Zeti Akhtar Aziz: Global Findex Database 2014 - measuring financial
inclusion around the world
Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara
Malaysia), at the World Bank's Asian Region Launch of the "Global Findex Database 2014:
Measuring Financial Inclusion around the World", Kuala Lumpur, 20 August 2015.
* * *
It is my great pleasure to be at this World Bank Asian Region launch of the "Global Findex
Database 2014". The Global Findex is one of the most comprehensive and authoritative
source of financial inclusion data, that offers valuable insights into the state of financial
inclusion in the world today. We are most honoured that the World Bank Group has selected
our cosmopolitan city of Kuala Lumpur to host the Asian regional launch of the Global
Findex.
Financial inclusion, the provision of cost effective and quality financial services to all
segments of society, has been acknowledged as an important structural enabler for
economic development and progress. There is also a greater appreciation that development
which empowers every individual to achieve their full potential raises the aggregate
productivity and income, which in turn, supports a more dynamic and durable economic
growth. Therefore, financial inclusion needs to be pursued more extensively beyond the
underserved to achieve a more effective participation in the financial system and thus
unlocking the further potential to contribute towards the overall growth and development of
economies.
Financial inclusion in Malaysia: Our evolution
Since Bank Negara Malaysia's inception in 1959, financial inclusion has been an important
agenda for the Bank as it was recognised that it is central to supporting the aspirations for a
balanced and sustainable growth of our economy. Attention was initially given to
establishment of a diverse range of financial institutions to meet the needs of the various
consumers and businesses, including rural communities and small businesses.
Bank Negara Malaysia has also worked towards providing an enabling regulatory
environment which encouraged the financial system to develop innovative products and
services that would better meet the needs of the underserved. The Bank introduced the basic
banking services, a no frills low cost savings account in 2005 and on the financing side, the
micro-financing framework was established in 2006 to facilitate an uncollateralised micro
financing scheme that provides access to financing in a fast, easy and convenient manner.
Another important policy initiative is the development of such financial services based on
Syariah principles. This has allowed many segments of the Malaysian society to now
meaningfully use and benefit from the financial system.
In line with the transformative importance of financial inclusion, the Central Bank of Malaysia
Act 2009 states that promoting a sound, progressive and inclusive financial system as one of
the primary functions of the Bank. This has provided a clear mandate and legislative power
for the Bank to advance the financial inclusion agenda. The financial inclusion mandate of
the Bank is further reinforced by The Financial Sector Blueprint 2011-2020, which charts the
future development of the Malaysian financial system. It details the Bank's holistic approach
toward achieving greater financial inclusion.
An important evolution in the advancement of our financial inclusion strategies is the
increasing focus on data and measurement. Success can only be celebrated if it is proven by
visible developments that is felt on the ground. Hence, one of the cornerstone
recommendations under the Financial Sector Blueprint is the development of a Financial
Inclusion Index, a framework to measure accessibility to financial services as well as its
usage and quality. Our performance on this agenda has therefore been measured,
consistent with our drive for accountability and excellence. Further policy initiatives have
included the introduction of agent banking which has enabled 99% of Malaysians today to
enjoy convenient access to safe, reliable and affordable financial services.
International efforts to enhance financial inclusion measurement
Internationally, there is an emerging common understanding that measurement is an
essential policy tool for implementation. In this regard, the Alliance for Financial Inclusion, a
network of central banks and financial regulators from 96 countries, has provided an
important platform in advancing the global agenda of financial inclusion measurement. With
the Sasana Accord, which was agreed upon in 2013 during the Global Policy Forum held
here in Sasana Kijang, AFI members underscored the importance of measuring the progress
of financial inclusion using a common set of measurable indicators. This Accord has
formulated the measuring tools for the monitoring of Key Performance Indicators (KPIs) that
has assisted policy makers in implementing and refining strategies to assist the underserved.
Immense progress has also been made in gathering accurate and timely data for financial
inclusion KPIs. Traditionally, financial inclusion data has been scarce as they have depended
on national user surveys. In this regard, the Global Findex has made a very significant
contribution to financial inclusion policymakers and practitioners, as it is a database of more
than 150,000 survey responses from more than 140 countries across the world. With the
data from the Global Findex, which is updated every 3 years, we are now able to compare in
a consistent manner the financial inclusion performance across countries and analyse trends
over time. The availability of country performance data not only provides peer pressure that
spurs action, but also provides empirical evidence on which financial inclusion policy actions
are delivering the most optimal impact. The analysis of the Global Findex data has provided
strong evidence that countries which adopted mobile banking outperformed those that did
not. Such empirical evidence facilitates policymakers and the private sector in their drive for
greater financial inclusion.
Priorities for greater financial inclusion
In these recent years, there has been significant progress in advancing financial inclusion
across the world. According to the Global Findex, 700 million adults have gained access to
formal financial services since 2011. This is indeed a significant achievement. Yet 2 billion
adults today are still unbanked. Therefore both the private and public sectors, need to
intensify efforts to accelerate meaningful and effective efforts in the drive for greater financial
inclusion. In Malaysia, our priorities are to enhance greater access to digital financial
services, as well as to enable the underserved to benefit from increased convenience,
greater efficiency and lower cost. Another important priority would be financial education for
the newly banked, to ensure that new entrants into the financial system behave responsibly
and do not suffer the unintended consequences of being over-indebted.
For ASEAN, financial inclusion is an increasing priority because it is estimated that 260
million adults in the region still do not have access to the formal financial system, while 45
million small businesses have difficulties in accessing financing. To overcome this challenge,
ASEAN Finance Ministers and Central Bank Governors in March 2015 decided to elevate
financial inclusion to be a policy priority. It is our shared vision that every person and every
small business in the region can participate and benefit from the opportunities that will be
brought forth by greater regional integration under the ASEAN Economic Community.
Conclusion
Our collective efforts in advancing financial inclusion have yielded many significant
achievements. The Global Findex Database 2014 will be an important contribution to more
optimal and impactful financial inclusion policy making and implementation. Bank Negara
Malaysia would like to congratulate the World Bank Group on this accomplishment. We
would also like to reaffirm our unwavering commitment to the financial inclusion cause and
look forward to deepening our cooperation with all stakeholders to fulfil the promise of
greater financial inclusion, thereby bringing hope and better opportunities to our
communities.
Thank you.