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3 ways to increase global access to financial services

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An estimated 1.7 billion people worldwide are still unbanked and lack access to basic financial services Image: Aaron Joel Santos for PayPal

Peggy Alford
Executive Vice-President, Global Sales, PayPal
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This article is part of: World Economic Forum Annual Meeting

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  • Financial services are essential to the resilience of people and businesses in uncertain times.
  • To ensure equal access, global leaders must democratize access and adopt digital identity infrastructure.
  • Public and private sectors must come together to create low-cost forms of financing for small businesses.

Current challenges, including geopolitical instability and rising prices, renew questions about how access to affordable, convenient, and secure financial services can help more people achieve financial security and weather uncertain times. Financial services are essential to building inclusive economic opportunity. That’s why global leaders must ensure the benefits of financial services are distributed equitably, in a way that makes the world stronger and more resilient. In pursuit of these opportunities, we should consider the following areas for greater investment, collaboration, and focus.

1. Democratize financial services

Access to financial services gives people more control over their financial health. When people have the ability to receive a payment to an account it can lead to positive outcomes, such as the accumulation of savings and greater access to credit. Savings in particular are crucial to helping people weather financial shocks and setbacks. However, an estimated 1.7 billion people worldwide are still unbanked and lack access to basic financial tools.

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To help address this, public and private stakeholders can work together to make financial services available for people to increase their financial security. There should also be a focus on supporting mission-driven financial institutions to deploy capital in underserved areas. Companies like Kiva are doing impactful work in this domain by expanding access to micro-lending and investments to underserved borrowers, including women, minorities, and people from rural and conflict-affected areas.

2. Digital identity

To use financial services you need to be able to prove who you are, and 1 billion people around the world lack formal identification. Identity verification requirements also vary across countries and entities, resulting in processes that can be challenging and fragmented.

This can reinforce existing disparities between people who have access to resources and opportunity, and people who don’t. By encouraging the adoption of digital identity infrastructure in countries around the globe, we have an opportunity to foster greater inclusion, enable greater resilience during times of uncertainty and crisis, and boost global GDP.

The benefits of digital ID have also been found to help nations better support their people during times of crisis. Studies showed that during the pandemic, the countries that were most successful in distributing pandemic aid were the countries that had already invested in digitizing financial infrastructure and digital identification systems. This led to better delivery of aid efficiently, with speed, accuracy and scale.

Despite these benefits, people today have varying attitudes and degrees of openness to digital ID technology. In 2021, roughly 71% of respondents in the US and Germany indicated a preference for carrying a physical ID instead of a digital license on a smartphone. On the other hand, 70% of consumers in China and 57% of consumers in Brazil expressed support for digital ID.

This contrast in attitudes suggests that global leaders must continue to raise awareness and educate their fellow citizens about the benefits of digital ID systems. This means working with public and private stakeholders to develop and promote digital ID standards; funding initiatives to drive private sector innovation; and taking legislative and regulatory action to streamline digital ID efforts to avoid fragmentation.

A lack of legal identification can reinforce existing disparities
A lack of legal identification can reinforce existing disparities.

3. Sustaining and promoting small businesses

Access to capital is consistently listed as a top priority for small businesses, as those that can meet their financing needs often experience stronger growth, and can weather unexpected expenses or economic downturns.

Acquiring financing is a challenge that has been exacerbated by the pandemic and by inflation, especially for businesses that have been traditionally underserved by the financial services industry. These businesses are more likely to be adversely impacted by economic downturns. We saw this in the early days of the pandemic in the US when 41% of Black-owned businesses closed their doors, twice the rate as their White-owned counterparts.

Small businesses must develop new ways to attract and retain customers to ensure they can maintain – or even grow – their businesses during this volatile time. In the US, PayPal research has shown 60% of small and medium-sized businesses have only enough cash to operate for four months if revenue dried up and they didn’t get access to capital.

To support small businesses, the public and private sectors must come together to create low-cost forms of financing. These should link together public and private funding to ensure capital commitments are reaching the communities that need them most. Collaboration around digital strategies, tools, and practices would also help. Making these resources available can help facilitate greater access to the global business community and digital economy.


How is the World Economic Forum fostering a sustainable and inclusive digital economy?

Reaching the billions who are currently underserved by financial services and supporting the world’s critical small businesses requires discipline and a sustained focus. As the world navigates through this time of heightened economic uncertainty, organizations across the public, private and social sectors must work together to find new ways to improve the financial health of the world’s citizens.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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Institutional update

World Economic Forum

May 21, 2024

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