and product design, and 55
develop a clear business case for women.

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

Several initiatives by the WBG, including IFC’s Banking on Women program, World Bank’s Women
Entrepreneurship Development Project in Ethiopia, and the We-Fi initiative, have worked with women
entrepreneurs to provide them with suitable credit products.80

In Bangladesh women have been traditionally excluded from the regulated financial sector. According to the
Global Findex database, in 2017, while half the adults had an account at a regulated financial institution,
only 35 percent of women owned such an account. There was also a lack of data on the potential returns
from women’s financial inclusion. Women in Bangladesh were largely unaware of the financial products and
services, including mobile financial services. The WBG took a holistic approach and initiated a market study
to understand women’s financial needs. The team then piloted tools and products to test their fit with women.
The study showed that most existing and potential women users of mobile financial services preferred women
agents because of the social and cultural norms in the society as women were not comfortable in sharing
personal details with agents that were not women. At the time the project started, the mobile financial service
providers in Bangladesh had not taken any action toto acquire women agents. The project developed a toolkit
for women agent acquisition for providers. The toolkit is based on the data collected via the market study on
the levels of financial literacy, the perceptions towards the regulated financial sector, etc. The project also
trained the staff of providers for them to identify and train women agents.81

80
IFC (2020), [Link] [Link]
81
[Link]
-to-accelerate-womens-financial-inclusion; and IFC (2018).
 3.4.5 From access to usage
UFA2020 set its headline target as percentage of adults who own a transaction account provided by a
regulated financial inclusion. This has mainly been due to a measurement necessity: pilot tests of survey
56 questionnaires showed that it is not feasible to reliably measure having “access” to a transaction account
otherwise, as survey respondents did not fully understand the meaning of access. On the other hand, the
concept of “owning” an account was much easier to comprehend. Because there is also voluntary
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

non-access, measuring account ownership would bring more consistent and reliable measurement outcomes.

In addition to account access and ownership, UFA 2020 initiative has emphasized the importance of usage
of accounts. However, account dormancy remains a challenge for financial inclusion. As of the 2017 Global
Findex, 25 percent of account holders in the developing world hadn’t used their financial institution accounts
for a single deposit or withdrawal in the past year. Although there are millions of mobile money accounts in
Africa, GSMA estimates that dormancy has been above 60 percent. However, this high dormancy is driven
by a few markets, like India, where dormancy was 48 percent in 2017. Some other countries such as Kenya,
and China have seen higher usage rates. And trends are positive in many countries: usage of accounts
improved from 2014-2017 in 46 developing countries.82

Reasons why a person may open a first account and then never use it or stop using it after a time include:
stopping receiving funds into the account (G2P, wage payments, remittances or other payment source that
does not continue), lack of trust and confidence, products that are not relevant or affordable, threshold effects
where others do not use the service so there is no one to pay, inability to pay for the goods and services from
the account, being unaware of the account and its benefits, concerns about the security of their money,
among others. For example, in a 2017 survey with 18,000 respondents from underserved segments
conducted in 16 countries, Mastercard found that rural populations have less discretionary income and are
more concerned about the security of their money when it is out of their physical possession.83 This may be
one reason why usage is especially low in rural areas, in addition to unreliable mobile and internet
connectivity.

The WBG’s work on driving account usage suggests three main areas for continued focus:

Relevant, affordable, easy to use products. Human-centered design and building products specifically
for excluded segments can help foster products that are relevant to rural, low-income, and other vulnerable
groups. But the business case for serving the specific needs of these populations is often less attractive than
building for those with more resources, leading financial institutions to cater more towards wealthier
customers.84 Simple products that facilitate onboarding through local language content, video or audio for
less-literate users, and supporting peers to show others how to use the product also have potential. In a similar
context, the World Bank has done work in designing financial education programs based on insights gained
from customer’s needs (See section 2.6 for further details). This work focuses on the end-users’ learning needs
and designs financial education programs accordingly. Such an approach was used in several countries,
specifically in the context of designing financial education programs specific to social safety net beneficiaries
or to remittance receivers and senders.

Finally, one additional method supported by the World Bank to improve product design for the underserved
is the use of financial diaries. Financial diaries collect information on major income, health, and other shocks
that households face, and the related strategies they use to cope with them. This approach was used in rural
China and the results are forthcoming.

Trust, confidence, and literacy Building trust in formal financial services takes time and is not
straightforward. Experimental studies from Mexico and Bangladesh, among others, show positive effects of
products that expose new users to features slowly, with opportunities to test and learn.85 Stremlau and Osman

82
Demirguc-Kunt et al. (2018), Bull (2018), GSMA (2021), Salazar and Monteverde (2019)
83
Mastercard (2018).
84
Mastercard (2018)
85
Bachas et al. (2017), Breza et al. (2020)
(2015) argue that elders and traditional authorities' involvement in Somaliland helped build trust in mobile
money, showing that leveraging institutions and relationships where trust already exists has potential. In
addition, from a regulatory perspective, the World Bank and the Central Bank of Somalia worked together
on building “Trusted Agent” model in Somalia, where the Trusted Agent, Abyrint AS (selected via WB
competitive selection process), would work with the Central Bank to help regulate and supervise the money
transfer businesses. In parallel, the World Bank provided technical support to the CBS for drafting new pieces 57
of legislation to ensure the AML/CFT compliance of the sector. Lastly, joint actions were taken by the World
Bank and the UK Government, in collaboration with Somali authorities, as part of the UK-Somalia Safer

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

Corridor Initiative to ensure a steady flow of remittances to Somalia in a safe and efficient way. Thus, the work
on opening up the Somalia remittances market was a result of a holistic approach.86

At the same time, with high inflation and prevalent bank failures in many countries, people may have good
reason to be wary of the formal financial sector. Additionally, fraud is a problem in mobile money.87 Over 20
percent of banked respondents in Uganda, Kenya, and Nigeria reported losing money to fraud or scams, or
paying illegal extra fees (such as bribes) in the prior six months in the 2016 Financial Inclusion Insights
Surveys.88 Strong consumer protection practices and regulatory enforcement that creates consequences for
fraud will help build trustworthy ecosystems while providers, NGOs, and others work on building trust and
driving financial literacy.

Ecosystem, including merchant acceptance Sending and receiving payments seamlessly can be a
positive experience that showcases the convenience and safety of digital payments to users who are new to
the formal financial system. In practice however, adoption of digital payment remains low in many markets.
In LMICs 26 percent of adults reported making a digital payment in the past year in 2017.89 According to
GSMA, in Sub Saharan Africa 19 percent of all monthly active mobile money accounts made a bill payment,
while only 10 percent made a merchant payment in 2020.90 Learning more about the barriers to digital
payments in Africa and supporting projects to alleviate these challenges shows promise. And there is reason
for optimism in other markets: China is a great example of how the flywheel of digital payments can work. In
2018 over 80 percent of adults in China had an account, and 85 percent of adults who made purchases
online also paid online (as opposed to paying cash on delivery, which is still common in much of Asia, Middle
East and Africa).91

86
Osman and Ridwan (2015); [Link]
-makes-progress-to-support-remittance-flows-to-somalia; UK Government (2016).
87
Buku and Mazer (2017)
88
Kantar Intermedia (2016)
89
World Bank Global Findex Database, 2017
90
GSMA (2021).
91
[Link]
 Box 22 – FIGI Electronic Payments Acceptance Working Group

Global Findex 2017 data showed enormous progress globally in terms of account ownership: between
58 2011-2017, there were 1.2 billion new accountholders. However, a more detailed look at the data
revealed the areas that needed specific attention. Among these, one interesting data point is provided by
the “made or received digital payments” indicator. This indicator showed that 52 percent of adults
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

globally made or received at least one digital payment in the past 12 months. At the same time, only 22
percent of adults paid utility bills digitally. While usage has reached high levels in China (68 percent) and
Kenya (77 percent) as measured by the same indicator, not all countries have experienced the same.
Furthermore, the World Bank, in 2016, conducted a data analysis and concluded that the majority of
transactions by the micro, small and medium retailers (in terms of sales, payments to immediate suppliers
and salary payments) were in cash. More specifically, at the time of the study, an estimated $19 trillion
out of $34 trillion such payments were made in cash.92

Essentially, account ownership is more useful when it is possible for account owners to use their
transaction accounts for making and receiving payments and not only for safely storing value. For the
transactions purpose to be realized, account owners needed to have opportunities to use their electronic
payment instruments for everyday purchases, bill payments, online payments, payments to the
government, etc. They also needed to receive their salaries into their accounts as well as other payments
from government, businesses and other individuals. It is the convenience of the use of digital payments in
everyday transactions, such as in grocery stores or at the small merchants, that make the consumers
change their behavior and adopt digital payments.

