Go Back Home

Why Developing Nations Need Financial Literacy More Than Ever


For most of us in the developed world, banking is easy. Digital tools allow seamless access to our finances with just a few swipes or clicks. But that robust financial infrastructure we take for granted is completely foreign to more than 2 billion people worldwide. In the developed world, 94 percent have some form of bank account — in the developing world, that number drops to 54 percent.

Even the most basic aspects of financing — savings accounts, debit cards, credit cards, and payment systems — are not yet available to all. And when the products are there, many individuals don’t know how to use them. Recent studies prove a lack of awareness often prevents people from using available financial products.

Financial access and financial literacy are essential tools to help impoverished people rise above their circumstances toward better lives. Though behavioral insights are leading to cost-effective financial literacy strategies for the developing world, these lessons need to be paired with the right tools to truly be effective.

Why Digital Banking Is the Answer

Citizens of wealthy countries often conduct their banking activities through digital means. Digital payment systems create a level playing field with affordable options — such as kiosks, mobile phones, and other digital interfaces — that make it easier for everyone to connect to the formal financial sector. But in developing countries, those with financial accounts don’t yet enjoy the same digital access.

These instantaneous financial connections could mean a whole new financial world for those in poorer areas. Through financial technology, they become customers and suppliers within the broader economy, track their finances, and enjoy faster transactions while cutting down on theft and corruption. Direct deposits allow consumers to get their wages and government assistance in their bank accounts without interruption, providing women in particular with more financial authority, as well as better tools to save money.

Financial technology also gives institutions the tools to better serve poorer households. With better access to financial histories, providers can develop products that are suited to unique customer needs, including fee-for-service offers or small-unit transactions.

Improving Conditions Through Financial Awareness

Those in rural areas need access to more immediate financial tools to help them weather a monetary shock, find new income opportunities, or escape poverty. To that end, the Bill & Melinda Gates Foundation’s Financial Services for the Poor program focuses on low-cost and robust banking systems for those in poor and rural areas. Financial institutions, including FIS, are making strides by focusing on innovative ways to expand access and offer effective products and channels.

In addition to digital options for those in poor or rural areas, other solutions can make good use of the brick-and-mortar infrastructure already in place. Sandhya Rani, postmaster general of the Andhra Pradesh state in India, put an emphasis on the vast potential digital finance holds for rural areas. “With over 155,000 post offices, most of which are in rural areas, we are poised to play a critical role in enhancing financial inclusion, as we are able to deliver a variety of financial services, including banking, insurance, and remittances, even in the most remote areas of the country.”

Bridging the Gender Divide

Even though the number of people with a financial account has grown by half a billion in the past three years, women haven’t made nearly as much progress.

Women in developing countries are 20 percent less likely to have a bank account than men, and they score lower on financial metrics, such as budgeting and planning for emergencies. Even in my modern and open-minded family in India, my father or uncles handled most money-related issues, and women were largely excluded from financial discussions.

But there is still hope. Anecdotal evidence shows that microfinance has a positive impact on women. In a 2014 survey of Indian women who received microloans, 92 percent saw their standard of living improve, 91 percent said their confidence increased, and 65 percent became more involved in making household decisions. Word is spreading, as 74 percent of those women gave advice to other women on obtaining loans.

Encouraging those in developing countries to take control of their finances will improve their opportunities for success in the long run. Financial technology is a promising way to get the word out. There is still a great deal of work to be done, but expediting these advances — in both access and understanding — will help ensure widespread empowerment for those who need it most.

Sona Jepsen is the global head of sales enablement at Fidelity National Information Services (FIS). Her team empowers FIS’ global sales teams with sales content, strategic insights, and world-class learning and development opportunities.

Share this article

How about these articles next?

  • bunch of bananas

    3 Actions for Enabling Frugal Innovation for Financial Inclusion

    I came to know of the term “frugal innovation” when I read about Narendra Modi’s announcement of putting a satellite on Mars for less than the cost of making the movie Gravity.  Since then, the term “frugal innovation” has been vital to effectively describing the constraints that must be taken into consideration when using technology […]

    FIS 13:56 PM UTC

  • Source: Hindustan Times

    A cashless dream for kirana stores

    Last year, under a partnership between the US Agency for International Development (USAID) and the ministry of finance to advance financial inclusion in India, we conducted research on digital payment acceptance among small merchants in rural, urban and semi-urban India. In Kota (Rajasthan), we met Ram Babu, who runs a small roadside tea stall. Ram […]

    FIS 10:58 AM UTC

  • Humanistic 004

    Alternative Data: The Ascension to Better Risk Management & Financial Inclusion

    The financially excluded are defined as those who lack access to financial services at usury prices, and have no financial education. This is not limited to those in developing countries, but includes those in the developed world as well (see consumer profiles in American Express’s Documentary “Spent: Looking for Change”). With the ever increasing pace of […]

    FIS 13:08 PM UTC

Interested in helping? Get in touch.

Whether you’re an FIS employee, customer, partner or simply someone interested in helping to drive financial inclusion initiatives across the globe, we’d love to hear from you.

Get Involved