Financial Inclusion Rises, Thanks to Latin America and Southeast Asia

Global financial inclusion witnessed significant growth last year, according to a study sponsored by the U.S. company, Principal Financial Group.

Released on Tuesday, the Global Financial Inclusion Index showed an overall score of 47.3 out of 100.

This increase, a boost of 5.6 points, came largely from Latin America and Southeast Asia.

Financial inclusion refers to the equitable and accessible availability of financial services like banking, loans, and insurance to all individuals and businesses.

The Centre for Economics and Business Research and Principal conducted the report. They ranked 42 markets.

The report also introduced new scoring at global and regional levels.

Brazil showed notable growth, ranking 21st with a score of 47.6. Thailand, Vietnam, and South Korea also made strides.

On the other hand, Singapore led the rankings with a score of 73.9. Hong Kong followed at 71.1, then Switzerland at 68.4.

In comparison, Spain ranked 29th with a score of 41.4. Mexico was 35th with 37.6, Peru 38th at 31.4, Colombia 39th at 30.2, and Argentina last at 42nd with 23.9.

The Index relies on three criteria for evaluation: government support, financial systems, and backing from employers.

Background

This surge in financial inclusion is crucial for economic growth and stability. Notably, Latin America and Southeast Asia are emerging as significant players.

Their improvement also underlines the role of effective financial systems in fostering growth.

The study’s three pillars—government support, financial systems, and employer backing—reveal a comprehensive approach.

They help to understand the multifaceted nature of financial inclusion. Brazil’s rise is particularly significant given its size and impact on the Latin American economy.

Lastly, lower rankings for countries like Argentina and Colombia signal room for improvement.

This report could act as a catalyst for these nations to reevaluate and strengthen their financial inclusion strategies.