As part of the Financial Inclusion Global Initiative (FIGI), the World Bank has been leading a working
group on Electronic Payments Acceptance (EPA) which focuses on effective practices for enabling
merchant acceptance of electronic payments, in the interest of increasing the prevalence of cashless
transactions with MSMEs. The working group has been developing a toolkit, the EPA Package which aims
to guide authorities, international organizations and electronic payment ecosystem stakeholders (e.g.,
PSPs, payment and card networks) in the design and implementation of EPA reforms to increase electronic
payments acceptance. The EPA Package (forthcoming) will focus on innovations in EPA, the role of
intermediaries in facilitating EPA, and the role of incentives to end-users and merchants in adopting
electronic payments. The Package also includes a guidance report for market assessments on which the
choice of relevant EPA reforms can be based.

92
World Bank (2016a).
3.5 READILY AVAILABLE ACCESS POINTS AND NETWORKS

Key lessons learned, readily available access points and networks

59
• Despite the significant increase in the use of digital financial services, cash continues to play
a role in the financial lives of many. As such, ATMs – with their increased functionality – will

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

also continue to add value for financial transactions.
• Agency banking has shown a lot of promise and the proliferation of agents have facilitated
an explosion in access to financial services for the most underserved (women, rural dwellers,
youth, etc.)
• Agents are perceived as trustworthy, however at the same time privacy of transactions at
agents can be a concern, especially higher value transactions.
• The role of women agents, who are usually underrepresented, is very important in facilitating
access and usage.
• Postal networks, with the extent of their reach to rural areas and the trust in them in general
compared to the financial sector, can provide an important way of expanding access points,
especially in hard-to-reach areas. However, it is important to ensure post offices in rural areas
have connectivity and knowledgeable staff.
• There is a role for regulators in increasing access to the most underserved locations through
promoting interoperability in access points, the use of geospatial mapping for access points
and using policy instruments to encourage the proliferation of access points in underserved
areas. Ultimately, however, in order to be more sustainable, agent expansions should be driven
by commercial factors.

This sub-section discusses the role of agent networks and postal financial services in expanding access points
in detail. At the same time, however, interoperable ATM networks can play a crucial role in promoting
financial inclusion, especially when cash still has an important role in transactions and branch penetration is
low.93

3.5.1 Agent Networks

Agent networks constitute a significant proportion of financial access points. According to the World Bank’s
2017 Global Survey on Financial Inclusion and Consumer Protection, non-bank electronic money issuers in 61
relevant responding jurisdictions (91 percent) are permitted to use agents as third-party delivery channels.
Ninety-six responding jurisdictions (81 percent) allow commercial banks to use agents (Figure 10).
Figure 10. Use of retail agents by provider type, World Bank, Global FICP Survey, 2017

% of responding jurisdictions that permit use of retail agents as third-party delivery channels, by institutional category

100

91%
80 81%

70%
65%
60 61%

40 47%

20

0 Commercial Other Banks Financial ODTIs MCIs NBEIs

Banks Cooperatives

Note: Percentages are based on 118 responding jurisdictions for Commercial Banks, 64 for Other Banks, 71 for Financial Cooperatives, 57 for ODTIs,
57 for MCIs, and 67 for NBEIs

93
See Ramteke et al. (2018) for further details.
 In many jurisdictions, agents serve as cash-in and cash-out points. This is specifically important where there is
no interoperability between e-money and deposit transaction accounts and agents operate as a widely
available way to top up e-money accounts, serving the otherwise unbanked/underbanked people especially
in rural and remote areas. Figure 11 provides information on different activities agents of mobile money
60 operators are allowed to perform across countries. In many jurisdictions, agents are mostly allowed to
perform cash-in and cash-out services. In mostly low- and middle-income countries, they are in general tasked
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

to conduct customer due diligence for new customers.

Figure 11. Permitted Activities of Agents of Mobile Money Operators, World Bank, Global Payment Systems
Survey, 2018

By Income By Region

n
ea ica
me e
As
ia ari
bb
rt Afr
o om ica CD c
le Inc Inc ntr
al &C Afr OE acifi No
me idd dd
le e Ce rica ran me &P st & ia
l nco rM Mi om e& me ha nco sia Ea As
a hI pe er Inc op A
b- S
a hI st A idd
le
uth
G lob Hig Up Low Low Eur La tin Su Hig Ea M So

96% 90% 91% 100% 100% 100% 89% 100% 83% 100% 100% 100%
Cash in 43/45 9/10 10/11 17/17 7/7 2/2 15/22 8/9 5/6 7/7 5/5 3/3

89% 80% 91% 88% 100% 100% 89% 100% 67% 100% 80% 67%
Cash out 40/45 8/10 10/11 15/17 7/7 2/2 15/22 8/9 4/6 7/7 4/5 2/3

Registration of new 78% 60% 82% 88% 71% 50% 89% 77% 67% 86% 80% 67%
customers (CDD) 35/45 6/10 9/11 15/17 5/7 1/2 13/22 8/9 4/6 6/7 4/5 2/3

Each box shows the percentage of answers among the juristictions in a group. 0% 20% 40% 60% 80% 100%
A jurisdiction may have chosen multiple options.

At the same time, however, many regulators have put the responsibility of agents’ actions on the principals, as
well as additional monitoring requirements (Table 4). The safeguards also include regulatory requirements to
prevent fraud by agents.

Table 4. Rules Regulating Relationships among Financial Service Providers, Agents and Customers, World
Bank, Global FICP Survey, 2017
 Box 23 – Rural Agents in China

China is an example of the use of agent networks to expand financial inclusion in rural areas.
61
China has made significant progress in expanding physical bank branches, Point-of-Sale (POS)
terminals, automatic teller machines (ATMs), and agents nationwide by the early 2010s. Yet regional

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

and urban-rural disparities in individual’s access to financial services persisted, particularly with respect
to access points beyond branches. In addition, the remaining unbanked have been increasingly
dispersed and therefore difficult to target, and data was lacking on their precise location and
characteristics.

In response, the authorities, notably the People’s Bank of China (PBoC), initiated rural agent-based
financial service pilots in 2009, and have increased the presence of rural financial services at the village
level in the few years after these pilots. More specifically, the PBoC worked on:

• Expanding card-based rural cash withdrawal services: government-to-person (G2P) payment

of agricultural subsidies, new rural pension insurance schemes, and new rural cooperative
medical insurance schemes.
• Issuing guidelines for the establishment and operations of card-based financial service agent
models in rural areas in 2014.
- Banks can choose rural merchants or other establishments to function as agents; each service
point can provide cash withdrawal, bill payments, and person-to-person transfers, capped by
general and daily ceilings.

By the end of 2014, the number of card-based rural cash-out service points covered more than 85
percent of administrative villages.

In response to these actions by the authorities, financial service providers (i.e. commercial banks, rural
credit cooperatives and the Agricultural Bank) have developed customized products, such as payment
card-based products for social benefit transfers, domestic transfers and revolving loans/overdrafts. All
these payment cards were branded with China UnionPay and worked at all ATMs, POS and agent
locations.

At the same time, by 2016, there were nearly 1,000,000 rural agent access points in China, making
China the largest agent network of any country.95 These rural agent access points had less functionality
as they were not able to provide broad services to facilitate the uptake of financial products (i.e. account
opening, loan repayments, insurance). And while their reach into unserved regions was prolific (covering
more than 90 percent of administrative villages and averaging 1.8 service points per administrative
village), they have not been sustainable or profitable due to very low (or in some cases no) transaction
volumes.95

Access to financial services in rural areas were thus shaped by government subsidy programs and by the
presence of state-owned financial institutions. As a result, the range of financial services that were offered
and product design were perhaps not a close match to the actual needs of end users. One example was
the need for specific financial products to facilitate the urban-rural remittance flows. Such flows were
crucial determinants of rural household budgets and provided a form of risk management or collateral
for borrowing.

Eventually, the emergence of non-bank mobile payment platforms, for example AliPay and WeChat Pay,
became a part of everyday life, with the “wait and see approach” taken by the PBoC facilitating
innovations in this area. The total number of active users of AliPay and WeChat Pay combined increased
from 450 million in 2013 to over 2 billion in 2018 (including users with multiple accounts).96 This has
contributed to the increase in access to and usage of transaction accounts.

94
WBG and People’s Bank of China (2018).
95
WBG and IMF (2017).
96
Huang et al. (2020).
 A World Bank and IFC study conducted in Senegal97 found that users trust agents and are willing to work with
them. Individuals who participated in the study tended to make more transactions if they used agents
compared to those that used bank branches. While agents provided convenient access and likely lower
transaction costs, transacting at a bank branch provided a higher level of privacy to the users. Thus, for larger
62 transactions, bank branches were preferred by the users.
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

Box 24 – The importance of women agents

A study conducted by the World Bank and IFC in the Democratic Republic of Congo between
2017-2018 based on over 1 million customer transactions in a microfinance institution provides evidence
for clients preferring to transact with agents of their own gender. In the study, women users especially
showed a robust preference for women agents although women agents were less available. The
importance of women agents became particularly high for high-value transactions and for women with
have higher account balances.98

Similarly, in Bangladesh, a study by IFC (2018) on mobile financial services showed a clear preference
for women agents by users and non-users alike. In addition, customers who used services by women
agents tended to transact more. Specifically, the respondents noted that women agents were more
approachable and more trustworthy, were perceived to keep confidentiality and respect privacy better.
However, at the same time, women agents were disproportionately low in number compared to men.

