For millions of people in the developed world, bank accounts are among the basic needs of life. People expect that the banks will be fully operational all the time to ensure that the money is safe and accessible through whatever means the person may desire. These ways include going to the bank itself, using an ATM, or other means if available.
However, for plenty of people in the developing world, this is not the case. In fact, the World Bank reports that about 1.7 billion people all around the globe did not have access to bank accounts in 2017. This high number is despite the fact that the number of unbanked people all around the world has decreased by at least 500 million in the past three years alone. Since 2011, there have been about 1.2 billion unbanked people who have gained access to banks.
Countries with the Largest Populations without Bank Accounts
The country with the highest population in the world also has the highest population without access to bank accounts. Of the global 1.7 billion people unbanked in the world, China accounts for about 224 million people. This figure translates to about 13% of the total world’s population without access to banks. Surveys done by the World Bank shows that most people do not have bank accounts because they feel that they do not have enough money. Another common reason, especially among women, is that they feel a bank account is simply not necessary. In China, 35% of women do not have accounts compared to 27% for men. Fortunately, China is making great strides in improving their banking sector. One of the ways China is doing this is by increasing the number of financial institutions. In 2012, there were an incredible 3,747 financial institutions.
India, the second most populous country in the world, falls second on the list of countries without access to banks. About 191,000,000 people in India do not have bank accounts. Although the Indian economy is growing, the reach of banks into rural areas remains difficult. Interestingly, the Reserve Bank of India began granting approval in 2016 for small finance banks. Thes are targetted specifically at the unbanked population of India. Each of the 10 approved banks must open a quarter of their banks in unbanked regions of the country, meaning that is no bank branches currently located in that region.
Third on this list is Pakistan with a population of 99 million people without bank accounts. Pakistan is an interesting case in terms of what the major reason is for not having a bank account. The previously mentioned global reasons lack of money and people deeming a bank account unnecessary apply. What makes Pakistan interesting is that a huge percentage (13%) of the people surveyed cited religion as the reason for being unbanked. Interestingly, another Muslim dominated country on the list, Bangladesh, did not have as high a percentage of people who cited religious reasons. The small number of banks (just above 30) has also played a part in the high number of unbanked.
Nigeria is the only African state on this list with about 62.7 million unbanked. Following the fall in the price of crude oil in recent times, a lot of banks were severely affected. A few closed up while others are barely surviving. This hardship may explain why Nigeria has such a high number of unbanked. Even before the recent oil prices drop in 2014, there was another one in 1998 which had similar effects.
Banks are constantly innovating to come up with new ways to reach more people. For example, China and Pakistan banks have come up with agreements that will ensure both countries increase access to banking services for more people.