At a Glance With 2.7 billion adults still lacking access to financial services, improving access to finance affords a number of economic and human development opportunities. Improving access to responsible finance has a positive impact on a number of levels: · At the household level, access creates a positive impact on households’ welfare by helping families to build assets, manage risks, and smooth consumption. An increasing body of evidence shows that when the appropriate service is matched effectively with the needs of poor clients, financial services can lead to increased income and improved health and education outcomes, allowing children to spend more days in school and families to eat more regular meals. A study conducted in Kenya shows that access to savings accounts for female market vendors allows for higher business inventory and therefore higher incomes. Microenterprises are, collectively, the largest employers in many low income countries. Yet, their growth is often stifled by lack of access to credit and savings services that would enable them to make the necessary investment in fixed capital, grow their turnover, and employ more people. Savings, insurance and payments services are also needed for firms to better manage risks and to be confident in making new investments. · Financial delivery systems play an important role in improving the efficiency and reducing the costs of other public policy interventions. For example, Bolsa Familia in Brazil decided to shift its government payments onto one electronic benefit payment card. As a result, they went from a 14.7 percent cost to 2.1 percent cost of transaction cost—12.7 percent savings on billions of dollars. · At the macroeconomic level, evidence exists that more universal and integrated financial systems increase growth and reduce inequality. The G20 has therefore made financial inclusion a permanent policy priority by establishing the Global Partnership for Financial Inclusion (GPFI) and committing to the ‘Principles of Innovative Financial Inclusion’, which are intended to serve as a basis for action to improve access to financial services for the world’s unbanked. Over the last few decades, different types of financial services providers for poor people have emerged—non-government organizations; cooperatives; community-based development institutions like self-help groups and credit unions; commercial and state banks; insurance and credit card companies; telecommunications and wire services; post offices; and other points of sale—and offer new possibilities. Mobile money--financial services such as payments and short-term savings--delivered through mobile phones is particularly promising as a means to dramatically reduce costs. It enables greater outreach to more people living in isolated areas, and can be safer and more convenient. Within the World Bank Group, different institutions play complementary roles in achieving our goal of responsible financial inclusion: · The World Bank (International Bank for Reconstruction and Development and International Development Association) is the leading global development partner for governments and regulators for financial inclusion. This support can take the form of policy advice, data and diagnostics, technical assistance for legal and regulatory reforms, institutional development, risk-sharing, and financing. The World Bank currently has an active portfolio (not including the wider portfolios of supported financial institutions) in financial inclusion of over $3 billion, with projects in over 55 countries. · IFC is the World Bank Group’s lead investor in microfinance, and it is one of the leading multilateral investors in terms of outreach to microfinance institutions, working with 150 institutions in more than 60 countries. As of December 2011, IFC had a committed microfinance portfolio worth $2 billion, and IFC’s investee clients had an outstanding portfolio of nearly 8 million microloans, worth nearly $12.6 billion. · CGAP (Consultative Group to Assist the Poor), is a global policy and research center dedicated to advancing financial access for the world's poor. As a multi-donor partnership housed at the World Bank, it is supported by over 30 development agencies and private foundations who share a common mission to alleviate poverty. CGAP promotes standards, funds, and develops innovations, and shares knowledge and best practices. It also offers advisory services to governments, financial service providers, donors, and investors. The World Bank (IBRD/IDA) The World Bank takes a comprehensive approach to working with governments and regulators towards creating financial inclusion for the poor, led by the Financial Inclusion Practice and its global network of specialists. Efforts include increasing access to a range of financial products and services (credit, savings, payments, insurance) and institutions (commercial banks, savings banks, cooperatives, MFIs), through low cost delivery mechanisms (agents, ATM kiosks, mobile phones). This integrated approach (i) enables policy and legal frameworks (ii) architects sound and efficient financial infrastructure (iii) leverages a broad range of institutions (iv) innovates delivery using technology and existing networks and (v) ensures responsible finance through consumer protection and financial literacy. The World Bank partners with countries not only to formulate national strategies for financial inclusion and diagnoses needs and feasibility, but also it provides technical assistance, financing and capacity building to ensure the resilience and sustainability of these plans. World Bank diagnostics, technical assistance, and development policy loans support governments to enable policy and regulatory changes that can facilitate increase in access for the poor and small enterprises and to promote responsible finance. The World Bank also supports the needed financial infrastructure to promote financial inclusion, such as payment and credit information systems. Financing for MSME or poor households is another provision from the World Bank and can be offered via wholesale or retail institutions with government guarantees, lines of credit, or risk sharing mechanisms. The World Bank conducts two global surveys that provide a comprehensive set of data and insights on financial inclusion: the Global Financial Inclusion Database (Global Findex), a Gates Foundation funded survey of about 150,000 people in 148 countries, implemented with Gallup,), and the Global Payment Systems Survey (which covers critical financial infrastructure related to payments and mobile money, in 142 countries). IFC IFC’s focus is on creating and supporting commercially viable microfinance institutions that can attract the private capital needed to scale up and respond to unmet demand. IFC is playing an important role by demonstrating the business case for commercial microfinance and promoting it as an asset class to private institutional investors. Since pioneering commercial microfinance in the early 1990s, IFC has continued to lead innovation in microfinance, using developments in technology, financial products, and policy to help financial institutions reach a greater number of people in a more cost-effective way. IFC’s goal for microfinance is to scale up access to a range of high-quality financial services for underserved populations, maximizing development impact and ensuring institutional sustainability. IFC achieves this goal by effectively combining investment and advisory services to a range of financial intermediaries, and through projects such as Bandhan and EB-ACCION Microfinance. The Consultative Group to Assist the Poor (CGAP) CGAP is widely recognized as the leading resource for financial inclusion, offering vital information through its renowned publications and online knowledge resources that include the Microfinance Gateway (www.microfinancegateway.org), the CGAP Microfinance Blog and the CGAP Technology Blog. CGAP projects focus on new delivery technologies such as mobile phones to improve efficiency and reduce costs, policy frameworks for branchless banking and sequenced programs that provide the poorest pathways out of poverty. (LINK) Media Contacts Jeanette Thomas (CGAP), (202) 744-4829, jthomas1@worldbank.org Nicole Frost (World Bank, FPD), (202) 458 0511, nfrost@worldbank.org John McNally (IFC) (202) 458-0723 Jmcnally@ifc.org Updated March 2012 | 
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