The underrepresentation of female agents may contribute to the persistent gender gap in access to and
usage of financial services.

Agents provide a critical link between poor customers and providers and enable cash-in and cash-out
(CICO) transactions, in addition to providing some additional services in some instances. Expanding
customer access to CICO agents increases both uptake and usage of digital accounts because they
connect the digital and analog worlds. They also build trust in digital channels because agents tend to be
known in the community and can explain financial services in a manner that customers can relate to and
easily digest.99

As the provision of payment services involve certain risks and liabilities, the agency relationship between
a principal and its agents should be governed by contractual agreements which are clearly written and
comprehensive in coverage. In addition, there should be a legal basis for these contracts, and they should
be enforceable. The contracts should clearly identify transparency and disclosure as well as dispute
resolution processes. In some instances, these contracts include certain protections such as exclusivity
agreements. While from a business perspective such agreements enable the principal to invest more in the
agency relationship, these agreements limit agent interoperability and may inhibit competition. In Kenya,
the competition authority maintained that competition issues such as exclusivity agreements should be
handled by the competition authority, or where none exists, a competition unit within a sector regulator. In
2014, the Competition Authority of Kenya ruled for MNO agent non-exclusivity. The Central Bank of
Kenya issued the National Payment System Regulations in 2014, which banned agent exclusivity
agreements for payment service providers.100 In Ghana, after the ban on agent exclusivity in 2016, in the
Agent Guidelines issued by Bank of Ghana, the number of active agents has increased from 82,000 to
over 356,000 in 2020.101

3.5.2 The role of postal networks in improving financial access

Postal networks play an important role in promoting financial access with approximately 28 percent of the
population using some form of postal financial services (remittances, government payments, insurance,
current or savings accounts). Postal financial services (PFS) are provided by 91 percent of

97
Buri et al. (2018)
98
Chamboko et al. (2020)
99
CGAP (2020).
100
Mazer et al. (2016).
101
Bank of Ghana
postal networks globally, either directly or in partnership with other bank and non-bank financial
institutions.102 103 Given their accessibility and popularity around the world, PFS play a significant role in
providing day to day financial services to the underserved segments. Factors like scale, presence in rural and
underserved areas, and low-price points for financial products and services provide postal networks an upper
hand compared to financial institutions in serving the needs of population that tend to be excluded, such as 63
women, the rural poor, the less educated and those in the informal economy.

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

Through product and business model innovations, PFS has become more specialized as form of mass market
retail banking in more than 50 countries worldwide, providing access to a full range of digital financial
services, via multi-channeling, to anyone, anywhere, anytime and with any payment instrument.104 Postal
networks are addressing the three main challenges of financial inclusion – access, eligibility, and affordability.
Established as “public” networks with a strategy to connect each part of the country, postal networks address
the physical barrier associated with access to financial services in outlying, rural areas. They also bring social
impact by providing services to vulnerable segments that other institutions are not willing to provide. Lastly,
compared to other service providers they offer well-priced financial services, with no or small minimum
amounts charged for opening accounts.105

102
Universal Postal Union (2016).
103
Universal Postal Union (UPU) defines postal financial services as the process by which people and enterprises excluded from
the formal financial system are provided with financial access through the postal network. This does not necessarily mean that the
postal network must offer its own financial services to the unbanked, as postal financial inclusion also applies to cases where postal
operators provide the unbanked with access to the financial services of partner financial institutions, through a postal channel.
104
UPU classifies several types of business models ranging from cash merchants, proprietary domestic and cross border
remittances, partnership with a financial services provider, postal savings bank and a full-fledged post bank.
105
As an example, a common product offered by most postal networks is international remittance, the costs of which are tracked
quarterly by the World Bank Global Remittances Worldwide database. In this ranking, postal networks are repeatedly classified
as the most affordable channel for sending money internationally, well in front of banks and slightly ahead of MTOs.
 Box 25 - Postal Financial Services for Access Networks and Financial Inclusion:
The Case of Morocco and Egypt
64 Morocco: In Morocco, Al-Barid Bank (ABB) was established in 2010 as a separate subsidiary of
Poste Maroc with a banking license and plays a major role in promoting financial inclusion. It
provides banking services to individuals with low or irregular incomes, particularly in peri-urban and
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

rural areas. ABB has approximately 6 million customers that it serves with over 880 ATMs and 1500
branches, of which a large majority are in rural areas. It has a stated mission of “facilitating access
to financial services and increasing the banking rate in Morocco”.
ABB has recently become a payment card
acquirer, but its market share is very small (less
than 1 percent). ABB launched its popular
mobile application, Barid Bank Mobile, in 2018
and in the post-COVID 19 environment, this
channel experienced tremendous growth during
the first five months of 2020, with over 10
million transactions made and an increase of
approximately 80 percent compared to the
same period in 2019.

Egypt: With only a third of the adult population in Egypt having access to financial services,106
roughly half of these use postal financial services provided by Egypt Post. It has an extensive
infrastructure with 4,200 post offices across the country, of these approximately 3,400 branches are
outside the main cities, mainly located in “bank deserts,” which are a critical part of the financial
access infrastructure, especially in rural Egypt. Egypt Post plays a significant and a relevant role for
the financially vulnerable populations to access various types of government, postal and payment
services including postal savings account, different types of checking accounts, prepaid cards and
mobile wallets. These products provide an entry point for financial access for many unbanked
Egyptians and is used by over 10 million adults with 7 million active card accounts. It provides
savings account to over 20 million Egyptians. Additionally, Egypt Post also provides domestic and
international remittance transfers, government disbursements, collections and notifications to its
customer base including those who do not have
accounts with Egypt Post. According to one
Government of Egypt estimate, about 14 million
Egyptians visit Egypt Post branches each month
and there is immense loyalty and trust among
who use these branches for various types of
services. Since the onset of Covid-19 Pandemic,
Egypt Post has played a significant role in
becoming the hub for all COVID-19 related
government assistance while also deepening
financial inclusion.

106
Global Findex 2017
3.6 FINANCIAL CAPABILITY / LITERACY
AND CONSUMER AWARENESS
65
Key lessons learned, financial capability/ literacy and consumer awareness

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

• Financial sector authorities have a clear role to play when financial risks are posed to
consumers, and, in order to prioritize efforts, mitigating financial risks should be the central
focus and first priority of an authority’s financial education approach.
• Financial education efforts should complement, not substitute, existing policy interventions
and consumer protection regimes.
• Integrating financial literacy into national curricula at the primary and secondary level will
empower future users of financial services with the literacy and numeracy to make informed
financial decisions. Developing specific targets and assigning agency accountability through
NFIS processes is one effective way to mainstream financial literacy in education.
• Information delivered at or close to the time of making financial decisions (i.e. a teachable
moment107) is likely to be more impactful than one-off trainings on financial literacy.
• Evidence around successful financial education interventions is growing (e.g., targeting
“teachable moments”, incorporating behavioral insights, periodic reinforcement of messages)
and should be reviewed ahead of each financial education activity to ensure selected tools
and delivery channels are aligned with good practices and behaviorally informed principles.
• Financial service providers that integrate financial education within the day-to-day
operations (i.e. offering additional training or answering questions around disclosure
information) can help re-enforce consumer protections and contribute towards broader
financial inclusion goals.
• Integrating financial education into government programs that provide financial services at
scale (i.e. cash transfer programs, agricultural finance programs, remittance programs, etc.)
helps embed important messages to better prepare and protect financial beneficiaries.
• Efforts to support PSPs and FSPs to offer disclosure and information about how to use
financial products is closely linked to the World Bank’s support of consumer protection
regulation. Rules around disclosure and complaints resolution plays an important role in
assuring customers are provided with key information about financial products.

Lack of awareness of the transaction accounts available and their utility is a barrier to financial inclusion.108
People who are new to the formal financial system may question the value of transaction accounts for their
specific situation and needs, as evidenced by “I don’t need an account” being in the top three reasons why
people do not have an account in the 2017 Global Findex data.109 Those new to financial services may also
be wary about the high cost of financial services, accessibility of funds, and being defrauded. These concerns
are warranted. DFS customers may be targeted for fraud including phishing, SIM swapping, agents asking
for PIN numbers, fraudsters posing as agents, and more.110 Similar concerns exist with traditional bank
accounts: Kantar Intermedia surveys in 2016 found that over 20 percent of banked users reported losing
money to fraud, scams or bribes in the past six months.111

Consumers may also lack the training or skills to evaluate the true cost of financial products, especially credit
products. Early surveys of financial literacy found that people in high- and low-income countries alike
struggled with financial literacy and numeracy.112 The risk of consumers being underinformed about the
products they use are exacerbated by FSPs and PSPs that are not always fully transparent about fees. In a
study of FSPs in Ghana, Mexico, and Peru, Giné and Mazer (2021) found that less than a third of the total
107
A time when an individual is about to make an important financial decision or use a financial service, such as making a
deposit into a savings account or receiving a loan disbursement
108
Bank for International Settlements and World Bank Group (2016)
109
Demirguc-Kunt et al., (2017)
110
Buku and Mazer (2017)
111
Garz et al., (2020)
112
Xu and Zia (2012)
 cost of products was disclosed voluntarily, although FSP employees answered truthfully when asked directly.

The World Bank works with the authorities to develop a strategic financial education approach to integrate
financial education into government programming. So far, the technical assistance in this area has focused
66 on: (1) providing technical assistance to the authorities to conduct financial education surveys on the demand
side to measure the level of financial literacy; (2) to provide technical assistance to the authorities in their
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

efforts to support financial service providers to deliver education and training together with financial products;
(3) to provide technical assistance to help clients integrate financial literacy into NFIS or to develop National
Financial Education Strategies (NFES) and to have dedicated government staff or units working on financial
capability. A forthcoming World Bank technical note titled ‘Building a Financial Education Approach: A
Starting Point for Financial Sector Authorities’ aims to provide guidance to authorities on when to intervene
with financial education, how to build an impactful approach, and how to make financial education more
impactful. The note also has key considerations for gender and digital financial services. This note, like other
evidence that underpins technical work done by the World Bank, aims to make financial capability initiatives
more systematic and impactful based on an evaluation of what does (and does not) tend to work in the field.

In the context of improving the usage of transaction accounts, specifically, some key efforts include
demonstration of the advantages of using the electronic payment services – i.e., the safety, protections,
recourse mechanisms, speed and convenience – learning how to use specific payment instruments, such as a
debit card or an electronic funds transfer, and building the trust and comfort with a transaction account and
its use. Information on the reliability of ATMs, POS devices and other channels and services can also help
address potential customer concerns regarding the accessibility of their funds.

At the same time, through Project Greenback, the World Bank has been working with remittance senders and
receivers to understand their financial product and financial education needs better to (1) provide them with
digital and financial literacy, (2) work with the remittance service providers to ensure better products and
delivery of financial education, and (3) work with the regulators to convey demand-side information for
better-informed policy making (see Box 29 for more on Project Greenback).

Philippines overseas workers sent $30.1 billion to the Philippines in 2019, and while expectations were for a
much steeper decline, this amount only fell to $29.9 in 2020. Recognizing that these workers are important
consumers of remittance services, the Bangko Sentral ng Pilipinas has over the past decade conducted its
Financial Literacy Campaign through road shows in Singapore, Hong Kong and other countries, educating
hundreds of Filipino working abroad about financial planning, saving and investing.113
3.6.1 National Financial Education Strategies & Action Plans
National financial education strategies and action plans help financial sector authorities build a coherent
approach towards financial education. It helps to identify a set of national priorities and concrete actions that
can improve financial capabilities of adults at a national scale. According to the FICP survey114, roughly 44 67
countries have launched financial education strategies or approaches as of 2017 and an additional 27
countries reported having a strategy under development.

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

However, the impact of financial education strategies has been mixed. In the past, some financial sector
authorities have taken an overly broad approach, aimed at improving consumer capability for the full sector.
This often relied on traditional delivery mechanisms such as classroom training with a wide range of
curriculum topics with the intent to increase consumers’ financial capabilities directly. Traditional approaches
however can be both expensive and not always effective in providing for sustained behavior change and
improved financial outcomes.

Financial sector authorities do have a clear financial education role to play when financial risks are posed to
consumers, particularly since the expansion of DFS, along with its benefits, also amplifies traditional financial
threats and poses new risks for all consumers, especially for the newly banked.

Financial education strategies are still a powerful tool to help policymakers develop a national plan to
mitigate financial risks and improve the lives and livelihoods of individuals, particularly vulnerable
populations. Mitigating financial risks posed to consumers should be the central focus and primary objective
of financial sector authorities’ financial education strategy, particularly as COVID-19 has accelerated the
transition from traditional banking to digital services which can heighten risks, particularly for new users of
digital financial services.

A few core activity areas have shown promise in the development of financial education strategies and
include: (i) activities which forge key partnerships with government institutions to embed financial education
into programs offering financial services at scale (i.e. cash transfer programs, remittance programs,
agricultural lending programs, etc.); (ii) guidance to help financial service providers integrate financial
education more holistically within day-to-day operations; and (iii) developing a set of publicly available
resources provided to consumers that focus on addressing knowledge gaps and core educational needs.

For example, Zambia revised its financial education approach and launched a second National Strategy on
Financial Education in 2019 to focus more squarely on working in partnership with stakeholders, engaging
the private sector, maximizing cost-effectiveness, building sustainable programming, ensuring content meets
the needs of consumers or is “citizen centric”, communicating effectively, and monitoring and evaluating
impact particularly to inform policymakers if programs should be modified or discontinued.115

Similar principles are also being employed in Pakistan. In complement to SBP’s original national financial
literacy program, Sikka Bakaida, the SBP has recently called on financial service providers to integrate more
targeted, behaviorally informed campaigns that train women to access and use financial products and
services more appropriately.116 These interventions are to be integrated into the operations of SBP’s regulated
entities (commercial banks, microfinance banks, e-money issuers, etc.) as outlined within the SBP’s newest
“Banking on Equality Policy.”117

Mexico has also incorporated a new financial education approach within its recently issued National Policy
for Financial Inclusion 2020, which includes a focus on providing digital financial education particularly to
beneficiaries of social programs.118

113
[Link]
114
World Bank Group (2017).
115
Republic of Zambia (2019).
116
[Link]
117
State Bank of Pakistan (2020).
118
Government of Mexico (2020).
 Box 26 – Integrating Financial Education into Cash Transfer Programs

Globally, cash transfer programs are employed to address chronic poverty for low-income and poor
68 households and is among the most common policy response to the COVID-19 pandemic. More than
100 countries worldwide have scaled up their cash-transfer programs as part of their response to the
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

COVID-19 pandemic, often by digitizing cash transfer programs and transferring payments directly to
basic bank accounts or e-wallets.

Without financial education, however, beneficiaries of digital cash transfer programs have faced
barriers when trying to access or use their products appropriately. Beneficiaries may not fully
understand how to effectively use their new digital instrument or e-payment product, troubleshoot issues
or file a dispute, often amplifying certain financial risks (i.e. PIN and agent fraud, data privacy issues,
etc.) particularly for vulnerable beneficiaries.

Key education that leverages behavioral insights and “teachable moments”, integrated within key cash
transfer program interactions (i.e. upon registering, onboarding, transacting and continuing use), can
help ensure beneficiaries can mitigate risks and access and use their products and services
appropriately.

Cash transfer programs often have organizational and operational infrastructures in place that can be
leveraged to integrate a few quick, core financial education messages.

For example, Zambia integrated financial education during the digitization of their Women’s Livelihood
social cash transfer program, which reached over 12,000 women.

For more information, policymakers can refer to the World Bank toolkit entitled “Integrating Financial
Education into Government Cash Transfer Programs” which offers concrete guidance for policymakers
working to design and implement financial education for cash transfer programs.119

3.7 LEVERAGING LARGE VOLUME AND RECURRENT

PAYMENT STREAMS

Key lessons, leveraging large volume payment streams.

• Customer choice about which PSP to use for withdrawal makes digital G2P programs much
more attractive and convenient for the beneficiaries (Zambia).
• In digital G2P systems, “topping up” the beneficiary payments to cover cash-out fees may
induce PSPs to compete on price (Zambia).
• An important lesson for government payments in the COVID-19 crisis was that payment
systems need to be more flexible to respond to emergencies quickly.
• Digitalization of remittances can also play an important role in expanding financial
inclusion, as remittances are usually the first entry point to the regulated financial sector by
many migrants and their families.
• Needs-based, targeted product design and financial and digital literacy programs are
important for ensuring increased usage of transaction accounts by the social cash transfer
recipients and remittance recipients.
• Payroll accounts and digitalization of salary payments can improve financial inclusion.

119
World Bank Group (2018d).
For a massive shift in cash to digital payments to take place on a global scale, how large-volume payments
are made must change. Figure X shows that receiving wages, government payments or agricultural payments
has been a major driver for individuals opening their first accounts in select countries.120

Figure 12. % adults opening their first account to receive payments, select countries, Global Findex 2017
80
69
74
69 71 69
70

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

61
60 56
53
50
42
37 38
40 36 33
30 23
19 20
20 14 16
13
16
12 9 11 11 10
10 7 8

a
a

zil

ina

an

nya

ru

ica

key

ia
yp

Ira

ysi
tin

esi

mb
Pe
Bra

hst

Afr
Ch

Eg

Tur
Ke
n

la
on
ge

Za
k

Ma
za
Ind

ut h
Ar

Ka

So
Opened first account to recieve wages, government payments, or payments for agricultural products Adults with an account (%), 2017

When government payments are made into transaction accounts these programs can be a catalyst for
financial inclusion. Recipients who did not have an account previously are motivated to open and use the
account to receive payments, and when payments are repeated, recipients learn to use more functionality of
the account and gain trust through experience.121

International remittances account for the majority of payments individuals makes and receive in many
countries, for and are often repeated.122 While remittances are large in volume when aggregated, each
payment is relatively small, meaning that fee structures for regulated digital remittance services can be a large
deterrent for users. The World Bank reports that in 2021 sending remittances costs an average of 6.51
percent of the amount sent globally. However, digital remittances cost significantly less, at 5.08 percent on
average.123

Digitalizing other payment streams also has potential to make a large impact for shifting economies away
from cash and also for financial inclusion. Transit payments, utility payments, wage payments, and other
regular expenses are important recurrent payments as well as payments to the government by individuals and
businesses.

Digitalization of salary payments can be another important driver of financial inclusion and are recurrent. For
both B2P and P2B payments, a preference among some micro- small-, and medium-sized enterprises
(MSMEs) to remain informal is a barrier to adopting digital payments. IFC estimates that 74 percent of all
MSMEs are informal. In developing countries, more businesses tend to formalize as the overall quality of the
tax regime becomes more efficient and convenient.124

Business-to-business payments account for a large value in economic terms, and wholesale purchases
continue to be carried out in cash in many LMICs. At the same time, perhaps the largest component of
business-to-business payments is the supply-chain payments. There is evidence that digitalizing B2B payments
can motivate micro, small and medium sized merchants to adopt digital payment methods, and induce them
to also accept electronic payments for sales.125 FIGI Electronic Payments Acceptance Working Group (Box
22) was constructed based on this premise to conduct research on ways to improve electronic payments
acceptance by small merchants, in an effort to increase the usage of transaction accounts.

120
Demirguc-Kunt et al., (2018).
121
Bachas et al. (2017), Breza et al. (2020)
122
See for example Zollmann (2014)
123
World Bank, Remittance Prices Worldwide Database: [Link]
124
Klapper et al. (2019)
125
WEF and WB (2016a), and World Bank (2020f)
 While it is intuitive that more efficient, transparent, and lower-cost payment operations would have benefits,
research is helping clarify and quantify these benefits for payers like governments, and for payees including
low-income households and the previously financially excluded.126 In parallel, it is important to acknowledge
the role of cash and the need for it under specific circumstances, and the demand for cash by certain segments
70 of the population. It may not necessarily be optimal to eliminate cash in its entirety for a variety of reasons.
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

3.7.1 World Bank’s work on digitalization of G2P payments

Digitalization of G2P payments, and in particular of social assistance programs, can be beneficial for the
recipients, the financial sector and the government:

• Digitalization of G2P payments help create efficiencies for recipients by reducing costs from
cashing out funds and diminishing the risks associated with handling cash. Furthermore, G2P
programs normally target a segment of recipients that are excluded from the financial system,
digitization of G2P payments can provide a way of accessing financial products that can aid
woman’s economic empowerment and increase the standard of living of the recipients.
• G2P payments constitute a large volume of transactions and, if digitized, can significantly
advance the digitization of other payment streams and aid the technological development of the
financial sector.
• Digitization of G2P payments helps increase fiscal savings by reducing leakage, and
disincentivizing bribes and corruption. Also, through harmonization of different G2P streams,
government agencies can leverage the existing infrastructure to reduce the associated costs for
the execution of government payments.

Figure 13. End-to-End components for digitizing G2P payments127

126
World Bank (2016b).
127
World Bank (2020d).
The financial sector is a key player in the digitization of G2P payments and it is involved in the end-to-end
process of delivery of G2P payments (Figure 13). More specifically, the financial sector plays a part in:

• Targeting and registration of beneficiaries: The financial sector offers a source of information
that can help identify potential recipients of social protection payments, in particular when trying to 71
identify recipients within a household who already own an account. Close collaboration between
financial services providers and social protection agencies to facilitate the account opening process

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

for recipients through trusted data sharing can also improve the experience for recipients and can
contribute to reduce fraud.
• Distribution of payments from the government to beneficiaries: The financial sector
plays a key role in distributing payments from the government to beneficiaries as administrator
or participant in the payments infrastructure used to disburse funds by the government. Sound,
secure and interoperable payments infrastructures are essential to process the disbursement of
large volume payments in an efficient and timely manner.
• Providers of accounts, payment instruments and access points: The financial sector
also has a prominent role as provider of accounts to which the funds are disbursed to. The
financial sector also provides payment mechanisms and access channels for the usage of such
funds. Hence, financial services providers are responsible of offering accounts that can be
easily accessible to the recipients, as well as payment instruments that are convenient for
beneficiaries, which includes offering a wide variety and number of access channels that accept
the payment instruments used by recipients.

[Link] The World Bank’s work in G2P payments digitalization

Prior to the COVID-19 crisis, digitalization of G2P payments was incipient. A survey conducted across a
sample of 37 countries covering 41 World Bank-funded programs in 2019 showed that more than 35% of
the programs were delivered in cash, and that close to half of the programs that deliver funds to accounts
were delivering them to limited purpose accounts. Furthermore, the survey showed that financial inclusion was
not a widespread priority in most of the programs, and that the approach to financial inclusion was mainly
through financial education (Figure 14).128

The World Bank has established digitalization of G2P payments as a priority. In particular, a
whole-of-government and recipient-centric approach is adopted wherein the outcomes of financial inclusion,
women’s empowerment and government-wide fiscal savings are pursued. In this context the G2P architecture
–comprising all the infrastructure, systems, policies, regulations and financial products and services
supporting the processing and delivery of G2P payments in a given country—should consider the recipient
needs and barriers at the center of its design.. The rest of this section elaborates on the following: (i) A set of
case studies highlighting G2P digitalization processes pre-COVID on which the World Bank played a key
role (Boxes 27 and 28 on Zambia and Indonesia), (ii) The World Bank’s work on the delivery of emergency
G2P payments to tackle the effects of the COVID-19 pandemic, and (iii) The World Bank’s vision for a next
generation G2P architecture.129

128
World Bank, “Trends in the Delivery of Social Assistance Payments before COVID-19,” 2021.
129
World Bank (2020d).
 Box 27 – Enabling women and girls in Zambia to choose their preferred G2P payment
provider
72 In 2016, the Government of Zambia, with support from the World Bank’s Social Protection and Jobs
Practice, launched the (Girls’ Education and Women’s Empowerment and Livelihoods Program
(GEWEL). GEWEL involves a cash transfer “plus” program called Supporting Women’s Livelihoods
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

(SWL) administered but the Ministry of Community Development and Social Services (MCDSS) in
Zambia with the following components:

• Short-term life and business skills training, provided by community-based volunteers;

• A productivity grant of US$165 (ZMW 2,000), delivered in two installments;
• Mentorship, including refresher training and linkages to other public services;
• Support to form savings and loans groups.

The SWL program planned to reach around 75,000 women breadwinners aged 19 to 64 living in
extremely poor households from 2017- 2020. Zambia is sparsely populated, with beneficiaries spread
out over a large geographic area, so using digital payments to disburse the productivity grant made
sense for this reason in addition to the known benefits of digital transfers for both governments and
beneficiaries.130

The project has seen success in adoption of digital payments, use of mobile phones for DFS, and
reducing cost to beneficiaries. The lessons learned from this program include:

1. Allowing beneficiaries to choose their payment service provider allowed them to choose
the most convenient location and supported choice and switching.
2. Rather than a contract with certain PSPs, MCDSS topped up the grant with value to
cover payment provider fees. This encouraged competition and the withdrawal costs to
beneficiaries went down over time.

As Figure B28.1 shows, more PSPs partnered with the program in each phase of the project. When large
MNOs MTN and Airtel joined, over 50 percent of beneficiaries switched, citing proximity of the agent
location as the main reason. Because the MNOs offered a withdrawal fee of 2 percent as opposed to
3.5 percent with Zoona, beneficiaries also saved money. This has placed downward pressure on
transaction fees for Zoona and other competitors. Beneficiaries also migrated away from Zampost due
to reported issues with quality.131
Figure B28.1 Proportion of beneficiaries using PSPs over Time, ZambiaGEWEI Project
2016 - 2017 2017 - 2018 2019 - 2020

65
60 56
Proportion of beneficiaries

40
36 32
22 22
20 17 19
10 9
3 5 3 0 1 0
0
tel

A
ost

a
A
ost

tel

ve

A
ost

tel

ve
N

ve

mte
mte

mte

on
on

on

UB
UB

UB

MT
MT

MT
tsa

tsa

tsa
Air
Air

Air

mp
mp

mp

Zo
Zo

Zo

Za
Za

Za
Na

Na

Na

Za
Za

Za

Airtel MTN Natsave

PSP
UBA Zampost Zamtel Zoona

130
Baur-Yazbeck et al. (2019)
131
Marin et al. (2020)
 Box 28 – Improving G2P in Indonesia

Indonesia has a complex and diverse set of social protection and government payment programs
directed at improving its development outcomes. In 2017, the Government of Indonesia aligned 73
G2P programs with its financial inclusion efforts by mandating the transition from cash and in-kind
programs to digital channels.132 The World Bank’s Financial Inclusion Support Framework (FISF)

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

provided technical assistance for both G2P payments and complementary Digital ID efforts. The
World Bank undertook a comprehensive study of the G2P payments landscape, which then
informed technical assistance and capacity building initiatives to develop the Government Payments
Program, based on the guidelines proposed by the International Advisory Group for Government
Payment Programs chaired by the World Bank.133

This project supported the National Planning Ministry’s G2P Payment 4.0 Roadmap—a set of
reforms aiming to improve the efficiency and accuracy of social program delivery while delivering
and improving the experience for beneficiaries and expanding financial inclusion. With support of
the World Bank Group’s G2Px and ID4D Initiative, in addition to FISF, the Government has been
working towards the implementation of this roadmap including payment infrastructure reforms and
recognizing the importance of a secure and well-functioning digital ID program for success. One
important lesson learned that the Government of Indonesia is taking into account is that beneficiary
choice can lead to better adoption and usage of accounts, and a more empowering experience for
the beneficiaries. Choice is a key component of the new Roadmap.134

132
Moorena et al. (2020)
133
Indonesia FISF, World Bank Operations Portal
134
Moorena et al. (2020)
 [Link] Digitalization of COVID-response G2P payments
The COVID-19 crisis spurred a need for high and low-income country governments alike to distribute
payments to support vulnerable citizens and to deliver fiscal stimulus rapidly. At least 200 countries and
74 territories have expanded or introduced social protection measures in response to COVID-19.135 The global
pandemic forced a new way of looking at social protection payments, as beneficiary groups targeted are
broader than and different from previous social protection programs. In some LMICs, limitations of payment
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

infrastructure, targeting mechanisms, and tighter budgets posed challenges for COVID-19 support
payments.136 Because the majority of women in LMICs earn income in the informal sector— 95 percent of
women in Asia and 89 percent in Sub Saharan Africa— women are in greater need of support. Informal
economies are characterized by less security and support and were greatly affected by lockdowns globally.

By May 2021, over 1.7 billion people lived in households that benefitted from at least one COVID-response
cash transfer payment between 2020 and 2021. A review of 178 emergency programs across 85 countries
low- and middle-income countries shows that a large proportion of countries leveraged digital payment
methods to some extent to deliver emergency G2P payments (Figure 15).137

Figure 15. Delivery mechanisms used for emergency G2P payments across selected countries

The World Bank Group has been providing technical assistance, sharing good practices and providing
guidance for the digitalization of emergency G2P payments Some of these publications include high-level
considerations for emergency social assistance payments,138 women’s inclusion and economic
empowerment,139 and scaling up social assistance payments as part of the COVID-19 pandemic
response.140 The World Bank has also provided financing to support countries in the implementation of

135
Bull et al. (2020)
136
Hanna et al. (2020)
137
Marin and Palacios (2022)
138
World Bank (2020d)
139
BMGF, WBG, CGAP, and WWB (2020).
140
World Bank (2020e)
COVID-response social assistance programs. Some of these World Bank lending operations that included
support to digitize the payments include:

• Fiji Social Protection COVID-19 Response and System Development Project

• India Accelerating India's COVID-19 Social Protection Response Program, focused on cash
75
and food benefits, using a set of pre-existing national platforms and programs, to provide social

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

protection for essential workers involved in COVID-19 relief efforts; and benefit vulnerable
groups, particularly migrants and informal workers, who face high risks of exclusion
• Pakistan, the Pandemic Response Effectiveness Project focused on the COVID-19
preparedness and emergency response in the health sector. It has also helped the poor and
vulnerable cope with the immediate impact of the pandemic through social protection
measures, food rations, and remote learning education.
• Philippines Beneficiary FIRST Social Protection Project
• Peru In the Digitization of G2P social transfer payments in Peru, technical assistance to
support implementation by social protection and financial sector authorities to shift
government-to-person payments to digital channels, with a focus on emergency payments for
CovidCOVID-19.
• West Bank and Gaza West Bank Emergency Social Protection COVID-19 Response
Project
• Yemen Emergency Social Protection Enhancement and COVID-19 Response Project
 [Link] Next generation G2P architecture
An important part of creating a shared understanding of what characterizes an ideal G2P architecture, is
developing a cross-sectoral common vision of an ideal scenario. The World Bank Group has developed a
76 framework for a modern G2P architecture (Figure 16), laying out design principles to support long-term
development outcomes such as financial inclusion, women’s economic empowerment, and government-wide
fiscal savings.141
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

A G2P architecture encompasses all systems, infrastructure, regulations, policies, and design choices that
enable and characterize the end-to-end delivery of G2P payments. Any G2P architecture consists of various
building blocks. A building block of the G2P architecture is an element of it (e.g. an infrastructure, system,
policy, regulation, products) that has a distinct and well-defined role in the process of delivering G2P
payments and using them to facilitate financial inclusion. These building blocks are not exclusive to G2P
payments and in many cases, e.g. the National Payment System, G2P payments are only one of numerous
contexts and use cases.

A modern G2P architectures (the ideal scenario of how a G2P architecture could be) should be designed
with the needs, barriers, and preferences of recipients in mind, ensuring that infrastructure and systems are
shared across programs and payments streams, and providing choice and fully functional accounts to
recipients (Figure 16).

Figure 16. Modern G2P architecture142

141
World Bank. 2022. Identification for Development (ID4D) and Digitalizing G2P Payments (G2Px) 2021 Annual Report.
Washington, DC: World Bank
142
World Bank (2022).
3.7.2 International Remittances
International remittances are vital source of financing for many low- and middle- income economies, serving
as a macroeconomic stabilizer, a lifeline in times of crisis and a steppingstone for financial inclusion.
Remittances have steadily increased over the past decade, reaching a record high of $554 billion in 2019. 77
Even during the COVID -19 pandemic, remittance inflows to low- and middle-income countries declined by
only 1.6 percent, exceeding both Official Development Assistance (ODA) and Foreign Direct Investment (FDI)

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

and becoming more significant for the receiving economies.

Remittances are defined as small-value, cross-border, person-to-person transfers.143 In general, remittances are
recurring fund transfers by migrant workers to their families and friends back home. Oftentimes, sending and
receiving international remittances constitute the first encounter with the regulated financial system for many
remittance beneficiaries, and therefore, remittances provide an opportunity to provide access to a transaction
account to senders and receivers.

Cross-border payment transactions involve two jurisdictions, links between different payment infrastructures,
several providers, and in many instances, foreign exchange conversion. The complexity of these transactions
makes them cost much higher than a domestic P2P transfer of the same amount. Higher costs mean a lower
amount remains available for the receivers. Hence the international community has been working on reducing
the cost of sending remittances since 2009, when the G8, then G20, 5x5 Remittances Target was
announced, which aimed to reduce the average cost of sending $200 to 5 percent in 5 years. While this
target was not reached, it acted as a catalyst , m of a number of reforms in this area. Eventually, the UN
adopted a more ambitious target within the context of SDGs (SDG 10.c) to reduce the average cost of
sending $200 to 3 percent by 2030.

The World Bank has been supporting this international work since the early 2000s. The World Bank, together
with the CPMI, published the General Principles for International Remittance Services in 2007, which became
the standard tool for assessing the payments aspects of the market for international remittances, and formed
the basis of reform efforts for cost reduction in the years that followed. In parallel, the World Bank started
collecting data on the cost of sending remittances. Today the Remittance Prices Worldwide (RPW) database
provides the most comprehensive data on the cost of sending remittances, including 48 sending countries,
105 receiving countries and 367 corridors, and is the source data for UN SDG 10.c.1.144

According to the RPW data, the cost of sending $200 in the first quarter of 2021 was 6.38, more than the 5
percent global target set by G20 and the 3 percent target defined in the 2030 agenda for the Sustainable
Development Goals. Combined with other factors such as access to information and services, the high costs
often lead senders to opt for unregulated channels, which pose additional risks.
At the same time, the RPW data also shows that digital remittances are cheaper than cash remittances.
Moreover, the digital-only money transfer operators are able to provide remittance services at a much lower
cost than other service providers on average. Access to digital remittance services require access to a
transaction account, which is the underlying idea of the UFA goal. Therefore, in addition to remittances
constituting the first encounter of many remittance beneficiaries with the regulated financial system,
digitalization of remittances can bring additional benefits besides financial inclusion of remittance
beneficiaries: cost savings that would be one-on-one translated to increased incomes of remittance
beneficiaries.

In this regard, a couple of additional points become important. As remittance beneficiaries are likely to have
specific needs, e.g., potentially a lack of official ID on the side of senders and also on the side of receivers,
low and unsteady incomes, and low levels of digital and financial literacy, etc., product design fitting the
needs of this group as well as improving their financial and digital literacy are key points in digitalizing
remittances. Project Greenback approach by the World Bank provides technical assistance to national
authorities for this purpose (Box 29).

143
CPMI and World Bank (2007).
144
[Link]
 Box 29 - Project Greenback – Making remittances work for the poor

Implemented in 11 economies over the past 10 years, Project Greenback aims to help remittance senders
and receivers to access and use cheaper, regulated, transparent and efficient financial services, make
78 informed decisions and ultimately get more value from remittances.

Applying a bottom-up approach, Project Greenback focuses on a community or “champion city” to

UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

analyze issues related to remittance transactions and the community's specific needs to properly
articulate the needs of the end clients and determine what works. Starting from the demand side, the
Project then coordinates with providers, regulators, other national authorities, and other relevant
stakeholders such as NGOs, to pilot a set of strategic initiatives in financial education or new financial
products for remittance senders and receivers. The aim is to devise solutions that can benefit end users,
providers, and the industry overall. Depending on market feedback, the most effective initiatives are then
scaled up for broader application by the relevant stakeholders, which may go beyond the scope and
length of the World Bank's involvement in each country.

Often supplementing the World Bank’s broader financial inclusion and infrastructure interventions,
Project Greenback serves as a strategic instrument for bridging information gaps and fostering
stakeholder coordination at the country level. At a global scale, the World Bank team coordinates
knowledge-sharing activities of the project through the Remittance Champion Cities Network, ensuring
replication of best practices, piloting innovative solutions and disseminating lessons learned globally.

3.7.3 Digitalization of Salaries

Globally, 62 percent of wage receivers of ages 15 and above, receive them electronically into an account.
In high-income economies, the same figure is 87 percent while it is 51 percent in developing economies.145
This represents a significant opportunity to provide transaction accounts to those that receive wages in cash
or via cheques. At the same time, there is evidence that with the right product design, such transaction
accounts opened for receiving wages can be a steppingstone for further financial inclusion.

145
World Bank, Global Findex, 2017.
 Box 30 – Digitizing payments to readymade garment (RMG) workers in Bangladesh

The readymade garment sector in Bangladesh is a multibillion-dollar industry and important contributor
to the economy. Garment workers are over 85 percent women, representing about 3.4 million women in
2018.146 According to the Better Than Cash Alliance (BTCA) 75 percent of factories reporting data still 79
paid workers in cash as of 2016.147 The IFC, World Bank, BTCA, Bill & Melinda Gates Foundation and
others joined a coalition of public and private organizations working to support a transition to digitizing

TAKING STOCK OF PROGRESS IN PRIORITY AREAS OF THE PAFI FRAMEWORK

payments in this sector. The World Bank contributed important knowledge resources that provided the
evidence for partners like IFC and BTCA to engage international RMG companies.

There were numerous advantages of transitioning from cash to digital payments in this sector. Having a
personal account can benefit workers; digital payments reduce the risk of theft or loss of cash, and
research has found women report more control over money paid directly to an account in their name, with
some indications from other countries of increased female empowerment over time.

Second, RMG companies that made the transition reported productivity gains, better record keeping,
and reduced corruption. A World Bank and IFC study found that each worker waits an average of 18
minutes to receive their wage each month, adding up to 750 hours of productivity lost to a factory with
2500 workers. Companies that transitioned from cash to digital payments reported 53 percent increase
in time savings for administrative and finance teams in the first year of implementation. Relatedly, the
recordkeeping enabled by digital payments has allowed companies like H&M, Gap Inc., Marks &
Spencer, Inditex and others to easily demonstrate compliance with International Labor Organization
(ILO) and other standards for fair labor practices and living wages.148 Third, by opening bank accounts
for thousands of Bangladeshi women, this effort moved the needle on financial inclusion in Bangladesh
and was a contributing factor in the 10-percentage point increase in financial inclusion in Bangladesh
from 26 percent in 2014 to 36 percent in 2017.149

The results of this effort have been impressive, and progress continues. The Bangladesh Garment
Manufacturers and Exporters Association (BGMEA) became convinced of the case for digital payments
for efficiency gains in their own operation, but also for women’s financial empowerment. Over 70,000
of female garment workers opened mobile financial accounts between 2016 and 2018. BGMEA has
supported continued expansion among its approximately 4,500 factories.150

Another study by the World Bank in Bangladesh with workers in the RMG manufacturing industry shows
the importance of payroll accounts in furthering financial inclusion.151 The experiment was conducted in
two RMG factories, and tested payroll accounts offered by banks and mobile financial service providers
as opposed to wage payments in cash. Trainings with workers were held to familiarize them with the main
characteristics of the accounts they have.

The study finds several important results:

1. Workers who receive salaries in an account tend to use their accounts more frequently,
develop trust in the technology, learn to use the account without assistance and learn to avoid
common risks as opposed to workers who just receive the accounts but cash wages.
2. Workers with higher levels of financial literacy and experience tend to use financial
technology more effectively, while others end up primarily accumulating savings.
3. Financial education interventions seemed to have helped those with lowest levels of financial
literacy and experience the most.

This case study demonstrates that through producing solid evidence to make a case to the private sector
and contributing to toolkits to help with implementation the World Bank can be part of collaborative
efforts to drive large-scale change in B2P and other payment streams.

146
World Bank Group (2018c)
147
BTCA (2019)
148
BTCA (2019)
149
World Bank, Global Findex Database, 2017.
150
World Bank Group (2018c)
151
Breza et al. (2020).
 4
FUTURE DIRECTIONS FOR
80 •
THE WORLD BANK IN
SUPPORTING FINANCIAL
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

INCLUSION GLOBALLY

UFA2020 catalyzed donors, international development agencies, and governments to push for coordinated
action for financial inclusion in the 25 countries that are home to the majority of the world’s unbanked people.
By focusing the World Bank’s own work and bringing donors and other actors together and drawing attention
to the topic, partnerships made for more effective action at the country level and important gains were made
in account ownership and forging better policy environments to enable continued progress.

COVID-19 outbreak underlined the importance of widespread access to and usage of digital payments and
other digital financial services. As many governments around the world imposed lockdowns, e-commerce
transactions and online payments gained importance. At some point, banknotes and coins were declared to
enable the transmission of the virus, and hence the demand for digital payments, especially contactless
payment instruments increased. In addition, many governments established social assistance programs, and
needed mechanisms to disburse the benefits. The demand for both international and domestic digital
remittances increased as travel restrictions became common and families and friends tried to support each
other during difficult times.

While UFA2020 initiative acted as a catalyst for many reforms globally, there is still more to be done.
COVID-19 also exposed additional vulnerabilities and the need for further interventions. The following are
potential areas of focus for where the World Bank might continue the work that was started as part of
UFA2020.

Continue efforts towards women’s financial inclusion and closing the gender gap. The 9-percentage point
gap in financial inclusion by gender in emerging market economies persisted from the 2011 to 2017 Global
Findex, and this catalyzed global action to invest more in women’s financial access.152 World Bank research
and knowledge products continue to demonstrate the specific benefits to women and communities that can
accrue when more women have their own accounts.153 By driving meaningful financial inclusion through
social protection programs that target women and girls, and working with the private sector through projects
like digitizing salary payments to women and girls in Bangladesh, the World Bank has contributed to progress
in achieving gender equity in financial inclusion, but there is more to be done. The World Bank should
continue to address the root causes of barriers to financial access for women including identification, access
to internet and their own mobile phones, legal provisions that prevent women from being independent
economic actors154, access to markets and entrepreneurship skill building, and demonstrating the benefits that
can accrue to families through women’s financial inclusion and economic empowerment. The promising work
in G2P payments that target women is another key area of opportunity.
Sex-disaggregated data has been a successful tool to motivate action, with effects beyond financial inclusion,

152
This gap was of course much larger in many emerging and developing economies.
153
See among others Breza et al. (2020)
154
World Bank (2018a)
and this focus should be continued. In Mexico, Pakistan, Ethiopia, and other countries, collection of
sex-disaggregated data about financial product ownership and usage has been instrumental in making the
gender gap salient to public and private sector actors. In Pakistan having data per financial institution was
motivating for the private sector to make more efforts to serve women. Collecting these data, among other
factors, influenced the culture of the State bank of Pakistan. The World Bank should continue to support clients
in collecting and acting on these data, following best practices gained through experience.
81

FUTURE DIRECTIONS FOR THE WORLD BANK IN SUPPORTING FINANCIAL INCLUSION GLOBALLY
More work is needed in fragile countries. As the number of financially excluded decreases, the unbanked will
increasingly remain in hard-to-reach countries and settings, including states affected by conflict and extreme
poverty. While other actors often write off these markets, work in these contexts is definitively within the World
Bank’s purview and teams should not shy away from this challenging work to engage with the most
vulnerable. Financial and identification access for migrants and refugees is one example in this area where
promising work has been done and projects should continue.

Social protection and financial inclusion are complementary and there are many examples of coordination
and collaboration between social protection and finance teams, leveraging government payments for
sustainable access to finance. This collaborative work should be continued, sharing lessons learned and
continuing to build best practices. Often this includes work on identification, and the ID4D team and G2PX
will continue to be critical partners on the financial inclusion agenda. Moreover, there are opportunities to do
more with other sectors and global practices in the World Bank including agriculture, energy, education,
transport and digital development and water. In virtually all sectors there are payment needs where
opportunities exist for collaboration on the agenda for financial inclusion, and were working together could
reduce costs, increase efficiency and help to reach more people.

It is critical to ensure that the recent uptake of digital payments and inclusion of underserved segments due to
the COVID-19 pandemic is sustained in the long run. Across several countries, digital payments saw an
increase in volumes associated with mobility restrictions and social distancing, the uptake was also driven by
different measures implemented by authorities and private entities across the world which facilitated usage of
digital payments (Box 31). Also, emergency G2P programs allowed to include millions of previously
underserved citizens in the financial sector. However, as for digital payments, many of these inclusion
opportunities were possible due to temporary measures agreed between governments and financial services
providers. It is important to capitalize the financial inclusion opportunities from the pandemic and review how
current policies need to be modified to sustain such gains in the long run.
 Box 31 – COVID-19 and digital payments

The COVID-19 pandemic has highlighted the convenience of using digital payments as a way of
82 overcoming limitations from social distancing. However, it is important to note that while digital payments
attracted many new users during the pandemic the overall volume of transactions has been affected by
the global decrease in economic activity.
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

These dynamics had different effects across countries, with some countries increasing their overall
volume of digital payments, while other showing decreases. Another relevant aspect to consider is that
digital payment instruments, such as cards, can be used for both present and not-present transactions,
and for many, the former is the most popular way of usage. Hence as many merchants and retailers
closed during the lockdowns, card payments showed large decreases in volume. For example, growth
in number of payments for two largest international card brands showed a sharp decline in the second
quarter of 2020 and had a recovery in the third quarter of 2020.

The same perception was validated through a survey sponsored by the World Bank, in which 48 C-level
executives from the payments industry covering 40 countries provided their insights of the impact of the
pandemic in digital payments. Respondents stated that at the beginning of the pandemic there was a
steep decrease in digital payments volumes, with only 13% reporting no reductions in volumes.
However, nearly half of the respondents stated that following the initial decline the volumes were already
fully recovered (Figure B32.1).

Figure B32.1. Survey on domestic payments innovation during the pandemic155

In contrast to card payments, in some countries non-card digital payments did not decrease in volume
and some countries saw significant increases that go beyond 2019 year-over-year increases (Figure
B32.2).

155
Payments Innovation Jury (2021).
 It is important to highlight that many authorities around the world set temporary measures to facilitate
the uptake of digital payments. The World Bank has tracked the measures taken by authorities and other
stakeholders related to payments and detected 275 measures taken by authorities and stakeholders in
90 countries (Figure B32.3). Among the measures to highlight are the following: 83
• Waiver of fees: In Albania, Brunei, Egypt, Ghana, Indonesia, Kenya, Nepal, Philippines,

FUTURE DIRECTIONS FOR THE WORLD BANK IN SUPPORTING FINANCIAL INCLUSION GLOBALLY
Palestine, Pakistan, Portugal, Rwanda and Uganda authorities have withdrawn fees for
using electronic payment services, such as electronic transfers and mobile money services.
In Cameroon, Ethiopia, Nigeria, Uganda and Zambia private providers are waiving fees to
users of mobile payments.
• Increase transaction limits: Authorities raised transaction limits on mobile channels in
Bangladesh, Egypt, Ghana, Kenya, Nepal, Rwanda and Uganda.
• Facilitate contactless payments: 29 countries across Europe have raised limits for using
contactless payments without the need of entering a PIN. This measure is also being used
in Egypt and Costa Rica.
• In Egypt, authorities are facilitating account opening. In Palestine, banks are providing
incentives for users to use their mobile banking apps.
The same perception was validated through a survey sponsored by the World Bank, in which 48 C-level
executives from the payments industry covering 40 countries provided their insights of the impact of the
pandemic in digital payments. Respondents stated that at the beginning of the pandemic there was a
steep decrease in digital payments volumes, with only 13% reporting no reductions in volumes.
However, nearly half of the respondents stated that following the initial decline the volumes were
already fully recovered (Figure B32.1).
Figure B32.2. Non-card digital payments volume in selected countries

120%

70%

20%

-30%
BRAZIL INDIA MEXICO PERU TURKEY

-80%

Mar-19 Apr-19 May-19 Jun-19 Mar-20 Apr-20 May-20 Jun-20

Figure B32.3. Measures taken by authorities related to payments156

Promoting and ensuring availability

of digital payments mechanisms

Other measures

Easing regulatory requirements

Consumer protection measures and ensuring

availability and acceptance of cash

0 10 20 30 40 50 60 70 80
Upper middle income Lower middle income Lower Income High Income

156
World Bank, Financial Sector COVID-19 Response Dashboard:
[Link]
 One key sector for increased collaboration is agriculture given the high percent of the unbanked living in rural
areas and who depend on agriculture for their livelihoods and food security. This should be a focus of future
efforts to continue to reach the remaining unbanked with services that meet their needs. The rural-urban gap in
financial inclusion is large globally and is especially pronounced in many less-developed countries and there
is little P2P and merchant acceptance of digital payments. Poor connectivity or network access may also be a
84 challenge to using DFS. Projects on geospatial mapping of access points and of population use of financial
inclusion is a strong start to understanding the scope of this challenge and should be continued. Trust in digital
solutions and reluctance to shift financial habits and challenge social norms are also barriers. Outreach
UNIVERSAL FINANCIAL ACCESS 2020 - LESSONS FOR THE FUTURE

through trusted local leaders and organizations together with effective media campaigns using channels
people use and trust can help shift social norms and acceptance of new services.

Current offerings of financial products in many countries understandably still design products with urban,
wealthier customers in mind. Serving people living in rural areas with products that help start a flywheel of
digital income, commerce, and spending is an exciting area of opportunity for the intrepid members of the
private sector. The World Bank can help make the case and support governments to incentivize efforts in rural
areas. This will mean greater emphasis on agricultural and smallholder finance, support for convenient and
affordable domestic urban-rural remittances, and livelihoods work to grow the economic pie in areas of high
financial exclusion.

In addition, continued focus on improving account usage is needed. As mentioned earlier, the design of
relevant, affordable, and easy to use products are important to improve usage. Products need to be designed
based on the needs of the unbanked and underbanked segments. To drive usage, end users need to be more
trusting to the financial sector and the providers, they need to be more confident in using financial services, and
they need to be more digitally and financially literate. Regulators need to be especially diligent in protecting
the interests of the customers with the application of technological innovations in the financial services industry.
Lastly, building an entire ecosystem is important. It is not sufficient to empower end users with transaction
accounts if those accounts cannot be used to make payments. At the very basic level, enabling bill payments,
digitalization of remittances and government payments, mandating salaries to be paid into accounts are some
steps that can be taken by authorities. However, perhaps most importantly, building a merchant payments
ecosystem is needed as it will be through the everyday transactions that the end users will end up building new
habits of using digital payments, which will be a steppingstone to financial inclusion.
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Bachas, Pierre, Paul Gertler, Sean Higgins, and Enrique Seira. 2017. “How Debit Cards Enable the Poor

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Banca de las Oportunidades, and Superintendencia Financiera de Colombia. 2019. “Financial Inclusion
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Barooah, Prabir, Samveet Sahoo, Sunil Bhat, and Denny George. 2018. “Closing the Gender Gap:
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Baur-Yazbeck, Silvia, Craig Kilfoil, and Ioana Botea. 2019. “The Future of G2P Payments: Expanding
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